4 Things You Must Do Before Holding a Self Storage Auction
Ask most self storage facility managers and they’ll tell you: The best storage auction is no storage auction at all. Unfortunately, when a tenant goes delinquent on their rent, it doesn’t always play out like that.If real life storage auctions matched reality television, every single unit would be filled with enough treasures to recoup the loss of unpaid rent and allow for a tidy profit on top of that. The truth is, a lot of storage auctions don’t even end up covering what a tenant owes. This means that in addition to taking time out of their day-to-day operations to put together an auction, many storage facility managers are left with no other choice but to contact a collection agency. If you’re about to host your first self storage auction or you’re tired of hosting auctions that take up way too much of your time, money and sanity, simplify the process by following these four steps.
Understand Your State’s Lien Laws
It is absolutely crucial that you make sure that you’re following correct protocol before going to auction. That’s right; we’re talking about lien laws. These vary from state-to-state, so be sure to read up on regulations where you live rather than following the advice of an industry friend in another market. Lien laws exist to protect both you and your tenant. One of the most important things to be aware of is the exact steps you need to take before going to auction. Typically, you’ll be required to contact the tenant several times before holding an auction. This includes phone communication and written communication. Some states may not recognize email as a form of written communication, so it’s often best to prioritize good old fashioned snail mail. If your situation is complicated by disconnected numbers, unanswered letters, a military tenant who is currently deployed or a tenant threatening to take you to small claims court, consider seeking help from a lawyer.
Remove Items That Contain Personal InformationSome of the most priceless items in a storage unit are only valuable to their owner. These include sentimental items like family photos but they also include financial and identification documents like tax returns and birth certificates. Before taking a storage unit to auction, it’s best to remove these things if possible. Additionally, remind anyone bidding on the storage unit that should they find any other personal effects, they can give them to you. If you’re able to contact the tenant to return them, do so. If not, hold the items somewhere secure for at least a month after which time you can shred any documents that contain personal information and recycle, donate or dispose of the rest properly.
Advertise EverywhereAdvertising a self storage auction isn’t just required (again, refer to your state’s lien laws); it’s a great idea. In addition to following any legal steps for announcing your auction, like sending a certified letter to the tenant, you should also advertise it through as many marketing channels as possible. Publish an advertisement in a local newspaper, but be sure to use free forms of advertising like Craigslist or some other online community forum for your neighborhood. You can also post about it on social media and target any communities in your town who might be interested, like college students who might be looking for used furniture. Lastly, print out flyers and post them in local coffee shops, grocery stores and anywhere else where they’re sure to be seen.
Make the Rules Clear
Before the auction, lay the ground rules for everyone in attendance. Be sure that those bidding are aware of things like the method of payment you’ll be able to receive, cleaning fees and taxes that will be added on and rules for the auction itself like how close they’ll be able to get to the unit and whether or not they’ll actually be able to see inside before bidding. Be clear on how much time the potential buyer will have to remove the contents from the storage unit. Most importantly, remind those who attend the auction to keep things civil. We’ve all seen Storage Wars, and while the drama certainly makes for great television, a real life storage auction is at its best when everyone involved is patient, polite and as committed to a positive outcome as you are.
Remember, the main goal of a self storage auction is to free up an occupied, unpaid for storage unit so that you can lease it to a tenant who will actually be able to pay the rent, so the sooner you’re able to do this—whether you have to enlist the help of a lawyer, an auctioneer or an industry colleague—the better.