In the February issue of Inside Self-Storage, I published an article titled "Valuation of Self-Storage Facilities." Since then, I've received many calls from people interested in financing, real estate tax issues, estate valuation or selling. Most are looking for a ballpark value for their facilities for planning purposes. Several have asked for a simple worksheet they can use to develop a value range.

Appraisal and valuation are a professional art, and while mechanical number manipulations are a very important part of the process, there is also a large measure of real estate judgment and experience in developing a precise value. I cannot impart such a judgment in a brief worksheet, but I can give you the basics of the number-crunching mechanics that may get you into the general vicinity--I can also point out some anomalies in valuation that can take you right out of it. Since few of these exceptions are easily understood or straightforward to evaluate, I will simply note them and encourage you to seek further advice if they exist in your facility.

It should also be noted a true appraisal takes an in-depth look at value, not only based on income, but from a cost and a market-sales basis. The cost-basis method looks at the price of replacing the facility in the particular market. The market-sales approach compares the values actually achieved in the market by similar facilities in recent sales.

Without reconciling the values from each of these methods, one cannot be sure the right value for the property has been identified. It is a complicated process requiring expertise and experience of a professional active in the business. Regardless of your need for the information, shortcuts to developing the right value can lead you to erroneous conclusions. As you follow the steps outlined in this article, you must be aware the answer number-crunching provides is merely an estimate of potential value and may be subject to a wide range in actual figures.

With all of the caveats stated and the exceptions to be noted hereafter, the following exercise is designed to show you how cash flow largely determines the value of a facility and the potential sensitivity of value to various operating results. As you work through the numbers, try changing some--such as dropping rates 5 percent or occupancy 7 percent, or raising real estate taxes by 20 percent--and see what happens to the values. You will learn why good operations are often the most important factor in creating value. It is important to remember a buyer determines price and is really buying income, not "bricks and sticks." The iron rule of value is, "If there is no income, there is no value; if there is less income, there is less value."

The "worksheet" provided at the end of this article is where you will write all numbers and develop a value range; but first you have to determine where you will get the numbers and how to use them. A good place is your most recent tax return or your last 12 months of operating statements. With this information in hand, you are ready to begin your investigation and fill in the worksheet, carefully reading the admonitions in the instructions.

Rental Income

Since self-storage is a seasonal business, you must consider a full 12 months of actual business rather than extrapolating the best three. An appraiser would also look at the trend over the last few years to see if it is declining and, if so, might adjust the final price or capitalization rate. If there is a significant vacancy--say more than 15 percent of potential rents--there may also be an adjustment.

Very few appraisers will count revenues in excess of 90 percent of potential rents, except in very unusual circumstances. When evaluating vacancies, it is very important to compare the actual rent received to the potential and not just the physical occupancy. It is very possible to be 92 percent leased physically and only 80 percent occupied economically. If there are many (or even one) new facilities nearby that are about to open or in lease-up, all bets are off until it is very clear rates and occupancies will remain stable. This is a good place to test the sensitivities by changing the revenue to reflect the potential competition.

Miscellaneous Income

This is the catch-all category for late fees, net box sales, truck-rental commissions, and lock and insurance sales. If this number is more than 10 percent of the rental income, it is possible a different valuation may be required to properly evaluate this source. As the amount grows larger, it may represent "another business," and not miscellaneous income. Such business income is usually valued much lower than real estate income, and is often not counted by appraisers for loan purposes.

Operating Expenses

It is considered a rule of thumb that operating expenses run between 30 percent and 40 percent, with many in the 35 percent range. If your project falls out of this range, further analysis may be required. The following items describe the expense categories in more detail:

Real Estate Taxes. This looks simple, but it really isn't, because real estate taxes can change dramatically if the property is reassessed. Properties are usually reassessed at time of sale, often resulting in a higher tax based on the new price. A buyer will often evaluate the property based on the "new potential" taxes rather than the actual, which will cause the price he is willing to pay to be lower. Additionally, some taxing jurisdictions may reassess every three to five years, so you must figure out where you are in this cycle and adjust accordingly. If, at the end of this exercise, you find the computed value range greatly exceeds the value shown on the tax bill, it is a good indication you may have a problem with increased real estate taxes and, thus, a lower value.

Salaries and Benefits. This is where salaries, fringe benefits and employee bonuses are accumulated. If someone works on site unpaid--including yourself--calculate what it would cost to replace this person and add it to the category. These numbers will vary significantly based on facility size and locale. Skip this last step only if you are willing to stay working on the project for free, forever. Don't include excessive benefits, such as generous pension plans, auto leases, silver-plated medical plans or key-man life-insurance policies.

Insurance. This category should include all costs for property and liability insurance. If you believe you will be receiving a significant cost increase, use the larger number.

Utilities. This category is relatively straightforward. Include costs for electricity, gas, fuel, oil and water.

Maintenance and Repairs. This category should include painting, door repairs, asphalt repairs, structural and roof repairs, and other things routinely repaired during the course of the year. Snow removal and landscaping maintenance may also be put in this category, as well as other routine maintenance contracts such as HVAC or pest control. If you have made major capital replacements or additions, delete them. This may include things such as a new gate, software, roof replacement, major landscaping or fence replacements. The general rule is if your accountant requires you to capitalize the expenditure, do not include it here. If your property has excessive deferred maintenance, an adjustment will be deducted in the final valuation to compensate for these items.

Capital Reserves. To account for these capital items, an artificial reserve is usually included in the computation of 10 to 15 cents per square foot. This is not an actual expense that will show up on your statement, but rather a number you should compute and deduct here.

Management Fees. If you pay a management fee to a third party, include it in this category. If you don't, you should add a management fee to your expenses of between 3 percent and 6 percent of gross revenue depending on the size and location of your facilities. This additional expense is necessary because value is based on investment returns and must include all management costs for the investment.

Marketing and Advertising. This category includes Yellow Pages, radio, TV, newspaper and Internet advertising.

Office Expenses. This category includes telephone services, supplies, software repairs and fees, bank fees, and other miscellaneous office expenses. Operating and business licenses can also be entered in this category.

Miscellaneous. This is the category where other necessary but minor expenses are included. Don't include your convention, travel or other personal charges, such as lunches or massages.

Depreciation. Do not include depreciation. Depreciation is not included by definition. For a detailed explanation as to why, read the article at www.selfstorage.com/argus/articles/valuation_0203.pdf.

Interest. Do not include interest, as it is not a charge against operating income. However, if you have a loan and it has a prepayment penalty, lock in or yield-maintenance requirement, see your appraiser or broker, as these loans may affect value and marketability significantly. The devil is in the details with regard to loans with these provisions, and they must be reviewed very carefully to determine the nature and magnitude of the impact.

Land and Building Lease Payments. Land and building leases can negatively impact value. Because the terms vary as to rent, length of term and other important clauses, any generalization is inappropriate, and you should confer with a highly qualified appraiser or broker to determine the significance of the lease. Unusual easements on the land can also have a major impact on value, as can nonconforming zoning, flood planes or environmental concerns. Each of these issues deserve very careful analysis and may impact the values, negating the ranges contemplated in these calculations.

Net Operating Income

After subtracting operating expenses from revenues, you have what is known as net operating income (NOI). This is not cash flow, as it is sometimes erroneously called. Cash flow is NOI minus debt service (both principle and interest).

Real estate is often valued by a process of capitalizing the NOI at what is called a capitalization rate. The capitalization rate, or cap rate, is the approximate rate an investor would receive without a loan on the property. (For a fuller discussion of cap rates, you can read the article at www.selfstorage.com/argus/articles/caprates.htm). Since this is a complicated subject, I will stick to the math. Suffice it to say great properties in great locations have lower cap rates and higher prices, while less-desirable properties have higher cap rates and lower prices. Most properties sell between a 9.25 and an 11.0 cap rate.

For our example, we will use a 9.5 cap rate and an 11.0 cap rate, which will define the range for about 80 percent to 90 percent of all facilities. To find the estimated value, divide the NOI by .095 and .11. The resulting numbers will give you an approximate range of value. If your NOI is $251,000, the range of value may be between $2,642,000 and $2,400,000.

Remember, this only applies if all of your assumptions are correct and there are none of the special considerations discussed in this article. You should never price a property based on this analysis, but confer with an appraiser or experienced broker. You may be too low and miss a profit, or too high and not make a sale. Use these value ranges as a general planning tool only.

The ultimate value may be influenced by many other factors beyond the scope of this exercise, such as extra land, excessive overbuilding, deferred maintenance or a changing location preference such as a new freeway, to name a few. Knowing the math mechanics of value will be useful when talking with a valuation expert; but in the end, as your science teacher said, this may not be something to try alone at home. ­

Michael L. McCune has been actively involved in commercial real estate throughout the United States for more than 20 years. Since 1984, he has been owner and president of Argus Real Estate Inc., a real estate consulting, brokerage and development company based in Denver. In January 1994, he created the Argus Self Storage Real Estate Network, now the nation's largest network of independent commercial real estate brokers dedicated to the buying and selling of self-storage facilities. For more information, call 800.55.STORE or visit www.selfstorage.com.

Valuation Worksheet

Revenues

Rental Income $____________

Miscellaneous Income $____________

Total Revenues $____________

Operating Expenses

Real Estate Taxes $____________

Salaries and Benefits $____________

Insurance $____________

Utilities $____________

Maintenance and Repairs $____________

Capital Reserves $____________

Management Fees $____________

Marketing and Advertising $____________

Office Expenses $____________

Miscellaneous $____________

Depreciation N/A

Interest N/A

Total Expenses $____________

Net Operating Income (NOI) $____________

Value-Range Computation

9.5 Cap Rate: Divide NOI by .095 $____________

11.0 Cap Rate: Divide NOI by .11 $____________

90 Days and Counting: The Pre-Grand Opening--By now, you have sent out at least a dozen press releases covering everything from the ground-breaking to the hiring of your management company. Hopefully, several of them were published, and the general public knows you're on the way to your grand opening.

Before the opening, you establish contacts at the local chamber of commerce and court the local "dignitaries." You have met the mayor and all council members. You are on a first-name basis with the CEO of your bank and all of its officers. You know their golf handicaps and which scotch they drink. All brochures have been designed and are at the printer. You have ordered shirts and uniforms for staff and giveaways. Your coffee mugs have been delivered, and you are ready to order the on-site sign packages.

60 Days and Counting: Grand-Opening Jitters--Invitations to the grand opening have been sent and you have confirmed the mayor and bank CEO will be attending. The printed napkins are due to arrive next week, and the caterer has reviewed the menu with you at least twice. The bartender is on board, and you have made certain the servers are dressed in white shirts, black ties and vests.

You have ordered the on-site management software, and the computer is scheduled to be delivered in two weeks. The security folks have a set of plans and are setting up the door table, and you are making last-minute revisions to the security system. The office has been roughed out, and you can plainly see you are very short on electrical outlets. The tile you ordered has been matched to the countertops, and you are ordering the chairs and lobby furniture.

The management company has made an offer to the on-site managers and is asking you when the apartment will be ready. You have upgraded the appliance package from the builder and are having last-minute thoughts about carpet colors. The general contractor is now meeting with you twice a week to review change orders and update you on the progress of door and hallway installation. Large trucks with pallets of roll-up doors want to know where to leave their loads, and you are making sure the security company has the equipment ready to ship.

30 Days and Counting: The Tension Mounts--Your on-site manager is bugging you about having enough coffee mugs, and he needs more "hello" packages. The phone is ringing at the call center with early reservations, and you are conducting hard-hat tours with commercial customers as they select their spaces. You have placed orders with the Val-Pak or Coupon Clipper, and they are nearly ready to make a drop mailing. You have confirmed with the contractor that things are on track, and you are now meeting three times a week to go over last-minute details.

You have the job superintendent's cell-phone number memorized, and you know his kids' names and what kind of dog he has. You're nervous when he says his golf game is improving, because you think the building cannot possibly be ready in time. You have had at least three flat tires from the screws left in the driveways, and the construction dumpster is overflowing, no matter how many times it gets emptied.

You are starting to receive RSVPs from the dignitaries, and the editor at the local newspaper knows you by first name. The caterer has received his second deposit, and you are nervous about having enough food.

The feasibility consultant has called you with good news and bad news. Rates are up since the study was done a year ago, but occupancy at the other new facility in town is stuck at 70 percent. You are trying to not get nervous that he is offering his second month for free, and you are calling the software vendor to change prices for the initial set-up.

15 Days and Counting: Everyone Says You Are on Track, Yet You Are Certain There Is No Way Everything Will Be Ready--The sod and trees for the landscaping are at the nursery, which is waiting for it to stop raining so it can plant. You are certain it will rain on the day of the opening, and you are pricing a large tent for the parking lot, just in case. The driveway has received its last coat, and you cannot figure out why the parking spaces have not been striped. You are upset because the contractor has not swept the floors, and you just know the hallways will not get sealed in time.

Your managers have already started to move their things in, and the contractor says you have a temporary certificate of occupancy for part of the building. You resist temptation to start moving tenants in because the alarm guys say they will shoot you if you do. The computer is in a corner of the office waiting for the floor covering to be laid, and the security guys are starting to test individual door alarms.

You have ordered all of the office supplies, and the box and retail supplies are stacked inside units. The golf cart has its first flat tire, and there are scuff marks on the seat. You receive your first call from a direct-mail campaign and are sad because they need the space tomorrow and they will have to go to your competitor.

7 Days and Counting: You Are Ready for a Second Walk-Through With the Contractor and Cannot Understand Why Many Items From the First Remain Open--The rain has stopped, and you are so nervous sometimes you cannot remember the password to get into the computer. The manager is already starting to talk about a raise, and your certificate of occupancy has been held up by the fire department because the alarm panel did not ring through properly.

Your contractor assures you the elevator inspector will be here "tomorrow," and the 35 doors that do not open or stay open are no big deal. You want to shoot somebody when he says the sealer for the hallways will take an extra day to dry, and only half the units have numbers on the doors. Amazingly, there have been no flat tires in three days. The asphalt has been striped, and if the blinds for the office would arrive, you would be all set.

The manager's best friend has come over to see his new digs and you are furious because he smoked in the apartment. There is a stain on the carpet from move-in, and the dishwasher is leaking. The good news is you have 25 signed leases, and you are ready for the first tenant to move in. Your website goes down, and you only find out because somebody tried to reserve a unit online and had to call instead. There are only 30 alarms that do not work, but only two security guys on site. There is no way, no how, this mess will be cleaned up in time.

The radio deejay doing the live remote has come down with laryngitis, and he assures you he "will be as good as new in a week or so." Somebody has already stolen the digital VCR for the security system, and you remind the security company you have not signed off on the delivery yet. The mayor's wife is ready to deliver her baby, and the mayor has has not returned any of your 25 phone calls. His secretary assures you the assistant mayor is very photogenic, and he really has not lost that big pair of scissors they use for the ribbon cutting, he just cannot remember who used it last. (He also cannot get ahold of the mayor).

The car club that will be displaying its cars during the grand opening is sure it will have at least 20 cars on site and wants to know the size of the trophy you are presenting. You're pretty sure you told the manager to order a trophy... At least you have it in your notes that you were supposed to tell him to order a trophy...

There has never been a beer shortage in the history of Budweiser, and now they are talking about what will happen to Anhauser-Busch stock when the company is all out of beer. Of course, they co-sponsored the live remote, and you have an iron-clad contract to give away Budweiser exclusively at the opening.

Meanwhile, back at the office, the power will stay on for at least 30 minutes at a time before the circuit breaker trips. Since you elected to buy a state-of-the-art phone system that depends on continuous power (you saved $200 by not buying the extended-power back-up system), there are no messages, and the phone has not rung for days. (Did I mention the voicemail needs power to retain memory?)

The front window was broken when the neon sign for the office was delivered and, interestingly, the trucking company responsible has not answered any of your calls--but then neither has the glass company. The insurance company assures you the cost of the window will be about $5 more than your deductible. But not to worry, because at least now the mailman is actually delivering mail to your address. One of the first items you open is a notice from the city that it will be widening the street in front of your store.

Ah, life's little surprises...

RK Kliebenstein is the president of Coast-To-Coast Storage, a self-storage consultancy firm that can guide owners through the store-opening process. For more information, call 561.367.9241, ext. 81, or e-mail rk@askrk.com.

Maintenance Challenges

Refinishing doors with a protective coating is a sound alternative to repainting.

Sun, salt air, acid rain and other damaging elements take their toll on the paint on metal doors and buildings. Ultraviolet rays will eventually fade and chalk even the best paint. Salt air can oxidize and pit the metal, causing ugly corrosion. Acid rain can streak and ruin doors. Dirt and dust will settle and stick on chalky or oxidized doors. Metal doors and buildings can remain dull and dingy even after being cleaned.

Acid rain can wreak havoc on your metal doors and buildings, even if you are not in an area with refineries, factories or power plants. Acid-rain damage creates dark streaks on the metal that are permanently etched and cannot be removed. This damage cannot be reversed, but it can be prevented.

Dirt or grit in the door guides can gum up the mechanisms. With more commercial customers renting storage units, the doors may get more wear. If they do not have bearings, the steel-on-steel friction may cause excessive wear if maintenance is neglected.

The effects of acid rain on a standard metal door.

The original paint on metal buildings and roll-up doors is baked on in the factory. Many times, doors will get scratched when they are installed and the contractors will touch them up with matching paint. But paint that isn't baked on will oxidize and fade more quickly than the original, causing blotches to appear. Some swing doors come with nonbaked paint, causing them to fade faster than the surrounding roll-up doors. While some doors and buildings require little or low maintenance, there are some periodic procedures you can use to ensure they are better-looking, longer-lasting and well-working.

Fading and Chalking

Door and building manufacturers are constantly working to offer better paint finishes. Even though metal doors and buildings will eventually fade and chalk from sun exposure, the good news is there is still good paint under the chalk that can be refinished to look new again. If you clean the doors or metal buildings and don't seal or protect their surfaces, they will soon fade or chalk again.

Touch-up paint fades faster than the original paint baked on at the factory.

Some owners repaint their metal doors or buildings to brighten them. There are, however, problems with repainting the metal. Moisture can get between the original baked-on paint and the softer, newer layer, causing bubbling and peeling. Paint that is not baked on will also oxidize much faster than the original, bringing back the chalking and fading problem you tried to resolve.

Instead of using paint to brighten faded metal doors and buildings, refinishing with a high-quality protective coating is a good alternative. Once the surface is cleaned from chalk and other soiling agents, a good clearcoat can restore the doors' former appearance. Make sure the coating will bring back the original color; is easy to work with; will not crack, peel or discolor with exposure to the elements; and will protect from sun, salt air, acid rain, moisture and other damaging elements. A good protective coating will also make the doors much easier to keep clean by repelling dust and dirt. You want to choose a clearcoat that is nonflammable and able to flex with the roll-up door.

If your metal is already peeling or you want a color change, repainting is the only option. Make sure you have the surface properly prepared and use quality materials. If you are planning to slurry coat your property, have the refinishing or painting done first. In either case, the chalky oxidation will have to be removed and can cause stains if not washed off the slurry immediately.

Salt-Air Oxidation

The effects of salt corrosion on a standard metal door.

In areas close to the ocean or even by Salt Lake City, pay particular attention to the tops of doors--especially on buildings that don't get very much sun. Even if you are miles from salt water, you can get oxidation from fog. Rub your hand along your doors. If they are rough, you are feeling salt-air oxidation that can cause extreme corrosion and damage to your doors and buildings.

Similarly, if you use salt for snow and ice control, keep an eye on the bottom of your doors and metal buildings for corrosion. This decay needs to be stopped before it does major damage. Paint alone cannot stop rust or corrosion. Paint breathes and will allow moisture to penetrate, and rust can travel underneath or quickly penetrate back through. In areas where salt air is a problem, check your interior doors for corrosion as well, especially if your hallways are open. The moist salt air can settle on the doors and corrode the interior doors. A quality protective coating formulated to stop salt oxidation will halt additional damage.

Door Numbers

Door numbers will eventually fade and crack, creating a poor impression for potential tenants. When replacing numbers, use the highest-quality vinyl numbers possible in an easy-to-read, block style. Otherwise, you will be replacing your numbers more often.

Periodic Maintenance

When a unit is vacated, there are several procedures to ensure your doors remain in good working order:

• When you sweep out the unit, sweep any cobwebs and dirt out of the guides on the door. You may want to wipe them down with a rag to remove dirt that will interfere with the smooth operations of the door. Do not use grease or WD-40 on the guides, as it will attract dirt and grime and gum up the rollers.
• Check to make sure the door is securely screwed into the wall. The screws may have backed out after excessive use. Sometimes none of the screws are in place.
• Oil or lubricate the springs with a very light coat of oil to reduce friction and prevent rust. Check the tension and adjust according to the manufacturer's directions. Maintaining the spring tension and making sure they are balanced is critical. People who hurt their backs trying to raise doors that stick or open unevenly can file lawsuits.
• Check the pull cords, especially if they are on the outside, as they wear very quickly. Frayed cords do not give a well- maintained image. Nylon rope is very durable when used for pull cords, particularly in colder areas where routine winter maintenance (i.e., snowblowing) can damage them. The cord ends can be melted or singed so they won't fray.
• Inspect the unit for signs of leakage, and replace worn weather seals as necessary.
• If your doors are dented, dent tool kits are available that fit the doors of several manufacturers.
• If you must paint older doors, make sure to readjust the springs to compensate for the extra weight of the paint.

Building Maintenance

Metal buildings can be refinished. Stucco, wood or block buildings can be maintained by painting. Start by thoroughly cleaning the area to be painted. Paint won't stick to dirt, grease, grime or dust. If mildew is a problem, a bleach and water solution can be used to kill it. Always use quality materials.

Tenants tend to run into corners of buildings with moving trucks. Any broken corners should be repaired before painting. Any cracks in stucco should be filled with caulk or elastomeric paint. Broken or bent gutters, metal trim or downspouts can be replaced, which will not only enhance the look of the facility but increase the life of the roof. Broken gutters can contribute to roof problems by allowing water to pool on roof surfaces. Not only is water itself detrimental, but its weight can be a serious problem.

Also pay attention to your signage, gates and fencing. First impressions are extremely important. If you have rusty gates and faded signs, what impression are you giving about the rest of your property? Painting your curbs and bollards can also make a huge difference in the overall appearance of your facility.

Roof Maintenance

The best preventive maintenance one can do is perform quarterly or semi-annual inspections to identify and solve problems as they occur. Roofs get more abuse from the elements than any other part of the building, and preventive maintenance is a key element to saving money by providing a longer service life.

• Clean all debris from the surface of the roof. This includes debris that has gathered behind HVAC units, pipes and pitch pans, and any other roof penetrations. Debris has a tendency to hold water, and water will expedite roof deterioration.
• Make sure water does not pool on your roof. This adds to the weight of the roof and can cause major problems.

The appearance and smooth operation of your facility projects your image to the public. Maintenance does not cost you money, it makes you money, and keeps your customers and employees happy. Preventive maintenance is a service to your customers and is not an option when it comes to maintaining a profit.

Teresa Sedmak is the president of Everbrite Inc., which manufactures and markets Everbrite Protective Coating, and Pacific Pride Products Inc., the company's contracting division. She is also a licensed painting contractor with extensive experience and knowledge of protective coatings. For more information, visit www.renewstorage.com or www.everbritecontractor.com. Call 800.897.9659; e-mail tsedmak@everbrite.net.

Construction Corner is a Q&A column committed to answering reader-submitted questions regarding construction and development. Inquiries may be sent to construction@ministorage.com.

Q: My husband and I are thinking about purchasing some land to build our first self-storage facility. The area I live in is not very populated, and there are many open spaces for sale. What would you recommend as an economical building layout? Should we build several out buildings or one, large multistory facility that is climate-controlled? Space is not the issue; we just want to be able to offer our tenants the best possible location for their treasures.
--Christina in Lake Havasu, Ariz.

A: If you have the space, "bunker"-style buildings would probably be the preferred construction for your facility. In your climate, you don't have to worry about extreme snow and fluctuating weather conditions. Most tenants like the convenience of being able to drive up to their units. In addition, you could add breezeways at intervals in your out buildings to create low-cost interior units. The overall expense of running a facility like this is considerably less than a climate-controlled facility. Before you make a decision, though, check to see what your competition is doing, how it is working for them, and what you can do to better to grab more tenants.

Q: I am interested in installing three or four cameras on one of my buildings, but there is no easy way to get conduit from the office to this building. I do have an underground 1/2-inch conduit from the office to the building, but could not fit enough coax wiring through it. Do you know of a solution that would work other than wireless?
--Gordon in Cocoa Beach, Fla.

A: This is a common problem older facilities face when they wish to upgrade security or other portions of their site. There are products that can use a single CAT-5 cable and control up to four cameras (one camera per pair). This is made possible by using a pair of transceivers and video baluns.

A receiver is connected in the office via coax cable from your digital video recorder or multiplexer to a single CAT-5 cable. That cable is run to the detached building, where it is connected into a powered transmitter with four RJ-45 ports. Baluns are then connected between the individual cameras and the transmitter. Caveat emptor--I have seen mixed success with this solution. It is essential to keep your camera runs under 1000 feet, and the CAT-5 is inherently more susceptible to interference than coax. It would be less expensive, however, than trenching and running new conduit for coax.

Tony Gardner is a licensed contractor and installation manager for QuikStor, a provider of self-storage security and software since 1987. For more information, visit www.quikstor.com.

How would you like to pay a flat fee of less than $10 a year and get a steady flow of self-storage prospects to your website? Using websites to promote your facility is all the rage these days but, frequently, it costs hundreds if not thousands of dollars to get your site ranked high in the search engines. This is no doubt important, but it's an elusive goal. Search engines change their criteria often, and getting and keeping your site at or near the top is difficult to do. Here is a strategy any storage operator can use to get traffic to his site for a small pittance of what he'd have to pay to get search-engine optimization folks to help him.

Let's say you own Los Angeles Self Storage. Go to the pay-per- click search engine Overture (www.overture.com) and click on the box marked "Advertiser Center." This will take you to a screen where you will see a number of options from which to choose. Click the "Tools" button. When you do so, you'll see something on the right side of the page called the "Search Suggestion Tool." Click on that next. A separate box will pop up on your screen. Type in "Los Angeles Self Storage" and see what you get. The number you see will vary from month to month, but as of this writing, the number is 122.

What does this number mean? It means that in the last month, 122 people entered the key words "Los Angeles Self Storage" into the Overture search engine. A year ago, Overture saw 5 percent of all Internet traffic. It now gets much more. I haven't seen specific figures, but let's assume that number is up to 20 percent of all web searches. This would mean approximately 600 people entered the key words "Los Angeles Self Storage" into search engines last month.

This is good information. But these days, many people use their browsers as search engines. They go to Internet Explorer or a similar browser and type in a domain name using their key words, expecting a page to exist. In this example, they would attempt to access www.losangelesselfstorage.com. So it stands to reason that if you own that domain name, it is highly likely people will find you. For less than $10--the cost of registering the domain name--you get a full year's worth of what I refer to as "type-in traffic."

Most of you already have a website for your facility. Now all you have to do is forward all traffic from the new registered domain to the original site. This can be done for free at ultracheapdomains.com or, in most cases, whichever domain registrar you choose. If you assume each customer is worth about $300, all you have to do is generate one new customer each year using this strategy to get a substantial return on your investment.

Everyone who reads this column should immediately register their city's name with the terms "self storage" or "storage" after it. If you live in Portland, for example, register www.portlandselfstorage.com or www.portlandstorage.com. For many of you, the domain names will be taken, but the concept is critical to understand so you can use it in other ways to promote your business. For example, let's say your Portland facility offers RV storage. You would check to see if you can register www.portlandrvstorage.com. If you go to Overture and look, you'll see a number of searches in which people put in the name of their city and the words "RV storage" afterward.

Do the number of searches that show up in Overture ensure you'll get a similar number of type-in traffic hits? Not necessarily. In fact, it will probably be much lower. But given that the number of units you need to rent to earn a decent payback is a mere one, it makes an investment of $10 or less well worth it.

The next question is whether it makes sense to reserve the dot-net, dot-org or other web-address designations. The answer is no. Do not reserve any web addresses other than dot-coms. If you already have a domain name with a dot-net address, that's fine; it just won't be helpful from the standpoint of type-in traffic--the reason being that most browsers default to dot-com, not any of the other addresses.

How many web addresses should you have? It depends. If they are generating traffic, keep them; otherwise, get rid of them. It's worth the less than $10 investment to test a number of different domain names for a year at a time. If you reserved 30 different domain names for a year, it would cost you less than $300, which is still only the average cost of one annual rental.

All of this assumes you have the ability to track your traffic. This is something most of you will have to talk to your webmasters about. Tracking this data will allow you to find out how many people got to your site using the type-in traffic methodology and whether it's worthwhile to continue with the various domain names you reserved. No matter what domain you use, you'll be able to have its traffic forwarded to your actual site. This online tactic is perfect for storage owners and operators looking to get the maximum bang for their marketing dollar. Where else can you spend less than $10, get just one customer in a year, and have it be worth more than $300?

Don't get me wrong--this method of driving traffic to your site should not be the only one you use; but it should be part of your overall online marketing strategy. Everything I have discussed here assumes that when people eventually get to your site, you have it designed in such a way to get the greatest number of people to call or visit your facility. Make sure you don't waste traffic by sending people to a site that doesn't accomplish your end goal.

In short, search the Overture suggestion tool for great names that relate to your city. Once you find some, reserve them and have them forwarded to your main site. Keep them for a year and track the results. If they pull good traffic, keep them; if not, you can always exchange them for others.

Fred Gleeck is a self-storage profit-maximization consultant who helps owners/operators during all phases of the business, from feasibility studies to creating an ongoing marketing plan. Mr. Gleeck is the author of Secrets of Self Storage Marketing Success--Revealed! as well as the producer of professional training videos on self-storage marketing. To receive a copy of his Seven-Day Self-Storage Marketing Course and storage marketing tips, send an e-mail to tips@self storagesuccess.com. For more information, call 800.FGLEECK; e-mail fgleeck@aol.com.

When I was two years old, my parents purchased a lime-green Dodge Dart with dark-green interior. It had a beautifully smooth bench seat in the back on which I would slide from one end to the other every time we went around a sharp turn. It had a black hard top and sweet white-wall tires. It smelled like vinyl.

My father loved this car, and babied it, and carried on over it. He washed it at least twice a week and was meticulous about its service schedule. In fact, he took such amazing care with this vehicle, it was still in fantastic working condition when I tested for my driver's license at the tender age of 16. I drove that car until I graduated from college--no lie. I was none too thrilled with having to drive the "snot-green boat-mobile." But it got me from point A to point B, it was free, and damn if it wasn't the center of much attention.

Now, had my father been more lax with his vehicle maintenance, I might have been tooling around in a Chevy Cavalier or Ford Taurus. OK, maybe that's not glamorous either, but the point is, care and attention earned my family a car that lasted more than 20 years--much to my chagrin. And I learned a great deal about taking pride in ownership.

This is a good lesson for owners of self-storage, whose facilities project a message to the public on a daily basis. Your curb appeal, building exteriors, office environment, etc., communicate information to prospects about your business. What would you like them to say?

A well-maintained, clean and inviting property tells prospects you are conscientious and organized. Care for your property translates into care for their goods. On the other hand, cracked and broken pavement, chalky and faded doors, soiled carpeting and a foul restroom convey an apathy and disregard for tenants and prospects. If you treat your buildings with neglect, why would anyone believe you treat your customers differently?

In this issue, you'll find articles on ways to maintain building exteriors and doors, as well as the proper way to refurbish a roof with elastomeric coatings. ISS has also provided a series of handy maintenance checklists to help keep managers on track, from day-to-day practices to larger, less-frequent tasks. Maintenance is truly an area in which an ounce of prevention equals a pound of cure; and there is no better way to sell prospects on your facility than to present them an attractive, well-preserved and notable site.

Happy upkeep,

Teri L. Lanza
Editorial Director
tlanza@vpico.com

"Prevention is better than cure," or "If it ain't broke, don't fix it." Which do you believe? I suggest both are equally correct and, at the same time, incorrect. Paying for regular maintenance vs. paying for replacement is often a dilemma.

A regular program of prevention rather than cure will generally be cheaper than repair or even replacement. It will, however, mean spending money before an item actually fails. And, as a lot of self-storage facility managers could probably attest to, getting money from employers to fix something not yet broken can be like getting the proverbial blood from a stone. On the other hand, I have seen failures of an item due to overzealous maintenance.

Generally, every part of a self-storage facility requires maintenance, most by specialist contractors at prescribed times. For example, electrical equipment, including smoke-detection equipment, security systems, lifts, etc., requires regular testing and certification. Most of these systems are intelligent enough to tell you if they are experiencing a fault and require repair.

Mechanical items seem to need constant adjusting, tightening or loosening. Probably the biggest item here will be doors, and self-storage facilities more than likely have hundreds. However, facility managers don't open unit doors as frequently as customers.

Managers are only made aware of the problem when a customer complains his door is not functioning properly. This limits the opportunity of preventing a problem before it occurs. A good inspection of any unit after it is vacated could prevent doors from becoming a problem. In fact, it is a good plan to perform a general inspection of the internal condition of a unit and look for damage to partitions, floors and ceilings. It would be nice to think customers care for their self-storage units as if they were their own, but the reality is far from that.

Although there are some maintenance issues that are quickly carried out, roof maintenance can easily be forgotten—with catastrophic consequences. When operators have a problem with the roof, I can almost guarantee the end result will be water penetration. Other than fire, leaks are a self-storage manager's worst nightmare. Although there are many causes of water penetration, the most common yet often overlooked is a blocked gutter forcing water to overflow into the building. The cure is simple--regular cleaning of the gutters, especially throughout autumn. Since health and safety is always an issue, be sure to hire a competent contractor to advise a safe working method.

 A lot of potential maintenance problems can be avoided if, during design, more attention is paid to the quality of materials. During the design of any self-storage facility, a balance must be achieved between cost and the quality of resources. It is pointless to design a fabulous, state-of-the-art self-storage facility with the highest-quality longest-lasting products if the final cost prohibits its construction. At the same time, there is no point in building a cheap facility that needs rebuilding every couple of years. You will get what you pay for. As the saying goes, "If you pay peanuts, you will get monkeys."

Graham Lomax is a founding director of Rabco Europe Ltd., based in Essex, England. Rabco Europe opened in August 2001 to expand The Rabco Corp.'s Orlando, Fla.-based operation into the European market. For more information, visit www.rabcoeurope.com.

Would you like to make it easier for prospective customers to find your website? Would you like to be found when people looking for businesses like yours use a tool generating 2 million to 3 million searches each day? If you answered "yes" to either of these questions, natural language navigation (NLN) keywords are for you.

NLN is one of the easiest search methods available to Internet surfers, allowing them to conduct a search from the address bar of their browsers. A person can now type keywords instead of a long web address (URL). For example, once he has upgraded his browser, he can type "keyword company" instead of the long, cumbersome address, http://www.keywordcompany.com. Wouldn't it be nice to be able to tell a prospective client to simply type your company's name instead of a complete web address when he looks for more information or attempts to contact you?

How does it work?

Keywords are words and phrases a business licenses that allow consumers to connect instantly via the Internet with the products or services it provides. Keywords are intuitive, familiar words and phrases, such as "company," "product," "brand" or even a personal name. Keywords can include punctuation and spaces.

By using NLN, customers can type whatever they are searching for directly into the browser bar, in the same way they speak and think. The concept is based on the idea that we should ask for what we want and get what we ask for in return. Prospects simply type your keywords directly into the address bar of their browsers and go directly to your website. NLN eases the search for information on the Internet by means of concise words. This tool simplifies Internet navigation, enabling immediate connection between users and businesses.

What does this mean to you?

You can virtually eliminate your competition when people are looking for you or your services. While search-engine campaigns are still a must for making people aware of your website and driving traffic to it, NLN can ensure yours is the only site found when searched by a particular keyword or phrase.

For example, if you were to type the phrase "Yellow Pages advertising" into the search engine Google, your search results would exceed 900,000. But if a surfer who has upgraded his browser with NLN enters the same phrase into his address bar, only one site, www.michaelswilder.com, would be retrieved. With NLN, once you license a word or phrase, it is yours until you decide to relinquish it. None of your competitors can have the word you have licensed, and your site will be the only one found when your word or phrase is searched.

Who else is using it?

There are currently 2 million to 3 million searches a day made direct from an address bar, and more than 6.8 million users have upgraded their browses so they can use the NLN technology. More than 9,000 business and consumers have licensed words so their customers can find them easier and faster. Companies such as Pizza Hut, MasterCard, Perrier and The Home Depot have already licensed words, and more words are being licensed daily.

How do I upgrade my browser?

Just visit www.getyourkeywords.com and click on the "Download NLN Now" icon in the upper-right corner. Once the upgrade is complete, close your browser and reopen it. You will have joined the other 6.8 million people who have downloaded the software and are searching the Internet with greater efficiency.

Visit www.getyourkeywords.com and get your words before they are gone! For more information, contact The Michaels/Wilder Group at 800.423.6468.

Award Winning sculptor R. David Mattiza

Once a key player in the tight-knit self-storage industry, R. David Mattiza now spends his days elbow-deep in clay, sculpting renowned works of art.

Mattiza spent 17 years in the self-storage business, designing and building facilities for big-name companies such as Mako Steel Inc. and Rigid Building Systems. While self-storage was his day job, his true passion was sculpting. He had attended the Banff School of Fine Arts in Banff, Alberta, Canada, and began sculpting Terra Cotta during the mid-1980s.

When Mattiza and his wife, Theresa, moved to Sedona, Ariz., a new-age Mecca for artists and spiritual types, five years ago, he found the courage and calling to pursue a new life. It was there he met John Soderberg, "one of the best monumental bronzists." Mattiza spent long hours working at Soderberg's studio at night. "That was really a transition," he says. "I realized I had done everything I could do in the self-storage industry. It was time to move on to the arts."

Mattiza spent three years learning and working with Soderberg before he and Theresa were called home to Texas for family reasons. "He showed me you can make a living at this," he says. Mattiza opened Epiphany Studio in the Great Southwest Equestrian Center in Katy, Texas. With Theresa running the business side, he was able to let his artistic talents flow.

His first piece was "Wintercount," a life-size bronze sculpture of a Native American. A bronze such as this can take six to eight months to sculpt and another 10 to 12 months to complete, with approximately 65 steps and nine major processes. Mike Brannon, owner of Mako Steel, and Caesar Wright, vice president, had such faith in Mattiza's sculpting pursuits they underwrote the first bronzing of the piece, as well as those of "Bridger" and "Life's Gifts."

Mattiza does a limited edition of each bronze sculpture. The size and difficulty determines how many are replicated. "With a life-size piece, there will probably not be more than 10," Mattiza says. "For a smaller piece--2-foot or 3-foot--I may make up to 20." Each one is marked and copyrighted. Of course, each replication may be slightly different. "The difference will be strictly in the coloring of them. The casting should be the same each time. But with coloring, each one will take on its own different look," Mattiza says.

Native American and Southwestern cultures are favorite subjects of Mattiza's. In addition to "Wintercount," Mattiza has produced several other pieces honoring the rich Native American culture. But it is his reflection on America's most recent tragedy--September 11--that has gained the 52-year-old artist the most attention.

Mattiza was home when news of the terrorist attacks began trickling in. After watching the second plane slam into the south tower of the World Trade Center, Mattiza headed to his studio. With one eye on the TV and another on a mound of clay, his hands began to create what would become a very important piece--professionally and personally.

"As an artist, the only way I knew how to cope with what was going on was to grab a piece of clay and start working," he recalls. With no design in mind, Mattiza's emotions poured into the piece. "Normally, I have some idea of where I'm going with a piece," he says. "With this one, I was strictly watching and working. The next thing I know, the piece had been completed in less than a couple of weeks." Titled "The Day America Cried," the sculpture features two of America's most recognized symbols: the bald eagle wrapped in an American flag.

The inspired piece has brought national recognition for the artist. It was selected to be placed in The Pentagon in Washington, D.C., to honor the many lives lost there as well as New York and Pennsylvania during the terrorist attacks. "The Day America Cried" was also placed in the George Bush Presidential Library and Museum located on the west campus of Texas A&M University. Another sculpture was sent to President George W. Bush to display in his home.

Signature live-size bronze by Mattiza: "Wintercount."

Although Mattiza has had many successes, the appreciation and heartfelt emotions he has garnered with the 9-11 sculpture stands out. "This is a good-bad piece. I wish I would of never had to do this piece, but it has gotten me a lot of recognition," he says. Mattiza also upped his standard limited-edition number to 100. All proceeds from the sculpture go to a Katy family who lost a family member working in Tower Two. The family, in turn, has created a scholarship fund that benefitted 20 children last year.

Mattiza has received other honors as well. He was awarded "Best of Show" in sculptures at the Bayou City Art Festival in Houston in the spring of 2002, where he had 18 pieces on display. Another piece, titled "The Guardian," was awarded a ribbon at the Woodlands Artfest in 2002. And his art has been displayed at different galleries, most recently the Thornwood Gallery in Houston.

In addition to working from the heart, Mattiza does commission work, most notably for Houston oil companies and Spindletop International, an organization that combines the charities of all the oil companies. Individual pieces run from $1,100 up to $30,000. A monumental piece can run $100,000.

With such success, Mattiza often wishes he'd made the career switch sooner. "I love it the minute I walk in the door to the minute I leave. It's a total reflection that is going on inside me. I can release anything that is happening--all my emotions are out there."

Even though Mattiza's self-storage days are behind him, the industry--and its people--still hold a place in his heart. "I loved the industry. I miss the industry and all my buds," he says. He still keeps in touch with former co-workers and even a few clients, some of whom have become collectors of his work. Still, there's no looking back for this sculptor. "As long as I'm able to keep doing this and feeling great about it, that's all I want to do."

For more information, visit www.thesculptor.com.   

How many self-storage facilities can boast openings with guest appearances by pop icons Marilyn Monroe, Arnold Schwarzenegger, Katherine Zeta-Jones, Lucille Ball, Dorothy Gale, Cleopatra, Charlie Chaplin and Fred Flintstone? Only one. On Wed., March 19, Conejo Valley's Hollywood Storage Center teamed with Aileen Stein Public Relations and the Thousand Oaks-Westlake Village Regional Chamber of Commerce to host a business mixer and grand opening unlike any seen before in the self-storage history.

Spoony Singh-Sundher is an entrepreneur at heart. According to his son, Jay Sundher, he's dabbled in several unusual ventures, including farms, and copper and gold mines. In 1965, he opened the Hollywood Wax Museum, and later, the Guinness World of Records Museum. After purchasing land in the now affluent area of Newbury Park, Calif., he took on the business of self-storage, opening the first phase of Thousand Oaks Self Storage--now Hollywood Storage Center--in 1982. His three sons worked as the construction crew.

"We barely knew how to hammer nails into pieces of wood," jokes Sundher, who runs the self-storage portion of the family business. His two brothers operate the museums.

While the valley has developed with upscale businesses and a prosperous resident profile in recent years, the area was deeply suburban when the facility originally opened. Regardless, the store was able to expand, and a second phase was added to the site in 1986. For phase three, Sundher wanted to change the direction of the facility entirely, playing off the Hollywood theme used by the family's other businesses and using cross marketing. "I wanted to get people's minds off of storage, because it's kind of a negative industry as far as how it is frequently used--for businesses downsizing, divorces, deaths in the family, etc.," he says.

To avoid causing any geographic confusion with the name, the $6.4 million facility uses its tag line--The Conejo's A-List Space--on all of its marketing collaterals. This opens possibilities for Hollywood-themed centers in other prime locations, regardless of their proximity to the actual metropolis.

Previews, Trailers, Promos!

Promotion of the March kick-off event, as well as the business as a whole, bordered on the extraordinary. Hollywood Storage Center has spared no expense to advertise its services to the local communities. It began with the creation of an enticing, fun environment for prospects that draws on the Hollywood theme.

"When customers come here, it's like entering a motion-picture lot," says Sundher. "We use Hollywood street names, and label the buildings as Stage 1, Stage 2, etc." The store lobby includes life-size figures of a "Seven Year Itch" Marilyn Monroe, the "Terminator" and Batman. And, of course, free popcorn is always available. "By making it fun, people want to come back. They go to their buddies and say, 'You've got to come with me to this storage center! You've got to see this place!' We're getting business that way. Referral business is really picking up," Sundher says. As an added perk, all tenants receive two free passes to the Hollywood museums.

Specific marketing tactics for the grand-opening event, aptly named "Hollywood Nights: A Wine-Tasting Affair," included:

• Fliers included in the chamber of commerce monthly mailing to 1,600 members.
• Postcard invitations to all chamber members.
• Postcard invitations to local media, corporate facility managers and other specific business contacts.
• Media coverage, including a press clip in local weekly newspaper.
• Personal calls to targeted members of the chamber member list.
• 60-second radio spots provided free by event sponsor 92.7 Lite FM.
• Post-event thank-you letters and tickets from both affiliated museums.

Sponsorships were solicited from local businesses, including Serendipity Cheesecakes, Westlake Village Florist, Epicure Catering, Balloon Designs by Jeanne, The Coffee Bean & Tea Leaf, Costume Alley, Lister Party Rentals, Wilshire Home Entertainment and Conejo Wine & Provision Co. To add to the excitement, attendees received a welcome package containing information and discounts for each of the facility's services as well as event sponsors. Every envelope contained a key to a locked unit in Hollywood's lobby containing a grand prize. A zydeco band provided entertainment, and a complete assortment of gourmet foods, desserts and beverages was provided.

Ancillary Services Play Leading Roles

Hollywood Storage Center offers more than traditional self-storage. It also provides Penske truck rental, fine-wine storage, vehicle storage, safety-deposit and high-security vault storage, records management, a "Studio Store" with boxes and packing supplies, packing and shipping services, and a business-service center. The facility supplies a conference room for business clients, as well as a gourmet kitchen for wine tastings and other events. It even has a playroom for children, converted from a 5-by-5 unit, in its lobby.

"The main reasons I included the ancillary businesses were, one, you get a higher return on your investment," says Sundher. "But the other reason was, depending on the density and demographics of an area, they expand your target market. So, now, in addition to Thousand Oaks and Newbury Park, I reach out to Malibu and Westlake and these different areas. People come in for specialty services at their convenience. I now have farther-reaching abilities as far as storage customers are concerned. In essence, you're breaking the location barrier, because you're luring them with specialty service."

Each facet of the business is marketed distinctly, with separate business cards and other promotional materials. Each is even given its own memorable name--Fortress Records Management, Hollywood & Wine, and The Vault. By advertising these services independently, Hollywood Storage Center can uniquely identify and address target markets' needs. And this approach opens opportunities for cool and fun attention-grabbers. For example, the door to The Vault is designed to look just like the heavy steel door to a bank vault. The wine-storage area is painted with murals of wine barrels.

Customers: The Real Stars

According to Sundher, the real stars of Hollywood Storage Center are its clients. He invests 100 percent into the careful training of his staff to best serve customers, using a finely tuned phone script, mystery-shopping services, and routine, one-on-one meetings with employees. "My employees know my manager and I mystery shop them, because we bring them into the office and listen to their tapes and teach them how to be better. I don't want them to be afraid of this process, but there are certain standards they must meet," Sundher says.

Sundher has devised his own particular phone script together with StorageWorks' Greg Call, an industry expert and consultant. Using the script, employees are expected to assess a customer's needs, ask whether he will need a rental truck, inquire about the need for boxes and packing materials, set up an appointment, find out where the caller learned of the facility, and obtain contact information--all while using the prospect's name at least three times. At the close of the call, they should ask, "Have I provided excellent service for you? Are there any other questions I can answer for you?" If a caller won't be visiting the facility within two days, he receives a full welcome package via mail.

"It's extremely important they get the phone script, that part of the process down," Sundher says. "Otherwise, all that advertising money you're spending is for naught. You've got to monitor it.

Dealing with the prospect visit is a whole different animal. Then, the employee gets up, greets the visitor, shakes his hand, takes him over to the menu board and explains all the different services we provide. Then he finds out what the customer needs. If it's a truck rental, we bring him over to the truck-rental area. If it's storage, we walk him over to the show units and size up his needs. We try to cross-market as many of the different services as we can. And we try to sell them in the office instead of running around in the golf cart. We train our staff to do it all."

On the weekends, the Hollywood staff drives a utility trailer around the facility to distribute free sodas and glasses of ice or, when it's cold outside, coffee. As a final convenience, the facility does not operate on a five-grid system, limited to 5-by-5s or 10-by-10s. It offers shallow units for easy viewing of contents, or others with extra-large doors. "I don't cram somebody into what we have available--I put them into what they need at the lowest cost. We've been very creative in our unit mix," Sundher says.

He disagrees the Hollywood theme is what makes his center so special. "No. 1 is the good service you get here and the good value--the peace of mind, the security, the staff who go above and beyond, and the services. Customers can do everything here at this one-stop shop."

Hollywood Storage Center is located at 3425 Old Conejo Road in Newbury Park, Calif. For more information, call 805.499.2700 or visit www.hollywoodstoragecenter.com.