Advice For Conducting Property Visits
By Bobby L. Hickman
Frequent, thorough property visits to self-storage facilities are a critical method for absentee owners and management companies to make sure that the properties are performing to expectations.
“Property visits are a full-time job, especially for management companies and supervisors,” says Carol Mixon-Krendl, president of SkilCheck Services. “Some managers and supervisors just drive the property, come to the office and chit-chat with the on-site manager for 15 minutes or an hour, and then they leave. You need to walk the property, look at the units, and review the inventory.” She notes that out-of-state owners are often too busy to conduct thorough visits, plus self-storage may not be their primary business interest. “Most managers are simply not proactive enough,” she adds.
“Ninety-nine percent of my job is keeping honest people honest,” says Diane Gibson, president of Cox Armored Mini Storage Management. “Visiting your properties and doing checks on a monthly basis helps your managers be better. Set high expectations and show them you’ll be there to engage them, and you get a much better result.”
Guy Middlebrooks, vice president of third-party management with CubeSmart, adds that property visits “provide us with an opportunity to engage and collaborate with the store teammates. Our district managers will be prepared to recognize great performance and to discuss areas for improvement.”
Plan For Monthly Visits
Most experts agree that property visits should be done at least once a month. Gibson, who oversees 18 facilities in Arizona, says she and a member of her staff each conduct separate, regular monthly walkthroughs each month. “We use a three-page checklist,” Gibson adds. “Sometimes the managers and maintenance staff get used to what they see every day, and they grow accustomed to those conditions.” Having two Cox Armored representatives also brings multiple viewpoints to the reviews.
CubeSmart’s district managers typically visit each property a minimum of once per month. Middlebrooks, who oversees management of more than 500 managed self-storage facilities across the country, says, “More frequent visits will occur if it is a new development project, if it is having challenges or turnover, or if there are ongoing physical improvements or an expansion being completed.”
Prepare In Advance
Andy Kelly of Sierra Self Storage Consulting, who manages six facilities in Arizona and New Mexico and does consults for other owners, also visits his facilities once a month. “Once or twice a year,” he adds, “I do a surprise visit. You’ll find out whether the manager is keeping it clean just because they know you always come the same week of the month.”
While Kelly reviews operational reports on all his facilities daily, he will do a thorough analysis the night before he arrives for a visit. “Where are we, and where do we want to go?” he asks. “What do we need to fix? Are delinquency rates high? Are occupancy rates down? Do we need to schedule an auction? If I already have any concerns, I’ll make sure I set up my visit to cover what I need to look at.”
Middleton mentions that CubeSmart’s district managers “will study the revenue trends, rentals, vacates, reservation conversion, accounts receivable, and other results prior to each store visit.”
Gauge Curb Appeal First
How a facility looks from the outside is important for potential customers and neighbors, so well-managed developments strive for a good first impression before anyone enters the building. Mixon-Krendl says that before she goes into the office, she drives around the property and walks around outside. “Then I talk to the on-site manager and tell them what I see.”
Kelley takes a quick drive around the site to look for maintenance issues that need to be addressed, such as weeds, graffiti, cigarette butts, and garbage on the property. “Those may not be obvious to a manager or a maintenance worker because they are always working inside the facility.”
Gibson covers similar items. “Curb appeal is the first priority. The signs should look nice and fresh; the landscaping should be attractive. Everything should be in order outside before I go inside.”
The next step is meeting with the on-site manager. “I take the pulse of a facility before I go,” Kelly says. “Then I verify that against what I see and what the manager says.” Kelly brings all the relevant management reports he needs, such as month-to-date and year-to-date income statements, competitive analysis, occupancy trends, delinquency reports, and pricing data.
Audit Facilities Thoroughly
While some management companies conduct thorough audits with every monthly visit, others vary the depth of their audits on the conditions they find at the site or outstanding issues. Mixon-Krendl audits frequently, while Kelly his audits may dig further when he notices warning signs that there may be issues. At Cube Smart, Middleton says district managers conduct a facility audit at least once per quarter, “which drills down into specific store compliance issues and customer service areas”.
The length of time for an audit varies considerably, based on such factors as the size of the facility and the number of issues that need to be addressed. Mixon-Krendl says some of her facilities have 3,000 units, so the visit often takes three to four hours. Kelly adds, “At some of our smaller facilities with 300 units and below, if everything is being done properly and is organized, I won’t spend two hours there.” A facility with 450 to 600 units usually takes three to four hours, while another facility covering 100,000 square feet may take all day, Kelly notes.
Most of the management companies look at the same set of physical conditions that ensure a self-storage facility looks clean and inviting. Managers walk the units to make sure the hallways are swept, the lights work, the paint on the walls is current, fire extinguishers are in working order, and the restrooms are tidy. Curbs should be painted and floors mopped; doors should open and close easily, and routine maintenance should stay on schedule.
Aside from physical appearances, another major focus is comparing the facility inventory against the actual units. Auditors may take printed reports with them on their tour or use software that displays the inventory on a device such as an iPad or iPhone.
“You want to make sure every unit that is listed as rented is actually occupied,” Gibson says. She also checks that units that should be overlocked (because the renter is delinquent) are actually overlocked, and that current units are not overlocked. “We open the vacant units to make sure they are really vacant and make sure they don’t have locks,” she adds.
Mixon-Krendl usually finds 10 to 15 spaces that have issues when she conducts an audit, plus maybe 10 that are overlocked incorrectly. Often there are occupied units that should be vacant. “Sometimes people just get confused about which unit is theirs when they first rent, and they move into a vacant unit next door, especially if the manager doesn’t show them their unit on their first day.” She adds one of her managers not only takes her customers to the unit but also offers to sell them a lock and installs it before the customer leaves.
At another facility, Mixon-Krendl says, the manager told her 100 percent of the units were rented. “I found almost 20 spaces that actually were not rented. Once they opened those up, they added $7,000 a month in revenue. You’re leaving money on the table when spaces are left in limbo like that.”
In addition to the inventory review, auditors also review paperwork such as active leases, delinquent accounts, collections, and lien documentation. Most periodically count the petty cash and compare it with store records.
Once the physical inventory is completed, Kelly sits down with the onsite manager and goes through all the reports he has pulled. For example, they compare the numbers of times a manager has waived late fees with corporate policy (which is once per tenant). The manager may be offering too many discounts and specials, or tenants may not be paying as much as they should in current market conditions. For each issue, he and the manager develop a game plan to address those challenges before his next visit. “If I come back the following month and those items are not done, we’ll address it further. I remind them that the owner is paying both me and the manager to take care of their investment, and they want it looking good.”
Auditing managers normally document their findings for follow-up on their next inspection. CubeSmart has an automated software application that manages the store audit process, listing the results and any items that need attention. “We also maintain a store visit tracking system that helps us manage all store visits by tracking notes, requests, and capital improvement recommendations with pictures to help increase the efficiency of these visits and increase follow-up,” Middleton says.
While property visits can become detailed, experts agree that all those little details can add up, often determining the success of a facility and the owner’s return on investment.
Tips On Property Visits
Bobby L. Hickman is a freelance journalist based in Atlanta, Georgia.