Lessons for New Storage Owners from an Experienced Manager with Victor Diaz

In this episode, we talk to Victor Diaz about how he got his start in self-storage, the mistakes he sees many new self-storage owners making, how to stand out from the crowd when marketing to potential sellers, and the changes he’s seen in the storage industry since he got into it.

Victor Diaz is the co-founder of Stor365.com, a new consulting firm that specializes in helping self-storage owners operate their small storage portfolios the way a large REIT would. Victor’s entire adult life has been spent in the self-storage business where he was general manager and then an area field manager for U-Haul. He now oversees 8 facilities and over 670,000 square feet of storage for a private firm in Ohio.

In This Episode We Cover:

  • Ways a self-storage owner can incentivize their on-site manager to achieve better performance
  • Emerging trends in the self-storage industry
  • The biggest mistakes new self-storage investors make
  • Why you should not rely solely on the self-storage supply index when evaluating a self-storage facility for purchase
  • And much more!

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Transcript
Neil Henderson:

Victor Diaz is the co founder of store 365 dot com, a new consulting firm that specializes in helping Self Storage owners operate their small portfolios. The way a large retailer would. Victor's entire adult life has been spent in the Self Storage business, where he was General Manager and then an area field manager for u haul. He now oversees eight facilities and over 670,000 square feet of storage for a private firm in Ohio. In this episode, we talked to Victor about how he got his start in self storage, the mistakes he sees many new self storage owners making, how to stand out from the crowd when marketing potential sellers and the changes he's seen in the storage industry since he got into it. I'm Neil Henderson, and this is the road to family freedom. Before we get to this week's show, we'd like to make you aware of something we are self storage investors, we buy existing self storage facilities and vacant buildings that can be converted to self storage in the Sunbelt. We buy them with cash and some loans. And we use private lenders who become Equity Partners in our deals, these Equity Partners share in the cash flow in the profits when we sell when we find a deal that we're considering. We call the Equity Partners and offer them a share of the ownership secured by the property. So if you've ever driven by a self storage facility and thought, I wonder who owns those things, and you have any interest in learning more about the storage business, we'd love to chat with you head on over to road to family freedom comm slash storage. That's road to family freedom, comm slash s t o r h g and set up a time to check. We look forward to speaking with you.

Brittany Henderson:

All right, and now thought of us Let's hit the road to family freedom.

Neil Henderson:

Well, Victor Diaz, welcome to the road to family freedom. As I introduce you, right as you take a sip of coffee, I'll do I'll do it as well hang on a second.

Victor Diaz:

Sorry about that.

Neil Henderson:

No, it's all good. We like to we like to keep thing we like the shake thing. keep people on our toes around here. So Well, welcome to the road to family freedom, Victor Diaz.

Victor Diaz:

Hey, thank you for having me. I appreciate it.

Neil Henderson:

Yeah. So before we dig in a little deeper into your story, I'd like to hear how you got into the Self Storage business.

Victor Diaz:square feet of storage, about:Neil Henderson:

Gotcha. So just so I'm sort of understanding when you're working for u haul you were primarily working on the truck rental side, or and you were you were helping them approach storage owners who maybe didn't have truck rentals, and maybe

Victor Diaz:

Exactly.

Neil Henderson:

Okay. And so, when did you first really go to work for a storage facility managing storage with this development firm?

Victor Diaz:

Oh, well, I when I was a general manager at U haul buy one of my first position for a year and a half. I ran a store in Toledo that we were actually in the top 100 of storage facilities in the country.

Neil Henderson:

Okay, gotcha. Gotcha. Okay. All right. So you were your primary focus was on the trucks. But you were working in a facility. Correct?

Victor Diaz:

Right.

Neil Henderson:

Okay, gotcha.

Victor Diaz:

And then, at that point in time, that's when you've all really shifted their focus from prop rentals to self storage.

Neil Henderson:overseeing eight facilities,:Victor Diaz:

About 670,000 square feet?

Neil Henderson:

And how long you've been doing that?

Victor Diaz:

About a year and a half now?

Neil Henderson:

And you have your own own consulting? firm store? 365? Correct.

Victor Diaz:

Yes.

Neil Henderson:

All right. Can you let's, let's get right into that and talk about sort of what it is that you are, what it is that you're doing as part of your consulting firm.

So what I'm trying to do is, is help first time buyers, the smaller groups of portfolios, where they might have two or three. And they're really not sure what to do how to do certain things, really, when it comes to the operations and management side. But I've noticed that right now, people are just buying like crazy and trying to get into this asset class. And they might not know what their endgame is. And that can be really detrimental to somebody who say, you want to buy five or six facilities in the future, and you have your first one, if you choose the wrong software to start out with new start expanding, converting your software, converting your website, that that's extremely costly. And then you're having to learn a whole new program and software, you know, years down the road. And it's, it's usually a struggle, like myself coming from a read software to sitelink, it was vastly different, I just, I wasn't expecting it. I like both programs, each one has their pros and cons, but it's more what fits you the best. And realistically, that's kind of what I would like to do, I do have some types of market demand studies that I can give people and help out with, I have a partner where we're going to be working together, and you'll be able to give that placement services or for business owners. And then on top of that I am trying to figure out once we get up and rolling and have a few facilities, we do want to franchise and partner with people and try to put our brand out there and try to have a larger pool than the market, you know, essentially third party manage things like that, where you could come to us. And we'll manage your property for you, we do want to try to stick like I said to the lower end of a couple 100 units at a facility. That way, I mean the rates and handle the larger class A, but I don't think that there's enough out there helping

Victor Diaz:

the first time buyers, the first time owners really get their feet wet. And it's I get a reason to make money. But realistically, knowledge to me is more important. So if I can help pass knowledge on to somebody and not just run it for them and say, Hey, this is what we're doing and why. That's that's my goal. Gotcha. So that way in the future, you don't have to use me, you can just do it by yourself, because hopefully I've given you enough. And if I haven't, shame on me.

Neil Henderson:

So what are some of the big mistakes you are seeing from first time owners are coming in and maybe buying their first facility.

Victor Diaz:

The big thing that I'm noticing is, is the software choices, they're not planning their endgame, like I mentioned before, when you use some of these less expensive options, they don't realistically give you everything you need. A lot of the reporting is a big deal. When you go to a try to sell or when you're trying to expand and you want to use your first city as collateral, you have to be able to pull these reports and if you don't have access to them, or the company can't make a custom report for you. You're gonna have to do that all manually and in a lot of it's not fun. Even with cycling, there are certain things where you have to make custom reports out and it is what it is. But it's it's a very simple task.

Neil Henderson:

So software choices, you know, so what you're saying is that when people, you know, they're making the choice, they're going for maybe the cheapest software option out there, because they're new and you know, and they don't want to spend a lot of, you know, they're they're maybe afraid of spending some money, that they're digging themselves into a bit of a hole before they even get started. Correct. Right,

Victor Diaz:Do I need to convert software:Neil Henderson:

Gotcha. One of the issues that I hear a lot of smaller operators talk about when they're maybe dealing with some of the larger software owners and things like that. And also, you know, when you're dealing with something like, what's it called sparefoot? Is that you're giving up? You're giving up the data you're getting, you're essentially giving your customer to that owner, do you have any thoughts on that at all?

Victor Diaz:

I mean, you're using sparefoot, as an aggregator if you need to lease up and so you have a conversion property or ground up build. They're great. I mean, yes, you you you pay money to be a part of an aggregator system, but it'll help you lease up. Yeah, is important. In the Self Storage industry. Most software providers allow you to keep your own private data. So when you sign up, as long as it's in the contract that it says you own your own data, You're safe now there's there's a couple that don't allow you to keep it the date on it. Those are the ones i would i would definitely ask the question, Do you own your own data? Or do I have to give it to you? Hopefully that answer your question? Yeah. Sorry. It's,

Neil Henderson:

you know, it's I don't want to throw any any, you know, particular software companies under the bus here. It's just something I think people should be aware of when they're,

Victor Diaz:

yeah, I mean, there's a big one, I think I know what you're getting. And it's, you have to ask that question. If you don't just blatantly say it on their website, ask about the contract, read through it. It can be hidden in there, but you want you want to make sure that you own it indefinitely. Yeah, you know,

Neil Henderson:

I mean, we're, I've heard this discussion before, and all often, Apple Computer kind of gets thrown under the bus here. And I'm, you know, I love Apple products, but they, you know, they are kind of, you know, you look at what Apple's done to the music industry, you know, and that's the analogy that a lot of people use is you don't want to, we don't want to have somebody out there that basically, you know, greases up the wheels of commerce for you. But then at the end of the day, they own your customer and you don't, that's essentially what I'm what I'm getting down to. Okay. And that's something that I think, you know, like you said, you know, it's a question that needs to be asked before you, you get in bed with a software. Exactly. So besides the software choices, what are some other mistakes you're seeing new owners making,

Victor Diaz:

I'm ready rent increases. Now it is, it is one thing to bring all three tenants up to the current sreet rate value for that facility. You know, say the standard rate for that website is $50. And your tenants are at 30 minutes, it's okay to bring that 50. But it's when you look at your overall playing field, you know, and self storage is hyperlocal. So you're looking at three five mile radius, or three and five mile radius. You know, you want to be very cautious on how high you're going to actually raise your street rates versus your you have to you can't just say Oh, that facility down the street. They charging 110 for a 10 by 10. I can charge that. But if your facility isn't a Class A or Class B like say that one is, you know, if you have gravel, they have asphalt, you may have no key keyless entry system, and you just have a normal slide gate with an operator and some keypads. You have to understand what your competition is and who they are, what they do as opposed to you. And I think at that point, that's when you can effectively raise your rates and not just kind of blanket the whole area with an average rate. Number, I guess is the best way to look at it. Yeah, you know, you also need to understand your demographics. If you go above what a demographic and bulls you're going to do is hurt yourself, we're going to lose occupancy very quickly, because they just won't be able to afford it. Or you'll have to opt in units often. And realistically, you just you never want to auction the unit off. You want to always put out there as much help as you can. But sometimes with these larger rate increases, it's just it's detrimental to some of these smaller little towns, either the tertiary and then the fourth year market. They just they can't support You know, usually above 60 cents a square foot sometimes, yeah, so it's you need to be cautious.

Neil Henderson:

Yeah, it's in, like you keep saying is that, you know, storage is hyperlocal mean, you're talking three to five mile markets and, you know, we one of the first things that we do when we're looking at a facility is we'll pull up the address and plug in the GPS coordinates and look at the demographics for that hyper local market. And, you know, you may find that that facility, you know, three miles away, is in an area where the median income is $75,000. a household whereas, three, you know, in your little hyper local market, you know, the median income may be $30,000. And so, you know, in addition to the facility characteristics, you know, what they have, you know, the Class A versus, you know, Class B, Class C, you know, that's what you also need to keep in mind is just that, you know, your market is not can't support the same level of rent increases that you know, somebody you know, that's got a very different demographic.

Victor Diaz:

Right. got that right. There is the proof is in, you know, different markets, like you just said, they can support different things. I mean, heck, wine storage. But that's, that's a fun one. They Oh, that's usually if I can wash it, I think it's about 110,000 is usually the average median income to support wine storage. I mean, that's, that's a pretty high income level for a little town. Yeah. But that's usually a primary market.

Neil Henderson:

Yeah. And so you know, so if you're somebody who's like buying your first facility at a tertiary market, you know, where the median incomes $45,000, which is not bad winds, converting some of your units to wind storage may not be the best, I know, I would not recommend. Alright, so I'm going to try and dig one more out of you. What's another mistake you're seeing new owners making.

Victor Diaz:

So this is this is just an industry wide situation. The one thing that's going to kill Self Storage is self storage, over saturating your market, just because you see a piece of land or you own land, down the road, you can't just build on it, you have to understand in the area support it. And what is it going to do to its rents? You know, if there's an available 100,000 net rentable square feet in this three mile radius, and you want to add another 50,000, you're adding literally 50% increase into the availability market? You know, what is that actually going to do? to your local three to five mile radius? going in and dropping your rates significantly, just to lease up? Well, what that's going to do is that's going to force the guy down the street to drop his rent rates, yours are perpetually going to be lower than what's your initial pro forma? Nope. So I do think that is one big situation is notice pay for the demands that he paid for the feasibility study, know what you're going to get yourself into, because, you know, what, $7,000, as opposed to half a million to build two buildings, that that's just the way I look at it.

Neil Henderson:

I think you're absolutely right, the days of build it, and they will come are long gone, and storage. And I think, you know, you're you're not the first person, I've said that the the biggest enemy of storage is storage. You know, and there's so many. There's, there are plenty of people in this business, who just think that, well, you know, all these all these people in this area are full, therefore, I can add 100,000 square feet of storage, you know, and we're going to be fine. That's not necessarily the case. You know, now that we're on the subject of supply index, what are some of the nuances that you see, I mean, you know, the industry sort of national industry equilibrium is considered to be about, you know, about seven square foot per capita. Or you have you ever seen instances, I'm sure you have where, you know, where that was not well, that didn't play out where the supply index was maybe higher, and people were still doing great or when the supply index was maybe lower saying that there was unmet demand, but then there people are not doing great. Have you ever seen that?

Victor Diaz:

Yes, yes. In the rural markets, you'll see that it could be able to support a very high end, you know, your your seven and your eight and the Supply could be three to four square foot per person. And in realistically, yeah, those, you know, those facilities are full. But sometimes I've seen especially when I was at U haul, a lot of these remote facilities would just be built up out of nowhere, and they would not fill up. And a lot of the time, it's just, they didn't need it. I've also seen where my gosh, there's, there's a strip out by where I live where it is, in five miles, you can hit well, storage facilities, not five miles grip on one road, I mean, literally, one trade show, and they're awful, every single one of them, and more and more keep popping up. So to the point where the legislation is literally, they're rapidly trying to change it so that people stop building storage, because it's just needed to go down the road, all you see are just red door green doors, blue doors, what, you know, that's where in those types of markets, you can see, is it climate control that's being built that everybody wants? Or is your traditional drive up? Is it interior RV units, there's a whole slew of different types of units. And that's where you really want to call it to find out the utilization numbers, you know, you call a facility that has 100 units, and they have all of their 10 by 10s, full, but none of their five by fives. So you're going to build, you know, probably don't want many five by fives in your unit mix. But supply index, it just it can vary so heavily that it's a good thing to look at. But I would not focus entirely on it. The utilization is more important, you know, what is? What is occupied at those existing facilities? Currently?

Neil Henderson:

Yeah, you're absolutely right, you know, you it's a good sort of initial indicator of a market of interest, or, you know, a warning sign of a market and maybe over supplied, but all things being equal, dig in, dig in a lot deeper, call around to those facilities, find out, find out who's full, if they're full. Great, that's probably a good indicator. But like you said, also, if they're full, you know, if they've got lots of five by fives available, but nothing else is available, then actually, that's a little more nuanced. Maybe then, you know, maybe there's room for a facility that's got more 10 by 10s. So how, you know, often what we do, and I'm, you know, I'm not sure if this is what you do as well, is we'll literally just, we'll call a facility in the area and say, Hey, we're looking at buying a facility, you know, down the road, we just want to know how businesses is that kind of how you, you know, handle things. And sometimes you'll get a manager that's very helpful and tell you exactly how awful they are. And other times you'll get ones are like, I'm not going to tell you that.

Victor Diaz:

Personally, I trained my managers to not do that. The ones that have run our facilities I go. I've explained to them how it works, what the questions are that that is going to be asked. I try to make sure that they don't answer those questions. But realistically, it could happen. But I agree with you. That's what we do I do the same thing. You know, hey, I'm looking at buying a facility down the road. Yeah. How are the units doing out there? You know, what, what's out there? Am I not seeing anything, I wasn't even out on the internet or on Google Maps, something like that. A lot of times are helpful. Sometimes in the smaller rural towns, you'll get the actual owner themselves, and they can kind of get a little hostile because they realistically don't want any more competition coming.

Neil Henderson:

Why don't usually usually tell them, I'm going to build a facility, I'll used to say I'm going to buy a facility down the road, you know, I've learned that not to say the worst things that an owner wants to hear is, Hey, I'm thinking about building 100,000 square foot facility, you know, a mile down the road from you, you're not going to get a great response on that.

Victor Diaz:

Exact Exactly. I mean, honestly, my managers we try to say, oh, we're not very full. We've got plenty of units and it kind of scares people off. But at the same time, you know, do I know 100% of my manager to do that? I don't know. But yeah, I agree with you. I do call I say hey, I'm looking to buy. A lot of people are doing the letters now. And some of these facility owners, I know a couple where they're getting 100 100. For me, since I oversee all the storage, a lot of those letters get forwarded to me. There were there was one week where I got 60 letters. It's all these different people sitting and they're all you know, I think it's one thing to send your letters out. But my God, just please don't make them so generic, I mean, personalize, make sure that you're going to do that, don't just post a stamp on it with an lol why, you know, slip in there and say I want to buy, you know, I think it's the way I look at is give a little bit of information about yourself, right to stand out, you know, I might not be the owner, and I know he doesn't want to sell. But the matter of Hey, right to stand out is the way I look at it. And that's what I do. I mean, even my letters that I send out, they do not they do not go in your you know, your typical number nines and business envelopes, they're, you know, invitations, the output on legitimate, not just normal computer paper. And now they've looked nice, try to stand out, and hopefully they'll just give me a call and at least have a conversation. I mean, my mind is mine. And same side, though. They're also geared more towards helping that owner out and seeing if I can actually do some business with them and bring them in any way or to help in any way or cheap that I can.

Neil Henderson:know, rather than sending out:Victor Diaz:

in you're right that there's there's no doubt about it. If you really have the view there's kind of no stopping it but you're right I do agree with your approach of picking the facility size pipe that you want to target your cities where you're comfortable traveling to if it's your first one or you have a couple that are getting really help you and it can really narrow down your costs on postage and flyers but then at that point you're able to narrow it down and hopefully be able to drive out there in front of me that owner that you just sent that letter to for to get an in person or just a face to face with them have even five minutes and just try to talk story don't don't bring up hey I want to buy but just read it talk to them read to see how did they get into the industry you know, this could have been their their parents business that they started in try to build that relationship because you never know maybe you just building that relationship in person. That's going to get potentially get your foot in the door and you might be the first call.

Neil Henderson:

Well and I think you bring it bring Have a great point. And it's always been the advice that I've given is, you know that this is like dating, you are, you know, the first date is just to get to know each other and whether or not you like each other, you know, if you go in this thinking that you're going to, you know, score on the first date, if you play the numbers game, then maybe it'll work out. But chances are, you're just going to piss somebody off, and they're not going to want to deal with you in the future. But if you go in and realize that this is, you know, this is a business that somebody built from the ground up, and they care about it, or, like you said, maybe it was owned by their parents, and maybe they don't like it very much in their lives, they inherited it, but it's still a business that their family created. And you come in and say, you know, Hey, I'll give you, I'll give you 50 cents on the dollar. What do you say, on the first date? It's like, Alright, get out of here, buddy. But you know, if you sit down and find out more about them, how the business got started, how they got into it, you know, what do they like about it, what they don't like about it and just have a normal conversation with a human being like you and I are having right now. You're probably going to get a lot farther?

Victor Diaz:

Oh, definitely. Yeah. It's an easier conversation easier way to broach the subject of now, you can then say, Hey, I'm looking to buy, at some point, you know, if you know anybody looking to sell, let me know. And that might put a button, you know, bug in their ear that says, hey, maybe I could do this.

Neil Henderson:

The other thing that I was keep an ounce an eye out for is that I don't typically go after owners that own more than two facilities. Because not with direct marketing, because typically, what you're going to run into is somebody that's going to like when they decide to sell, that person is going to go to a mortgage, they're going to go to a broker

Victor Diaz:

100% of the portfolio is going to be just too big.

Neil Henderson::Victor Diaz:

Definitely. And I now one thing I will say is some of the medium size portfolios, and when I say medium size, you know, seven plus, but I do think some of them are going to start dumping their knees in mid seas. But that way they can buy more bees and ace. My thought on that is basically, we're seeing a lot of portfolios now being sold, like you said, being brokered by larger firms than being sold rates. That is a big deal. And then reads are coming in, they used to just focus on flat essays. And I B's I have noticed some of these reads are coming in below B range. I think they're trying to if they're pointing to any market they can at this point. So just be aware of that. I mean, I agree with you where know who you're going to mail that to because I've caught some of these people and said hey, here's here's the deal, you know, we're not selling the large portfolio. I do. I might know some local people that might go here, here are their names. Give them a shout. Yeah, but that's really about it.

Neil Henderson:

You know, one of the exit strategies that that some people who are getting into this business are looking for is trying to take a maybe a Class C or Class B facility and kind of getting it up to a reposition it to the point where a reed might buy it. Yeah, what do you see the kinds of facilities that rates are going after?

Victor Diaz:

Usually they're 50,000 plus square feet. Metal framed buildings room to expand that that is that is a big plus. The buildings themselves are in good shape. And what I mean by that is, you know, you can buy a facility built in the 90s. What if that owner is never just taken some paint back to it, they can look pretty rough. I mean, just buy a gallon of Everbright maybe a few 100 bucks, but I got a one coat of Everbright makes your facility look amazing. I mean, that's just the truth. So I think if you can, those rates are good and go after the better looking larger facilities that have just been maintained, you know, as long as they don't have to go in there and place with the door springs into these unit. You know, your your concrete is well maintained. Your asphalt getting resealed, it's not all cracked up, they're probably going to go after it even if it is a low B or even a C plus, because they'll be able to go in and they're able to afford placing it as fault across the five acre facility. And they'll get it done. And they'll get it done quick, no questions asked. There was one that was purchased bought by me, they literally purchased a seed facility, repainted, it reap, they paved they took all the gravel paved built a giant, you know, RV, indoor RV spot, or I think they added 50 of those units back there. And then next door was a small 100 plus unit facility within two weeks, bought. I mean it was it was just that fast. And they then put down the bill, the onsite managers house that was there, they just weren't down, leveled it, they got all of the RVs moved asphalt and they were they were in there. I mean, they're these rates can move quickly and a lot faster than most of us can. Yeah, they have all the staffing all the manpower you could ever want or need really just go for it.

Neil Henderson:

Well, and they also are often you know, they're able to borrow money at a lower rate. They're not looking to you know, they're okay with a 6% 5% cash on cash return, you know, because they borrowed at 2%. So it's it's more of a it's a volume bond play for them. The other thing that I try and keep in mind is that leave some if you are, if you have an exit strategy, leave some meat on the bone. Because often what you'll run into is a facility that's 100% full, they're 100% market rates, and they've got no room to expand. Like, right, hey, great, I could buy that I could buy the income on that. But chances are i'm not buying it at a that's going to be much of a return for me. Whereas, you know, if you can expand a facility, but leave some room for your next buyer to expand or leave some room for someone else to raise rates, you know, or at least exit before it becomes this what I guess, turnkey, that somebody is going to buy.

Victor Diaz:

Yeah, no, that is the truth. Because if you can take faith on 10 acres, and you've developed the first or bought, go to an architect, get some drawings done for the last four or five acres that you can build on. And along with selling your facility, you can give civil drawings to the seller. And you can even raise you know you can resell price because you have those drawings done. You are right. I mean, having that little meat on the bone significantly. If that sale done a little faster or get you some more income a little faster. That that is something that I think the wholesaling industry is starting to come up with their their instead of just buying the land, they're getting civil drawings done, and they're including drawings on top of the purchase price. So that way you can go in build your facility, you already have your drawings, some of them are here, even approve the rezoning for you already, which I find insane. But yeah, I mean, there's there's a whole bunch of different options out there. But I agree if you can target the ones that have some type of add value to them. Those are the ones that are really, really worth your time and investment into looking into,

Neil Henderson:

of course that the problem is that everybody's looking for that. Right. So you are in addition to your consulting firm, you are you're out there looking for a facility yourself, correct? Yes. All right. So what are you you know, you've been in this business several years now, what are the some of the ways that the changes that you've seen in the industry since you've become a part of it, technology, it's

Victor Diaz:ome. So instead of say it's a:Neil Henderson:

it's definitely it's having it's having to impact I've been on a couple of self storage calls where everybody's talking about it. It's something that's definitely a concern.

Victor Diaz:

Yeah, yeah. I mean, it's, it's it's not we say it's supposed to drop in June. I don't know how much I realistically believe that. But I mean, we'll see.

Neil Henderson:. You know,:Victor Diaz:

Yeah, I mean, it's, it's really getting up there. But I know that I've been on a few polls where I've heard of people applying to hand new canopies with different material materials other than feel like fabrics, kind of like what you see when you go to restaurants, they have this fabric Ops, I don't really know how active that'll be. Realistically. I mean, it's it's still there still, you know, UV you UVA, UVB light getting through those. Yeah. But I get to blocking out some of that, but I just don't know how much. Yeah. But yeah, those are some of the major, major changes I'm seeing recently.

Neil Henderson:

What are some of the most unusual situations you've encountered as a as a self met Self Storage Manager?

Victor Diaz:

People living in units is a common occurrence. There is a way to handle it correctly, and there's a way to handle it incorrectly. I would not recommend just telling somebody if they're crap and get out, you know, knock on the door, ask what's going on, you know, try to figure out the situation to try to help that tenant. You know that a little bit more smoothly. I always have police when I suspect that somebody is living in a unit. It's just much easier to have them around that way. Nothing bad can happen and then you can evict them but that's probably one of the more common awkward things that you can find. You know, I have dealt with situations where there there have been deceased bodies in units. That is not a pleasant one. Again, it's just calling the police and just getting it handled. I did I didn't mean to get dark there on you but that's a lot of drugs. A lot of drugs I you know, there are things that you just Find in self storage that it's just gonna happen. I mean, as long as you can get some food security, you know, you're usually okay.

Neil Henderson:

Yeah, yeah.

Victor Diaz:

Have you have you had anything or heard of anything kind of crazy?

Neil Henderson:

You know, the weirdest, I think, again, you know, the weirdest thing I've heard is people living in it, there was even a story of a. And there are. And I think it's going to, I think that's going to become worse. Because I think we are facing a housing crisis. Here in United States man, I remember there was a story that went national have some guy in the Bay Area that lived in a facility for like, two years. Two years, oh my god, two years, he was able to, I could be exaggerating there. But he was able to live in a facility for a long time. And he was like, it wasn't a homeless guy. He was just a, he was, uh, you know, he was a millennial that just kind of figured out, you know, was able to unscrew the light bulb and install a little, you know, plug adapter, you know, and people have you got mobile internet now. So it's just, like, you've got you got electricity and internet. Like, and, and, you know, you pretty much that's all most people need. And so really, uh, but I like what you say is that don't just show up, like the heavy and say, you know, get your shit and get out. And, and probably good to have some police there, there's been there was a Self Storage Manager several months ago that was killed, I think by you know, confronting, confronting somebody. So,

Victor Diaz:

just 100% and then that is the exact 100% exact reason. I mean, when I my time working for you all, I mean, they have strict rules for a reason, you know, as a site manager, or sorry, General Manager, you you follow those rules for reason, a lot of its safety. I mean, I would get calls have to go back to my facility in the middle of the night because it alarm went off, well, you best be sure I texted my president, my assistant manager, I let my wife know where I was going. And I let everybody know, because, I mean, when I was with you, I remember hearing about a general manager, they got set up. And it's, it's a very bad situation. So just having presence there with you, or somebody with you, in general, is just always a good safety measure. One thing I will say to try to deter that from occurring, is with your gate system. I know a lot of people have the pressure plates, stop doing pressure plates and just put in a secondary gamepad. Because then you'll be able to see an entrance, and then an exit on your gate system. But additionally, you have lights in the units, when you buy it, when you buy this facility, remove those lights out of that unit. And make sure you pull all that electrical wire out. I mean, you don't want them running any electricity or even having possibility of living in that unit. That's that's just, you don't want to deal with it, you're gonna

Neil Henderson:

have plenty of electricity in the hallways, you can install motion LED lighting, that's plenty of light, anybody who's ever, you know, he was ever, you know, moved into a facility, chances are, if you're moving in in the dark, you know, that's, that's not going to be most common occurrence. And even then, if you've got bright enough lighting on the exterior of the unit, that's plenty of light. You know, if somebody really absolutely has to move in the dark, they can have a flashlight, they can have a lantern, you know, right, if they're moving in the dark, and they're constantly coming in moving in the dark. Yeah, something's going on there.

Victor Diaz:

You right there. And that is the truth, when even getting rid of 24 seven access. So for instance, we only publish the group by magic, we only give that to businesses, and they've legitimately got to be a business. That's the only way they're going to get it now, because we've started to have too many problems with people living in unison. I'm not gonna lie, I don't want to deal with it. My managers don't want to deal with it. It's just, it's the pain. And that's just the bottom line. And it's one less thing we have to deal with. Because we took some max levels away. We're okay with that. I mean, realistically, why? Why do you need to be able to access your unit as a normal non business person storing here at one or two in the morning? I mean, unless you're a DJ, but then at that, let us know because we do have DJs that store with us? Yeah, they have 24 seven access because that's what they do for a living they'd be gay. But realistically, there's, there's no need for it.

Neil Henderson:

So you, you talk to other managers, and I'm gonna put you on the spot here. And if it's too uncomfortable to answer this question, you don't have to but what are some of the ways that you see owners mismanaging their managers? Like how is our what are some things that, you know, they're doing wrong when they're when they're dealing with managers?

Victor Diaz:

You know, I think that you have to you as you know, if you're an owner, you have to sit there and realize, you have this person managing a multi million dollar asset for them. You know, you've got to realize that I mean, it's, it's, this is not a run of the mill, you know, minimum wage, I mean, pay scale is important, you have to hire the right manager for the right position. Now, give them bonuses, give them something that will entice them to make sure that they are answering that phone correctly, they're not just letting it go to voicemail. Or, if you have a call center, letting it go to the call center, I love call centers, but they don't, they don't know the facility as well as your on site does. Another thing I would probably say is no, give them the tools to succeed. If if they're in a large facility, I mean, just you know, 10 plus acres, and you don't have a golf cart, or just simple necessities to help them get it done. It's just gonna, it's gonna deteriorate them much faster. And probably the last thing that I noticed, is education and self storage. When I got to the company I'm with now I did notice that there was a lack of education for some of the managers. So literally, we went out, got some ISS guide books, got some branding information and made sure that they they know the lien was in there in the state, and know how to really know what these ciliary products can do for the company, how much of your income can they make? What can they do, and give them that that knowledge and freedom to know that, hey, this is my facility, I'm going to run it that did something crazy, I'll give you a show, we'll talk through it, and we'll figure out a good resolution. But I mean, that's the way I run the managers is making sure that everybody's on the same page, you know, I want to know that you know what you're doing. Because it is a multi million dollar asset. This is not, you know, you're not in McDonald's, just flipping a burger. I mean, it's self storage is more intricate than most people realize, especially when you get the facilities, they have climate control, RV, you know, the whole slew of different products. So those are the couple things I would I would really recommend just the knowledge, you know, decent pay, I mean, the reads don't pay very well. But that's them. I mean, as a private owner, I mean, we beat your manager with respect, like you'd want to be treated with that, that's just the bottom line, you know,

Neil Henderson:

it's a couple of things you brought up there that I think are our key, which is, you know, one of the draws one of the pitches for self storage as an asset class is no, no tenants trash or toilets, you know, it's just a metal box with a garage, you know, you basically just have to sweep it out. But, you know, at a higher level, it's a lot more than that. And that's, you got to remember that. And I think where people get into trouble is where that is where they come into it. And they think that's really just how it's going to be, you know, that it's just all i got, I've got this, this these metal buildings with some doors, and all I got to do is just put it there, and, you know, people are gonna move in, they're gonna move out, and I'm going to, I'm going to collect my mailbox money.

Victor Diaz:

Yeah, and it's just not the case.

Neil Henderson:

It's not. And the other thing, you know, that, you know, you got to remember that this is, it's not just real estate, it's, it's a business, it's a retail business, its customer service business. It's not as customer services intensive as something like, you know, apartments or short term rentals, but it is still a customer, you know, you still have a customer there. And, and it's important to find ways to incentivize your manager to have an alignment of interest with the success of the business. We talk a lot about key performance indicators, you know, trying to find some KPIs, you know, and not multiple KPI, you know, if you've got a manager and they've got, I don't know, 20 KPIs that they've that they're having to manage, you've probably over tasked that person, you know, but if you can give them you know, a few KPIs. What would you What would you suggest an owner, what would be the KPI that you would be most focused on incentivizing that manager to achieve?

Victor Diaz:

So for us, I personally look at if you sell tentative surance what are what is your tenant insurance penetration rate? That That, to me is a big deal. This is somebody who belongs Are you offering them insurance because most private insurance or most homeowners doesn't cover off site. So that that is a big one. So if you opportunity insurance, watch that. Watch those numbers. I mean, that that can bring you in a lot of income. And it can also protect that. I know, we use storesmart. Bader, and realistically, you know, through the use situations that we've had her, the faders came through every single time. I mean, they're, they're a great company to work with, if you say you sitelinks storage, that, you know, Bader is part of them better as part of storable is, and I would highly recommend using that program, because it's just easy to use, easy to sell, and it's gonna make sense. And you've got to have a disk lock or a cylinder lock, and you have no deductible. I mean, your wall, your whole unit, you know, where water can come in from the ceiling, and all your stuff get destroyed, and you're good to go. Because you had tenant insurance and you don't pay a deductible, your homeowner's doesn't go up, your premium doesn't go up. That's why To me, it's such a big deal. The second one would be auto pay, are you able to convert those tenants to auto pay? I understand you don't want to pay the merchant service fees. But I'm sorry that that's never going to go away. Or it's and services are they're here to stay. And I'm probably just going to get higher and higher as we go forward. That's the only way I can think about it. And realistically, for the last one, I mean, if you can I look mainly at the facility cleanliness and the image of the facility. That's something big for me, I don't want to walk around one of my manager stores and see trash on the fence, Ward not mock things like that. So and when we do facility audits on site managers, it's you know, your facility cleanliness, that's a big deal to me, I don't want to see smudges on your Windows, you have a class a facility or your trash overflowing. So I do think facility fogginess or imaging is a big deal.

Neil Henderson:

Gotcha. Well, Vic Diaz, thank you so much for sharing with us today. If any of our listeners you know, potential Self Storage owners want to reach out to you and find out more about what it is that you do what would be the best way for them

Unknown Speaker:

to do that.

Victor Diaz:-:Neil Henderson:-:

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