Inside Self-Storage

DEC 2018

Inside Self-Storage (ISS) is an information source for industry owners, managers, developers and investors covering news, trends, facility operation, finance, real estate, construction, development, marketing, technology, insurance and legality.

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O ne of the greatest risks to owning a self-storage facility is employee theft. Not only can it result in loss of income, it can lead to an improper lien sale if the rent the customer paid is being pocketed instead of deposited into the business bank account. To minimize this risk, self-storage owners must get comfortable with regularly auditing their properties or outsourcing the task to someone who'll take responsibility for it. Audits aren't only important to detect theft but to prevent it, and to close the gaps in staff training. You should also audit to confirm your policies and procedures are followed, generate more money, and ensure the business runs smoothly. Factors to Theft Although employee theft can occur anytime, there are three factors that make it more common. They are motivation, rationalization and opportunity. Motivation occurs when financial pressure increases, causing a staff member to consider theft when he otherwise wouldn't. When bills are piling up, a spouse or child is sick, or someone in the family loses a job, he may consider stealing to make ends meet. This isn't to say that all employees will steal when these situations occur, but when motivation is present, the likelihood of theft increases. Rationalization is when an employee makes the theft make sense for him. If he's been employed by you for a long time and sees the amount of money deposited each month, he may feel entitled to his "fair share." People who steal will rationalize that the money belongs to them because they're working hard for it. They may also plan to pay it back or think you won't notice it's gone. You don't have much control over someone else's motivation or rationalization, but you can control the opportunity! This type of theft happens when regular audits aren't conducted. Even if your staff aren't stealing, they may be giving away more in discounted rent and waived fees than you'd like. It's much easier to have a customer stop yelling by waiving a $20 late fee than to explain why he has the fee and try to resolve the situation another way. If the policy on late fees isn't clear, your staff may think it's fine to waive it, but those fees add up. Conducting regular audits, reviewing reports and giving feedback to staff on their performance will help avoid theft and ensure employees do a better job. Most managers genuinely want to do a good job; they just aren't always trained in how. Basic Auditing How do you conduct an audit? I like to regularly check for "the big wins" and look at the smaller details in between. The biggest win in auditing a self-storage property is to compare the reality of the site with the information logged in your facility-management system. Here are some simple steps you can follow: First, print a unit map and a secondary report, such as a walk-through or rent-roll report. Then walk through the property and confirm the status of each physical unit matches what's on the report. If the system shows the unit as rented, it should have a tenant lock on the door. If there isn't a lock, you need to find out what happened. Did the tenant just move in or out? Did he forget the lock? Did he get robbed? If the report shows a unit as vacant, the space should be empty. Open it and check. Some operators put a green lock or tag on vacant units. If the space isn't empty, whose items are in there? How long have they been there? Who are they paying? If the unit is noted as delinquent, it should have an overlock on the door next to the tenant lock. Locking the tenant out of the gate isn't enough. If your manager isn't overlocking the unit, it could be a sign that he's pocketing the monthly rent and doesn't want to alert the tenant. Hands in the Cookie Jar Using audits to prevent and catch inside theft By Magen Smith 20 ISS I December 2018 www.insideselfstorage.com

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