Welcome to our "Ask the Expert" section, where you can ask any question, from anywhere, at any time, and receive personalized advice from Trachte's resident expert, Jamie Lindau. Whether you're first starting out and need guided development advice, or you're a seasoned self-storage veteran looking for the latest tips and tricks, use this forum to get the answers you're looking for, from an industry professional who knows self storage best.

Read Jamie's answers to previously asked questions below or submit your own.
You will receive a response within 48 hours.

Development

I'm wondering what the average costs are to develop a project.

A small facility will cost $18-25 per square foot. The building, erection, and foundation will cost $12-15 per square foot, but additional costs include excavation, grading, fencing, etc. A larger site with enhancements, such as paving or an office, will cost $25-32 per square foot. A state-of-the-art facility with an apartment, total security system (door alarms, cameras, etc.) would cost $30-$40 or more per square foot. All of these estimates exclude land costs.

I'm looking at developing a site in Idaho. What are average per sq. ft. rental rates? Additionally does any building design or size units tend to yield better rates?

Every area of the country is different with rental rates. Idaho is noted for having lower rates than the rest of the country. I would guess that rental rates are around 4-5 dollars per square foot. To be sure I would just call a couple of sites that are close to you. I would ask what their 10' X 10' size cost is and then divide by 100 times 12 months will be your average.

The smaller the unit the higher the return but that's assuming that you have tenants in them. Check out your potential competition to see if certain sizes are over or under built in your area.

When applying for a loan, am I able to use the equity from my residential rentals as a down payment on a loan?

Yes you can use your land and its improvements as collateral. I suggest that you look at trying to get a SBA loan for your project because you will need to have less down payment with this type of loan. Self storage was only recently allowed to participate in the SBA program (since October 1st 2010). I'll e-mail you some details of eligible SBA loan programs. If you have any other questions please feel free to contact myself directly or the regional manager for your area.

 

We own a 36000 sq ft factory on 8 acres 2 miles off of a major interstate. To diversify our business, we are contemplating the portable storage business offering inside storage options also. We can't find anyone offering these particular services in at least a 20-30 mile radius. Questions: - Would you suggest we hire a marketing firm to run a study? - Also, I am having difficulty finding anyone who manufactures or has a variety of portable storage units whether they be new or referbed. Can you advise?

Portable storage businesses tend to serve up to a 30 mile radius, so you'll want to consider any competitors within that area. If you are closer than your competitors to a large population base, you'll have a built in cost advantage. Most portable storage operators charge per mile plus the container rental.

There are many consultants that specialize in traditional self storage, but fewer for portable storage, which is a newer industry. You can, however do much of the research yourself before paying an outside consultant. Visit http://www.trachteportables.com/ and click on the downloads link to get access to our guide to getting into portables, our competitor evaluation form, and more. If using an outside person, try to find someone that has done similar consulting so that you're not paying them to learn a new industry.

We hope that you'll find that our portable units provide a good value - we designed them to last, and to be easy to load and unload. To find more vendors, check out the National Portable Storage Association (NPSA) and Mobile Self-Storage Association (MS-SA). NPSA caters more to the sea container industry, while the MS-SA is more focused on residential portable storage.

I own a 3.3 acre parcel which already contains a house and car wash. Iím thinking of adding self storage to the property, using the house as an office and managerís apartment for both businesses. The property is prime commercial with the highest traffic count in the county. What size facility should I look at to begin feasibility studies?

It may be difficult to achieve the typical target of 35% rentable space on your land with the existing structures. You may also need to account for space for storm water management, which would consume additional land.

One of the services that we provide is assistance in drawing a conceptual land development plan. It is a free service and the first step in feasibility determination. If you are interested please call us to discuss. We will need a survey of the property showing available land area along with locations of existing structures.

There are currently 2 small lots on the same street as my office. The first lot is approx. 60ftx120ft and only 60ft from my office(currently a paved parking lot). The 2nd lot is approx. 135ftx150ft. and across the street from the 1st lot about 150 yards from my office (currently undeveloped). I am wondering if these 2 lots are big enough to develope into storage units and manage from my office. My office is near a Home Depot and next door to a former Cadillac dealer.

 “How much self storage do I have to build to make money?” is the first question many people ask. Well, it depends on how you run it. If you are planning to run the project from home or from your existing office than you can make a return with as little as 20 units. In your situation you have two lots that will total around 27,400 sq ft and I estimate that you could get around 9,000 sq ft on these two lots as long as you do not have a large setback requirement, or a city requirement where you will need a retention basin for the water drainage. I suggest that you get the exact boundaries of the site and we will give you an idea of what you can build on the site. You will also have to ask the city what is the zoning and the setback requirements on the parcel. Once we have that figured out we can give you a better estimate of what size buildings you can build.

If you can build 9,000 sq ft you should be able to make a decent return, you can put those numbers in our investment calculator on our website.

Is it really hard to find land in my area that is affordable? How much land do I need to be successful?

For one-story buildings, anticipate 30-38% building coverage. This rule of thumb provides approximately 13,000 to 16,000 square feet of storage per acre. The ideal site would consist of narrow buildings with driveways so that all of the units face the outside with drive-up access. Customers love to be able to drive up to their own unit. The problem this creates is that it burns up a lot of land and you get only 30% coverage. Most people can't afford to build this way anymore. The trend today is to build wide buildings and eliminate driveways. Developers are constructing buildings anywhere from 60- to 200-foot wide. This method allows you to increase your coverage up to 45%. However, if you build wide buildings, it is necessary to climate control the hallways. This ensures the units are rentable and will also increase your net revenue since climate control demands a higher price.

If you land has more than a ten-foot elevation change in it, it might be wise to build a two-story into a hill design. This design is superior to conventional two-story buildings because there is no need for stairs or elevators. Consequently, to the customer it seems like a one-story building. Since you use two floors, you will lose around 20% of the building to hallways, but you should still end up with over 40% building coverage. The negative of this design is that your grading costs and foundation/retaining wall costs are expensive.

With land costs escalating, many developers are looking to build two-, three-, or four-story buildings. With each story you build, you gain a lot of square footage, but each floor carries a lot of additional costs. Customers are leery of having to walk upstairs with their goods. So it is recommended that all multi-story buildings have elevators. Two-story buildings are the most common design. They typically can be built without sprinkler systems, while three- or four-story buildings normally need to have sprinkler systems. Regardless, with any multi-story building, you will lose around 25% of building due to hallways, stairs, elevators, etc. The cost of multi-story buildings typically runs at least $10-12 per square foot per floor.

We recommend that you look at the competition near you and your land costs to determine what type of building design you should construct. Check out our investment calculator to determine the amount of net rentable square footage you will need to have a viable self-storage project.

I own a piece of land which I think might work for self storage. How do I know if self storage is a good fit for the site?

Self storage is a retail business. A good retail location is essential to renting units. Visibility, ease of access, and how close you are to the population are also important. If the location is good, go to the city building department to determine if the property is properly zoned to build self storage. If so, get the proper permits and approvals needed to build (i.e. architectural review board, conservations board, department of transportation approval, etc.) For more information, see our find land section.

How do I know the proper zoning for self storage and how do I figure out if a piece of land is properly zoned?

I recommend that you talk to the building departments for the cities you are interested in developing in to find out what zoning you need to develop self storage. All cities have developed a city/county map that shows the zoning of all the land in the community. The process is much easier if you only pursue properly zoned land. If you want a zone change, I recommend you hire an expert to have any chance for success.

I found a piece of land that has a fantastic location and great visibility from the road. The problem is that it is a very small parcel. Is it possible to make this site financially work or should I keep looking?

While every self-storage owner dreams of building the perfect facility on the perfect site with perfect land conditions, in reality, this ideal site can be extremely hard to come by. In my opinion, if you can find a site that has the right price, location, and visibility, but is small, you can cut costs and make it work by being creative in the way you build or run it.

One way to increase net rentable square footage is to maximize the amount of units on the site by laying out wide one-story buildings with interior hallways, instead of narrow buildings with all exterior drive-up access. The buildings might be over 100 feet wide, which minimizes the need for driveways. If even more net rentable square footage is needed to make your project economically feasible, consider incorporating a multi-story building into your plan.

You must also take into account how you will manage the facility. In an ideal situation, you would have a manager on site everyday. If your site can only accommodate 200 units versus the 300-350 on a large site, you will need an alternative management approach in order to make your project economically feasible. One suggestion is to have the entire site run from a nearby business. Another idea is to build an office on your site, but lease it out to a business such as a carwash, tool rental, real estate office, etc. That business can then manage and rent your units out for you. The last option is to utilize an ATM-type machine to rent out your units, in combination with renting out units from your home.

Do I have to build a large facility to make money?

This depends on how you're going to manage your facility. If you plan to run the facility yourself out of your home or through another business you already own, you can make a good return on your investment with as little as 2,000 square feet. If you employ a manager to run the self-storage site, you will have to build at least 25,000-30,000 square feet to offset this cost. If you build an apartment and have a live-in manager, you will need to build at least 45,000 square feet. These are rough estimates that will change depending on the rental rate structure of your community.


Green Building

I'm interested in installing solar panels (PV) on some of your 1/4:12 buildings. Has there been any experience with this?

We do have customers that have installed solar systems in their projects, mostly in the Southwest. One consideration is the added weight on the roof structure, although it is usually not significant enough to require any changes to the building design.

Technology is evolving rapidly - one third party vendor has recently introduced a "Peel and Stick" system specially designed for standing seam roof systems. We will e-mail you some information, and feel free to contact your Trachte Regional Manager to discuss solar options further.


Management & Operations

Is there a system where you can run a small rural self storage facility off-site? Has this been done if so are there any tips or ideas you could give me?

Many of the projects that are built do not have a manager on site. Typically a site will need to have over 300 units before you can afford to have a manager. There are three ways to manage a site where you do not have a manager on site.

1. Run the project from another company. For example, the CEO of Trachte owns a project in a town called Whitewater Wisconsin and he runs it from a liquor store about 1 mile away. The sign at the site tells the customers to stop in the liquor store to rent a unit or pay their bill. We have many customers that run their sites from a realty company, car wash, convienence store, etc.

2. Run the project from your home. All the calls from your site are routed to your cell phone and you set up times to meet the customers on site to rent their units. How well this works depends on your ability to meet the customers in a timely fashion.

3. Install an ATM type machine at the site so the customer can rent a unit or pay their bill right there on site without talking to anyone. A company called Open Tech Alliance has a machine that will do this for you. To see examples, go to the resources section of our site and download the "Self Service Offices" Photo Portfolio that shows some of these types of ideas for you to look over.

I heard that the door springs need to be serviced on a regular basis....what product do you recommend to use for this lubrication?

The worst thing that can happen to a spring is rust. When a door spring rusts, especially on a door that isn't used often, the individual coils begin to rust together if not treated or lubricated. When you open the door and the coils can't move, that's when a spring breaks. Starting in 2007, Trac-Rite began using the EP3 coating, which prevents rust and eliminates the need for lubrication. For Trac Rite doors made before 2007 (or doors made by other companies) we recommend ZEP 2000 penetrating grease. Search for "ZEP 2000" or visit zep.com to find a source near you.

What kind of insurance do you typically see for self-storage projects? Obviously, I would have insurance on the building and property. However, are renters typically responsible for their own contents? What if they get damaged from leaky roof etc?

Typically the owner has insurance on the building and liability insurance. This insurance does not cover any of the items in the unit. All owners should offer separate insurance for the customers goods. In actuality most do not need it because if they have homeowners or renters insurance their stuff is covered by this insurance. If they have neither they can get insurance which is typically fairly cheap. The problem is this insurace only pays 1/2 of the declared value if there is a robbery. The insurance pays the full amount for a disaster. Our regional managers can provide you with examples of insurance policies typical to self storage. If you have any other questions please do not hesitate to contact us.
Are there any governing agencies over self-storage businesses?

There are no state agencies that govern storage. Most people set up an LLC corporation and run it themselves. Each state has rules on how to sell units that are in default but not much more than that.