The Storage Investor Show
Learn how to turn your cash into cash flow with self-storage and small bay industrial. If it has a roll-up door, The Storage Investor Show covers it. Your host, Kris Bennett, will ask the right questions to help you find, fund, and close your next deal. New episodes every Tuesday.
The Storage Investor Show
Terry Campbell's Shocking Truth About Storage Investing Risks
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DESCRIPTION
Terry Campbell shares valuable insights on the impact of property taxes, bad debt, and occupancy accuracy, while understanding the importance of adequate insurance coverage. Terry underscores the necessity of being prepared for unforeseen challenges, ensuring your investments remain protected against all odds.
ABOUT OUR GUEST
Terry Campbell is a 30-year veteran of the storage industry, having
held leadership roles at BETCO Self Storage, Live Oak Bank, and Copper Storage Management. As a facility owner and investor, he understands the challenges operators face. Terry is a founding member of the North Carolina Self-Storage Association and serves on the advisory board of Toy Storage Nation. A sought-after speaker, he shares expertise on risk management and self-storage operations.
https://www.linkedin.com/in/terry-campbell-619a199/
https://gojohnsoninsurance.com/
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NEWSLETTER
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Hey everybody, welcome to the Storage Investor Show. My guest today is Terry Campbell. He's with Johnson Insurance Services, but, guys, he's been in the business for nearly 30 years with roles at Betco, live Oak Bank and Copper Storage Management. I met Terry a while ago when I was at 10 Federal and he was at Live Oak Bank building that business over there. He's done a fantastic job. If you guys have ever heard of an SBA loan for self-storage investing, it's probably because Terry Campbell laid the path and the foundation for the industry to learn about SBA loans. So, terry, I'm happy to have you on the show, welcome.
Speaker 2:Thanks, Chris. I'm really excited to be here. It's good to see you again.
Speaker 1:Likewise, man, good to hear from you. Give us a little quick highlight of your experience in the industry. What first got you into the business roughly 30 years ago, and how has your experience evolved over this time?
Speaker 2:Sure, I'll try to make that as quick as I can.
Speaker 2:When we're recording this, we're literally days away from my 30th anniversary in this industry. For many years I was an AutoCAD drafter by trade in the architectural field and Betco had a need for someone who had some of my background but also to be able to do estimating. So I started there January 3rd of 95 and long story short, I grew up there. I mean literally in the industry and literally in my age, because I was 28 when I started there and I'm 58 now. So it's been a while. But I grew up there. I went through many positions. I learned so much about the industry, so much about the process of buildings, and when I left I had been Executive VP of Operations and process of buildings, and when I left I had been executive, vp of operations and VP of sales and marketing.
Speaker 2:And I was there for just a tad over 20 years when Live Oak Bank gave me a call out of the blue and they recruited me to come to the bank. And I'm like guys, I'm not a lender, I'm not a banker, I'm not a finance guy and they're like we don't want that, we want somebody who knows the industry, knows the the players, knows how to go to market, knows what we should be doing.
Speaker 2:And I said, well, I may be able to do that, so I was actually at a time in my life that my wife and I our kids were grown, they both had just flew the nest and I said to myself you know, I'm going to kick myself in the rear if I don't take this chance and one of the best things I ever did. So I left Betco after 20 years, went to Live Oak, started that lending team and for two solid years sort of what you were alluding to I was the SBA evangelist in our industry, because there was such a misunderstanding about that product and it was terrible, et cetera. But it obviously wasn't that bad because as I left the bank and to the early 22, after seven years, we were crossing the 1 billion dollar mark in self-storage loans. Almost every one of them were SBA. So it's obviously a good product and those guys they still do a fantastic job, they continue to grow it and run with it and it's just a fantastic product.
Speaker 2:And so I left there, went to Copper Storage Management to be CEO and partner there and after almost two years I decided you know, guys, I am worn out, I am tired, I think I'm going to retire. I was only 58. And it's like no 57. I said I'm going to retire early and enjoy the family and do things, and it's like after six months I told my wife not even that long.
Speaker 2:I told my wife I said I've got to go back to work to get some rest because this retirement is killing me. I'm working my stuff to death here. So I had several opportunities that were laid before me. The one at Johnson Johnson Insurance is actually in our hometown of Boxville, north Carolina, and I know a lot of the folks there. There's a lot of history there. I went to school from the first grade through high school with some of the current employees there, so it's a good fit. It's not a big corporate thing and I've enjoyed it so far. I really like it and those guys are just great people. And one of the big things that drew me to that was the customer service that they offer, and I mean they have a 97% retention rate, so you don't get that without customer service so long story in a nutshell, that's where we are.
Speaker 2:I'm still a partner or a part owner in 11 locations. So you know I've seen it from the building side, I've seen it in finance side, operations side and ownership side. So I can give a really good perspective and I have the same perspective as owners do and know what to look for and I can empathize with them on what they're going through and what they should be considering 100%, terry.
Speaker 1:Real quick, before we move on to the next question, just a real quick pause. Do you have a mic? Is there a microphone hooked up to your laptop? I just want to make sure, because the sound is a little bit.
Speaker 2:Yes, I've got a combo mic and camera.
Speaker 1:Okay, got it All right. I want to make sure that's going good. Okay, good deal, okay. So for someone, since you have a part ownership in roughly 11 facilities before we get into the insurance part of things and what investors should be thinking about, we're going to cover a lot of ground on that guys, so please stay tuned for that. But give us some advice for some newer investors. What should they consider before purchasing their first facility?
Speaker 2:Well, be sure that you do all your homework. The due diligence is so important. The cost you need to make sure that the market's there first of all. You know, is it an acquisition, is it a new build? Is it conversion? What are you doing? Making sure that you have a strong feasibility study if it's a new project. A strong feasibility study if it's a new project.
Speaker 2:And if it's an acquisition, make sure that the opportunity is there to add the value. That's what a lot of folks are doing these days is trying to do a value-add acquisition. You need just to make sure that that value is going to be accessible to you. You know some facilities, you know they're at 65%, and people you know go in and look at it and do their due diligence. They're like, wow, this has a lot of opportunity to grow the occupancy. I can really do it. Well, it may be that that market can't support any more than that, but at the same time, it could be that you know one of the things I've seen many times over the years is a value-add acquisition that never got over 65% but the reason was that there were so many small units that people didn't want.
Speaker 2:You go in, you make those bigger units, you fill them up. So, making sure you do all your homework and make sure that that expectation is realistic in what you're doing and things like property tax make sure you understand how property taxes are going to be handled. What are they going to be when you actually buy the facility, if it's an acquisition, because I've seen again over the years, especially in lending.
Speaker 2:I would warn people to be sure and make sure they understand how the taxes are handled, because they could go up. You need to make sure it's in your pro forma that when you're running your numbers you account for that. And I've seen several people who bought it and the next year their taxes doubled and it really put them in a bad spot because they didn't expect it, didn't know it was going to happen but didn't follow the advice to find out how that municipality or county or whatever handled those. And they could have very well done that.
Speaker 1:Yeah, with the taxes you bring up a good point about, it's generally in risk with risk management. So taxes are one thing. We've seen that at one location we had previously I think it was in Denver, colorado Taxes nearly tripled, so it went way above what we even projected in our pro forma. What other risks that are common to new storage investors that folks should be paying attention to? Obviously, insurance, we could talk about that as well, but is there anything else?
Speaker 2:you've paid attention to, Obviously, insurance. We could talk about that as well, but is there anything else? I'd say just making sure that you don't have a lot of bad debt. When you're looking at that, Make sure that there's not a lot of folks that aren't paying, that are just going to move out and your occupancy is just going to go way, way, way down. It may say there's a certain percentage of occupancy, but when you take over and run it properly, is that occupancy going to stay the same? You know there's all sorts of things in the background you could look at. You know, was this facility properly permitted? Are there any issues with property lines? There's just so many other different things to consider when you're doing your due diligence.
Speaker 1:Perfect. And then let's talk about insurance. What sort of risks do we need to consider? Because there's a couple of hurricanes that came through. We're at the end of 2024. Earlier this year we got the North Carolina one in the North Carolina mountains, which nobody thought a hurricane would hit the North Carolina mountains up in Asheville, and then one down in Florida as well. Talk to us about that and, guys, I know I've had a few other episodes regarding insurance. It's because it's super, super important. So help us understand. What can we do to determine and make sure we get the right coverage? What risks should we pay attention to when it comes to insurance, et cetera?
Speaker 2:Sure, and if you don't mind, I'm going to speak just a moment to why the costs have increased over the last couple of years.
Speaker 1:Please do.
Speaker 2:Because you know people are always asking what is happening, what's?
Speaker 1:going on. Everybody thinks the insurance industry is out ripping you off.
Speaker 2:And, to be honest, I may have had some of those thoughts myself until I got into the industry and learned what's actually been going on. But in 2022, there were records set on catastrophic events. That was really costing a lot of money. Well, by June of 23, we had already surpassed 2022. And, as you just alluded to, this year was not all that great. There was a lot of bad storms and there was a lot of states affected that you would not expect. So the cost because of that. You know, the insurance companies are regulated and they have to sort of like a bank. They have to have a certain amount of cash reserves that they always have. So they've been paying out a lot, so they've been losing those cash reserves, so they have to build those up. They have no choice. They have to build those back up. And how do you do that?
Speaker 2:There's not really any other way to do it other than to charge more for premiums, and so that's what's been going on. Is there's more premiums? I mean inflation, the cost of goods for anything. Just imagine, with the new cars these days, a car 10 years ago versus a car today if you had an accident then it was not that bad. Now you've got sensors and all sorts of things all over the outside of that car, especially if it's like a Tesla or something like that and you get hit. And not to mention that you know some of these EVs they're so heavy If they're in an accident they cause more damage than normally a gas-powered vehicle would, a gas powered vehicle would.
Speaker 2:And one of the biggest things is our society is so litigious anymore. That's another one of the big factors that's caused the insurance to go up. But to go on further into what you were just asking, you know some of the coverages you need to have, some of the things you need to do as far as risk management, the coverages, obviously your property and casualty that you want to have. You need to have property casualty for full replacement costs. Sometimes people do not want to replace it at full replacement costs because it's so much more than they already have. You know prices over the last five years have increased dramatically and whatever you had it covered for then, you're not going to replace it for now by any stretch of the imagination. So making sure that you have proper coverage on your property and also making sure that you have property proper general liability insurance because some people believe it or not, chris, they want to be self-insured.
Speaker 2:It's like I'm not going to pay. We just had a customer recently that was brand pretty new facility. It's a couple years old but it's a nice facility. They do not want any coverage on that property. They don't want it. They don't believe insurance.
Speaker 1:Wait. So what do you mean? Self-insured Meaning that if something were to happen, they would pay for the damage out of pocket.
Speaker 2:That's exactly right. They're covering it themselves. If a tornado or hurricane came through and blew down other buildings, they're going to have to pay for it out of their pocket. And we're like okay, if that's what you want to do, it's up to you. If you don't have a bank nope, don't have a bank, it's up to you if that's what you want to do.
Speaker 1:I was going to say because if you have a loan, the lender is going to require you to have insurance on the property at replacement. Okay, got it.
Speaker 2:That's the other thing. You've got to make sure you know what your bank wants If you have a management company. Third-party management companies have requirements as well. Some of the REITs if you use them, theirs are pretty big. So you've got to make sure that you're meeting those coverage requirements. But let's say you want to be self-insured, like this customer was. It's like okay, you can sort of define what it's going to cost you out of pocket to replace all those buildings, because you can get a pretty good idea. Talk to the building companies, you can get an idea. Talk to the building companies, you can get an idea. Talk to your GC. But general liability you have no idea what you could possibly be hit with. Uh, in a lawsuit, somebody gets hurt, something happens, you could be. I mean, you could be sued for millions and that's where you don't ever want to be self-insured. And my opinion.
Speaker 1:I mean so on the liability side of things. Somebody, maybe, I don't know somebody walks into the unit and, for whatever reason, the door comes crashing down, hits them on the head, they fall down, they get hurt, you know, and it's pretty bad, but maybe emotional, whatever damage, whatever, they want to sue for more. So that's what you're talking about with the liability, correct?
Speaker 2:Exactly. So that's you know, if somebody comes in and there's ice on the ground, you know they shouldn't be there, but if they are and they fall they're going to sue you and you know attorneys are going to come after whoever's got the deepest pockets.
Speaker 2:So you always want to have the liability, you know. If you feel like you're confident enough that you want to cover your own buildings out of your pocket, that's fine. You can do that. But don't do it with the general liability. Now, some of the other coverages you obviously should have that are specific to self-storage is customer goods liability. That's another one you want. Let's say you've got a roof leak and somebody's stuff gets damaged and mold and even though your agreement said we're not responsible for your stuff, especially more than $5,000, you know you wouldn't know as well as I do. Sometimes these things still go to court and people still win. I saw an episode years ago where somebody won a hundred thousand dollar judgment and I think there were some punitive damages too. So having customer goods liability is very important. Sale and disposal is obviously very important. If you have an auction and you do the process wrong or if you accidentally emptied the wrong unit, I've seen that happen. Where they have an auction, they sell it, but they sold the wrong unit, they sold somebody else's unit.
Speaker 2:So these things happen. I mean, people are human. It doesn't happen that often, but if it does you could really get hit. And especially you want the sale and disposal liability if you're anywhere near a military outpost, Because one of the worst things you can do as far as the sale and disposal is get rid of an active duty military soldier's goods. That is not going to end well for you?
Speaker 1:No, you're going to lose that. It doesn't matter. You're going to lose that battle.
Speaker 2:That's right.
Speaker 1:That doesn't matter. Yeah, we've done that where we're not a military person but just a wrongful sale of a person's goods and it doesn't end well. So how much in general? What are we looking for as far as cost? Probably somebody that's thinking about that way. How much does this stuff cost and I don't want to interrupt you if there's other liability things there, but just like the general liability, you know, the wrongful sale, it sounds like it could be pretty expensive if you're trying to get those coverages. What is that generally speaking?
Speaker 2:Well, it's hard to actually place a number because you know being an independent agency and that's one of the advantages of working with us.
Speaker 2:We're going to go to several carriers. We usually have, you know, half a dozen, eight, you know, somewhere in that range, depending on where the location is of carriers and each one of them are different and they don't actually split that out. It's not a line item, so you don't really know how much of it is actually the customer, goods liability and the sale and disposal or at least the ones I've seen it's all included in that one number. So it's usually not broken out. So it's hard to say. But I can tell you it's probably not that much and it's definitely worth it. I recommend everybody actually have that. I had someone who had a very small facility call me. They wanted insurance. I said, well, I need to go through this with you, we need to get this information, make sure you're covered properly. They said, well, it's just a building, it's not a business. I'm like, okay, I know, right, then I'm not going to be able to help them because they don't see it in the right way.
Speaker 1:It's hard.
Speaker 2:I can't really answer that because of the way that it's quoted.
Speaker 1:That's not a problem. Guys, reach out to Terry. Obviously you want to get that because you want to sleep well at night. I know that when your name's on the loan or when your name's on the deed, anything can happen and you don't want some. There are some people out there there's a lot of good people out there who understand accidents happen, no big deal. But there's a lot of people out there who accidents happen and now it's a 10 times bigger deal in their own mind, because they see you as the rich facility owner, the rich business owner or whatever, and they want to get as much money, squeeze as much money out of you as possible. So what else? What other coverages do we need to be aware of?
Speaker 2:Sure, one of the coverages we always recommend for everybody is the pollution coverage. There's some policies out there that are great. We try to sell a certain policy with each customer that we work with because it's so inexpensive, especially for what it covers, but it's third-party pollution. Some of the insurance policies you get it'll have a line for pollution, but a lot of times it's only going to be first-party. That means if you did something to cause some pollution, it covers it, but if your tenant did, it doesn't.
Speaker 2:So that's why we are specific about trying to encourage people to use this pollution policy that we try to market because it's third-party party and it's a million dollar coverage. So you know if you get a ugly I mean I know it doesn't happen as much as it used to, but if you get a big bad meth lab and somebody's really made a mess, that's there's a lot to clean that up and if the feds or the state get involved in the cleanup process it's going to be costly and you're not going to want to pay that in of your pocket. And this policy for I mean we were looking at one yesterday and it was a big facility. It was only like $500, $600 a year or something like that. It's definitely worth it because it covers a lot of things.
Speaker 1:I was going to say. I can think of a situation where somebody has a vehicle parked on some gravel or whatever and some fluids that leak out of that, where somebody has a vehicle parked on some gravel or whatever and there's some fluids that leak out of that, or they just happen to dump something, or dump some paint over the edge, where nobody can actually see, because it's on the edge of the property, and they go over there and there's like woods next to the fence line, nobody's going to know, and they dump something over there. Then you go to sell the facility down the road and you find out oh wait, somebody's dumped a bunch of stuff over here. I got to clean that up, and now you have a whole other issue that you didn't expect. So, um, yeah, it's, it's something that you don't think about. That's really good Actually.
Speaker 2:Those are some good examples. You just gave cyber. Uh, that's the latest one, you know, with so much cyber crime and hackers and things going on, cyber is something that a lot of people are. You know we recommend it and it's up to the owner if they want to get it or not or if they kind of want to put that off on the software company or the management company. But it's something that we offer and some folks take it and some don't.
Speaker 2:You know, if you've got employees, there's a lot of remote facilities out there now but if you still operate with employees, you've got to make sure that you consider workers' comp, epli, which is employment practices liability. You know, maybe there's your employee, you fire them and then they try to sue you for wrongful termination or harassment or discrimination, whatever. That helps cover your legal costs. And if there is actually a judgment by a court that you've got to pay something that helps cover that Employee dishonesty insurance. You know, if your customers were to steal from you or cause some issues with credit cards, I've seen that happen where employees actually took credit cards from folks who were paying online and loaded them up. So that's if you've got employees.
Speaker 2:You know you want to give everybody the benefit of the doubt but sort of trust and verify, trust them, but you need to make sure that you have the coverage.
Speaker 1:Yeah, employees can do some interesting things. I think I want to ask you real quick about Toy Storage Nation, because you're involved with those guys in vehicle storage. Is there a difference in insurance there? How does that work if you're operating maybe a strict like just a boat and RV type facility?
Speaker 2:Well, usually you're going to have, you're still going to have your coverage on or they're going to have their coverage on their boat or their RV. I mean, you don't want them coming down and parking it and taking the coverage off because they need to keep that. In a lot of cases they're going to have to keep that anyway, like you said earlier, because of banks, but for the most part they're very similar.
Speaker 2:We still recommend the same kind of coverages that we do, especially pollution, pollution, even more so because you've got all these units out there. What happens if somebody goes in, breaks in, they're just the handles and go along with the screwdriver and poke a hole in all the gas tanks. You know something like that were to happen, so you want to make sure that they keep their vehicle insured themselves, but as far as the coverage that we would offer, it's going to be very similar.
Speaker 1:How does it work? This is a random question, but I know that there's some facilities that do a lot of outdoor parking. Somebody decides they want to start stealing catalytic converters or just hopping the fence and jumping in and breaking into RVs and stealing what they can steal. Hopping the fence and jumping in and, you know, breaking into RVs and stealing what they can steal. How does that affect?
Speaker 2:does it affect your insurance, like how does that work in the boat and RV parking storage space? As far as the owners it doesn't. It should not because they're not going to pay out on that. That's something their insurance should help cover. If it gets covered, it'll be by the insurance they have on their unit.
Speaker 1:Okay, got it. That makes a ton of sense.
Speaker 2:But that's one of the things that we really harp on too is, if you have a boat and RV facility, you need to make sure especially if it's remotely managed have extra security measures. You know the fence, the gate, the cameras. You know there's a lot of options with cameras now that have the interactive live type of monitoring, and you know we recommend a lot of security because the security is actually going to help you get better rates on your insurance.
Speaker 2:I mean that goes for self-storage, as well as boat and RV storage. The better security that you have is going to help you with your insurance.
Speaker 1:Yeah, 100%, man. Talk to us real quick about just some mistakes that facility owners are making. I might say this is a mistake to be self-insured. I'm not saying that at all. But what are we looking at? As far as daily operations, You're an owner, you have a ton of experience, obviously on the insurance side as well. Management side, third-party management, the copper I mean, what are some mistakes that operators are making where they're cutting themselves short and they can come back and bite them in the end?
Speaker 2:Well as far as insurance, not making sure that you're keeping your property maintained well, because if you don't, that could potentially allow for an injury or maybe even a vehicle claim If your gate's not working right and somebody's driving in and it closes on them halfway through. Making sure that you do maintenance, because one of the one of the ways to save money is to not have claims, and one of the ways to not have claims is to have a good maintenance program in place so that you've got everything taken care of. Maintenance. As far as the weather, you know if you've got areas people are going to be walking, if this icing oring, make sure you get it clean, make sure you keep it clean, salt it, scrape it, whatever you need to do but you want to eliminate as many potential factors as you can where someone could get hurt or damage their vehicle or their belongings.
Speaker 1:That makes sense. You want to be proactive, in other words, yes.
Speaker 1:It's funny, my HOA, so we had the neighborhood where I live they had to fire the previous HOA for whatever reason. They brought in a new one. And I think about that, what you just said, being proactive, because then the new one went around and they found out where all the sidewalks were not even and they shaved the concrete there on everyone so you can trip and fall and hurt yourself, which actually, honestly there were, there was some. There was like a two-inch or one-inch gap. I remember, you know, walking and kicking to that sometime and kind of losing my balance and stumbling. So it's actually very smart. So, in other words, they're being proactive to avoid a bad lawsuit in the future, which could easily happen, especially with an elderly person walking around. They lose their balance and fall and hurt themselves. So that's actually great advice for you storage owners and future storage owners out there to be thinking about that being proactive when you're looking at a new facility to purchase, acquire or whatever.
Speaker 1:Take a look and see. You know, is there any place where someone can get hurt? Is there a door that's kind of stuck? Ask the broker or the owner hey, does it ice over? Is there standing water ever here? Where is it and does it ever ice over in the wintertime? Because it's something you need to be thinking about for the future. Sometimes we want to get in a storage tower and get all excited about it. We hear all the my Videos or podcasts or whatever else talking about how great it is and it is right, but then we don't think about those things where we can actually lose our shirt and not sleep too well at night. We don't want that.
Speaker 2:That's exactly right. And one other coverage I'm going to mention and we've already mentioned it a couple times is flood insurance. You know there's a saying.
Speaker 2:One of the training programs out there in the insurance industry says everyone is in a flood zone. You may just not be on the map yet how many people in North Carolina and Georgia were not in a flood zone? It's something to consider because if you're not in, you know on the map you can get it, you know, reasonably affordable, and I know that I've seen pictures, and you probably have too, of some of the facilities in the path of Helene, especially in Western North Carolina. I've seen facilities with mud this deep in every single unit doors caved in, but they were not in a flood zone. So it's something just to consider. Whether you're it's required or not, whether your bank needs it or not, whether you're in a flood zone or not. Just something to think about, because if you can get it for a reasonably low rate, consider it because a lot of folks right now who were not in a flood zone never would have had a thought to get flood insurance.
Speaker 1:That wish they had thought about it. Oh yeah, I just saw a picture on X yesterday, a recent picture of still the devastation up in the mountains where you wouldn't imagine a hurricane coming through and damaging or wiping out an entire area, those places where we go and visit as a family and it came through and just completely destroyed the whole area. So, like the seasonality of visiting and all that is pretty much done, at least for this year of course so yeah, that's really good. I want to sleep good at night, terry, I don't want to sleep poorly.
Speaker 2:I mean.
Speaker 1:I've been through that, you've been there, done that. When your head hits that pillow, you want to go to bed.
Speaker 1:You don't want to have your eyes pop open looking at the ceiling, thinking, oh my gosh, what's going to happen or what could happen. So I would recommend and heed what Terry is saying. It's really important Anything else that we're missing. On the insurance, how is it Okay? Talk to me about working with an insurance provider like yourself. How does it work? Do they just call you and just say, hey, help me out here? Like, and what do you got? What's the process look like?
Speaker 2:Yeah, we, you know, being an independent insurance agency like we are, we can go to many markets. We have access to so many markets that are out there that specialize in self-storage. Now there are certain carriers out there that they have products they have developed for our industry, which include things like customer goods, liability and sale and disposal and some of the things that you want to be sure that you have. Now you can get coverage through other companies, but it may not be specific to have those things and it might not even be an option and, especially if you've got a lender that's requiring these, you're going to really need to deal with someone who's familiar with self-storage and who has access to those carriers. So what we're going to do is we're going to take all your information, and I know that the application process is not all that fun. It's sort of like doing your taxes, but you've got to do it. You. It's sort of like doing your taxes, but you've got to do it.
Speaker 2:Filling that out, getting as much information as you can in front, being as accurate as you can with things like replacement costs and anything that we ask for. We want it to be as accurate and complete as possible. So when we go to the carriers, we'll send it out. We're going to get the bet. We're not looking only for the best price First and foremost. We're looking for the right coverage, and then the ones that have the right coverage. Who has the best value? Who's got the best price? So that's kind of the way it works with us is we go out to all these markets that specialize in self-storage, we get you a price.
Speaker 2:Now something else I want to mention, since we're talking about it, is sometimes folks want to get agencies competing with each other. It's counterproductive. It really is. It's counterproductive because we all-.
Speaker 1:Okay, hold on, hold on, hold on. When you say agencies competing with each other, what do you mean? I call you and then I call another? Do I call another insurance company direct and then I call another insurance broker? What do you mean by that?
Speaker 2:If you were to call another independent agency, like we are. So if we're independent agencies and if we have the same access to all these carriers, those carriers are not allowed to give more than one quote for a location. So if I get to that carrier with the application process first, I own that quote. No other agency can get it. So you're going to have two agencies trying to accomplish the same thing, but you're going to be wasting everybody's time because if they get all your information as well and they go out to market and try to do the same thing, they're not going to be able to get the quote. So so you're wasting their time and yours dealing with them and there have been situations where I've been in that and I've offered to bow out.
Speaker 2:I said look, you know, I have access to the same markets. Those carriers have to give us the same price. They're not going to give us or the other agency a better price. They've got to give us the same price and that's what's going to come to you. So you've got to decide which agency has got the best customer service. Who do I want to work with? Who's got the most experience? And obviously you're working with people who have the most experience is the best decision.
Speaker 1:And I'm going to give you an example that just happened this past week.
Speaker 2:We're working on one that we're closing. It was supposed to close today but I think they pushed it out just a little bit. But we got the requirements from the bank and they were so high. I actually emailed that bank and their risk management group that reviews all their insurance policies and I told them I said, guys, here's my background, here's my history policies. And I told them I said, guys, here's my background, here's my history. You're asking this customer to pay for replacement costs on these two single-story climate control buildings that literally, literally would be the same cost to build a five-story structure from this lab up. I said this makes no sense. And they actually took an inner advisement, went back, they reviewed it and they brought the value down by over half a million dollars. So it saved this customer in premiums on that facility by not having to have that extra $500,000.
Speaker 1:There was a few other things in there.
Speaker 2:We argued back and forth about it a little bit, but we're like, okay, we're going to die on a hill, we won that battle, let's take it for our customer. We saved them some money. And we're like, okay, we're going to, we're going to go down the hill, we won that battle, let's take it, you know, for our customer. We save him some money and we're trying to take care of it. So that's. You know, there's a lot of agencies out there and there's a lot of good people and I'm friends with a lot of them. Okay, so that's great.
Speaker 1:So I think about like a mortgage broker, where they're going out and getting you a quote from various lenders and then if you decide to go with one of those, they will essentially fight for you and say, hey, can we try? And you know they'll try and get you the best terms possible. In other words, so that's what it sounds like with you. I did not know that.
Speaker 1:What you said earlier on about the for lack of a better way of putting it, the competition between carriers, like you can't, it doesn't matter. So in other words, if I went to you and I went to whoever the heck, I don't know, I went to somebody else and you guys go to XYZ insurance company, they have to give you guys the same quote. It's not like, hey, we like Terry Moore, we'll give him, you know less. And then Jim, we don't like Jim as much, you know, we're going to quote him a different number. So they don't, they don't do that, in other words. So really it comes back to who do I feel comfortable working with as my representative who's going to?
Speaker 1:fight for me and do the job and obviously have the experience to know that, hey, this lender is screwing this whole thing up and Terry can help me out with that. That makes a ton of sense.
Speaker 2:That agency and that agent should advocate for you If there's a claim. I mean, that's where it gets really important. If you've got a claim, we need to be in there advocating for you.
Speaker 1:I was going to ask you that, so talk about that real quick. So if there's an issue, I got a claim. Now I call you, I call the insurance. What do I do and how does that work?
Speaker 2:Call me, call our agency. You'll have an account manager actually assigned to you, from the point that you sign on with us until you're gone, who's going to continually monitor your policy. They're going to be checking in with you, making sure if you had any changes, if you had any new buildings. Is anything changed that's going to affect your policy?
Speaker 2:Hey, by the way replacement costs have gone up 30% this year. Do you want to go ahead and change the replacement cost value that you've got in your premium and correct that? And if a claim happens, we're going to review that policy and we're going to look and make sure that that carrier is doing exactly what they said they would. And we had a customer this past year where the carrier was not paying the insured properly. Our team advocated, got them an extra quarter of a million dollars that they wouldn't have gotten otherwise.
Speaker 2:So that's where the agency is so important because, like you said, the carriers they're the ones that are competing with each other on price. Us, as agencies, get the quotes from them and there again, they will only allow one quote per customer, not per agency. So if I get it first, the other agency can't have it and it's wasting their time and a lot of folks don't understand that or how that works. And I think it's important to know that you know, pick the agency you're comfortable with, you think that it's going to advocate for you, that's going to have the knowledge and experience to help you, and don't put another agency through the ringer of doing that, because they're not going to be able to get the quotes, depending on whoever was first I hope all that makes sense.
Speaker 1:I hope all that makes sense. It makes a ton of sense. I had no idea, so that makes a ton of sense. It's super helpful. You guys and gals in the audience, you storage investors. I hope that is eye-opening for you guys. Obviously, I recommend giving Terry a call. I've known him for a while. He's a good guy. He knows what he's talking about. I'm curious this is a little bit of a random question here but you've been a part of Betco Storage Advisory Board. You helped co-found the North Carolina. We're both based in North Carolina. You helped co-found the North Carolina Self Storage Association. Talk to us how investors can leverage You're part of Toy Storage Nation as well for boat and RV owners, developers, investors. How can people who want to get into the business leverage these different organizations like the Self Storage Association, like Toy Storage Nation, to build their education, build their networks, et cetera? How do they take advantage of these things?
Speaker 2:Oh, there's those things, in particular the state association.
Speaker 1:I recommend that everybody always join your state association. Because not?
Speaker 2:only are you going to get most of the time legislative representation within your state. You're usually going to get an agreement a rental agreement.
Speaker 2:That's done by an attorney who understands self-storage. But most of them have lots of educational opportunities during the year and if it's your state, you know it's going to be more relevant to you in a lot of cases. Now you know the SSA, the ISS Toy Source Nation. You know they all have shows. It's like coming up this spring. You've got the SSAs in Florida. They always have great educational opportunities and networking. Iss always has great educational opportunities and networking. I think the ISS is bigger. It always has been, but they're both good. They're both good.
Speaker 2:Toy Storage Nation is actually doing a one-day workshop in Vegas the day after or that Friday of the week of the ISS show. But the Toy Storage Nation it was developed because there's been a need out there. That's still a market that's got a lot of opportunity and it's been largely underserved. Part of that is people just don't understand it or how to do it. So the Toy Storage Nation has that workshop that covers a lot of things from feasibility, financing, operations, marketing, you name it, and it's a great. You know it's a great workshop.
Speaker 1:I recommend it.
Speaker 2:If you're interested in that business, you know, check them out, toystoragenationcom and sign up.
Speaker 1:And especially if you're going to the ISS, cause you'll already be there.
Speaker 2:You get a site tour of an actual location in addition to the, the workshop in the classroom, so to speak. So, tons of this stuff out there. And then obviously you've got these great podcasts like Chris's that there's. There's a ton of these things out here. Folks you know there's some that are you know they have bought a facility and they've developed a YouTube channel. Now they're an expert. Just be careful of who you look at. Look at their background and experience.
Speaker 1:Yeah, 100%, man. I've been to Toy Storage Nation. We went to the Orlando show. This was a couple years ago and within about I don't remember about six months or eight months or whatever we bought a boat and RV facility because we went there and got educated. So I highly recommend the Toy Storage Nation stuff. It's really good, it's worth the cost and, like you said, if you're going to be in Vegas for Inside Self Storage ISS, might as well go ahead and pay a couple extra bucks and check out the Toy Storage Nation one as well. It's in the same place, so that makes a ton of sense, man. What else did we miss? I don't want to miss anything else. Regarding insurance, it's important for the listeners. We're going into 2025. We want to do some deals, we want to close some deals, but we don't want those deals to come back and hurt us in the end. Is there anything else that we missed on insurance that we, as storage investors, need to be aware of?
Speaker 2:I think, as far as coverage is concerned, we hit the most of it. And we hit the most of it. I mean, there are a lot of coverages. One of the things we didn't really talk about is business income. So if you have a facility, you know maybe a building or the whole facility that something happens and you're losing your income, you need to make sure you have business income coverage that will replace your income during the time it takes to get you back to where you belong, to be able to run your business again. So that's definitely one you want to have. And so there's tons of other little ones that they put in almost every facility, almost every policy. So I won't go into them one by one because I think we've covered the ones that we need to make sure that we've got in place for a self-storage facility and, I think again, just making sure that you've got accurate numbers, especially for replacement costs.
Speaker 2:We're going through some with some folks right now that their replacement costs are off and they're thankful.
Speaker 2:They're not happy that their premiums are going to go up, but they're happy that, as you said, chris, they're going to be able to sleep at night Because they didn't even know it. Now that they know it, it's oh my gosh, I can't sleep at night. Let's get this back, because they didn't even know it. Now that they know it, it's oh my gosh, I can't sleep at night. Let's get this back. And again, you know, if it's during the middle of the year and there's a bunch of increases, you want to consider changing your policy coverage to the current rates, because if you have an issue a fire, a tornado, whatever at the end of the year and prices have gone up over the year, your coverage is going to be based on the time of the incident, which means there may be a little bit of a gap. That's a whole other conversation we won't get into right now, but you want to be sure that you've got the coverage as accurate as possible to real numbers.
Speaker 1:Absolutely, Guys. We didn't want to make you have nightmares at night, but these are some things that you want to think about so that you do sleep a little easier. Let's go ahead and hit the final four questions brought to you by our sponsors. Check out the description for the links to save you money on your storage operations, investing, etc. Terry, tell us about a career challenge that you had, and what did you learn through that experience?
Speaker 2:that you had and what did you learn through that experience? Well, I don't know if I would consider it a challenge or a high point, but when my 20 years experience that I got at Betco allowed me to join LiveUp and to start that team, so that was definitely a high point and one of the things that really came home for me. I knew it, but what really drove it home for me is that your team it not you, it's your whole team, including you. But it's like you know, I said we were crossing the billion dollar dollar mark when I left that that was a hot one. You're crossing that billion dollar mark, but the lesson was you gotta have the right team, and I did. I mean we had a fantastic team, had a great team that was built out. I mean I don't I hope you don't mind if I call on my name.
Speaker 2:You know I had Mo Kruger, taylor and Bichette Shrestha were with me almost the whole, the whole time I was there at the bank for the seven years and those guys were fantastic and that's what helped us to build that team. So that was my high point is that, knowing we were crossing the billion dollar mark, that was sort of my going away present. But the lesson is that you've got to have the right team and that that translates to anything. It translates to the insurance business and I feel like I've got a team behind me right now. That is awesome.
Speaker 1:That's amazing. You mentioned Ana and you mentioned Bishesh. I always smile when I think about that because of our Vegas dinner that we had. I know you heard about that with Brad when we were there and it was just an interesting time.
Speaker 2:Yes, I remember that.
Speaker 1:We still joke about it at every conference. So it was good. If any of you guys out there ask Ana or ask Mishash or ask Brad Minsley over at 10 Federal about, hey, what happened at the famous Live Oak 10 Federal dinner there in Vegas, they'll tell you. So anyway, all right If you could change or solve this is a little bit off topic here, but if you could change or solve one problem or challenge facing the self-storage industry, what would it be?
Speaker 2:Oh gosh, that's a big question, chris, not even prepared for that one. I think. Just education, making sure everybody understands how they should operate their business. I mean, for example, people I talk to that they feel like they need to be 100% all the time Occupied. No, you don't, you're leaving money on the table, that they don't have auctions. When people aren't paying, they're scared to. I mean making sure that everybody has the proper education to maximize that business. That, to me, would be fantastic if everybody were all kind of on the same page of understanding how you should actually operate your business, how you should have the auctions, how you should do it properly, how you should raise rates if you're 100% full. I mean, so many people are not maximizing the investment they have and that makes me sick when I see that. So if there was a way to teach people how to make sure they're doing everything right and as efficient as possible so they can maximize that investment, it would make it even better.
Speaker 1:Perfect Along those lines. What's a book, podcast or resource for those looking to grow, even in their business or just their personal life? That has helped you along the way.
Speaker 2:Oh my goodness, there's several books. Tools for Titans is one book I really like, atomic Habits is another book that I really like, and I know it's going to sound weird and probably old, outdated, but I'm actually listening.
Speaker 2:I'm an audible guy. I don't read a whole lot, but I'm listening to Zig Ziglar and he's a classic man. I mean it still applies today, a lot of those things, but you know there's several podcasts. You have a classic man. I mean it still applies today a lot of those things, but you know there's several podcasts. You have a great podcast. Aj Osborne has a great podcast and AJ's got books. There's Scott Myers. There's just a host of folks out there that have good information, that are good, they have a good track record, they have a good background and they're just good folks. So you know, all of those are excellent opportunities for you to do and I'm just going to throw this out here. I'm going to start putting out a couple of real short videos, hopefully weekly, maybe a couple of weeks, just three, five minutes on insurance issues, like the things we just talked about. It's going to be one topic, it's going to be short, so you don't have to listen very long just to pass along some information.
Speaker 1:So that's something that's going to be coming out shortly. Perfect man, that's really good. Yeah, zig Ziglar, I used to listen to him back in the day Secrets of Closing the Sale. When I moved to North Carolina I had a job selling cell phones out of Sam's Club here in Kannapolis, and so that was a lot of fun. But I listened to his. I bought the CD set it was like 160 bucks, if you can believe it or not and I popped that in and listened to all his stories and all his stuff on closing the sale. He's a sales trainer from back in the day, so, yeah, his stuff definitely applies. He's always enjoyable to listen to. He was a pro. He was the pro of all the pros. So, yeah, amazing. Last question, terry how can listeners get in contact with you if they want to connect and obviously get an insurance quote for their facility?
Speaker 2:The best way is probably my email, and that is Terry T-E-R-R-Y at gojohnsoninscom.
Speaker 2:Terry at gojohnsoninscom, and that's the easiest way, and that way at go Johnson I N Scom and uh, that's the easiest way and uh, that way it's. It's there where I can uh handle it in a timely manner. Sometimes I get tons of calls. It's hard to keep up with them. I used to give out my cell phone but it's a whole lot easier to prioritize. You know somebody versus, hey, I'm thinking about buying a facility, so if that information, what you want, is in the email, it helps me to prioritize as well.
Speaker 1:Perfect, we'll have that in the description for the episode. Terry, thank you so much for being on the show.
Speaker 2:Chris, thank you so much. I really always enjoy being on your show and I appreciate the opportunity.