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It isn’t hard to see that self storage facilities are typically very sound investments.  They are, in a very central sort of way, “fool proof”.  If your pricing structure is appropriate, then you’re never going to have to worry about your bottom line; you’ll be making a profit as soon as you get your occupancy level above a certain threshold.  If your customers fail to pay their bills, you can exercise a lien on their property, auction it off, and thereby recover some of your lost rent.  Of course, you can also take the delinquent tenant to court and recover the rent they’ve failed to pay.  At least, that’s how it works in theory.

Recently, the California Self Storage Association (with the help of the national Self Storage Association) set out to make things a bit easier for self storage owners and operators.  Specifically, they’ve set out to make it easier for facilities to issue lien notices; furthermore, they’ve set out to make it easier on themselves to take delinquent tenants to court.  On September 30th, 2010, they got precisely what they were asking for.  Self storage owners of California, rejoice!  Arnold Schwarzenegger is on your side!

By approving of these amendments, Governor Schwarzenegger has made it not only easier, but categorically cheaper for self storage companies to deal with their delinquent tenants.  Lien notices are no longer required to be sent via certified mail; now, you can simply sign up for a certificate of mailing.  This minor change will save California self storage owners about $2 for every notice that they send.  When you crunch the numbers, that comes to nearly $2 million that California’s 3,890 stores are going to save in the coming year (about $480 per store in mail alone).  Additionally, the amendments specify that lien disputes can now be settled in small claims court.  In the past, companies were forced to deal with the superior courts to settle these disputes (many of them fraudulent); it got the job done, but it was much more expensive.  All told, most self storage facilities stand to save around $2000 a year by cutting the superior courts out of the question (that’s counting both lost rent and legal fees).  Considering that there are 3,890 facilities that all stand to save around $2000, it’s pretty hard to say that this amendment was, well, “small”.

Of course, all of this is very good news for self storage investors, both existing and aspiring—at least, in California.  The business model was relatively “fool proof” from the start.  Now, it’s quite a bit easier (and quite a bit cheaper) to deal with tenants who fall behind on their rent payments.  Whether you’re a single-property owner or a larger, multiple-property owner, you’re going to be saving yourself some money in the coming year.

If the goal of the amendment was to “streamline” existing laws and to “modernize many of the lien laws so that they are fair to storage operators and take advantage of today’s more efficient technologies”, then we can only refer to the the hard work of the California Self Storage Association as a resounding success.

With any luck at all, we’ll see these savings trickle down a bit—hopefully in the form of rental specials for customers, and maybe even a few raises for hard-working employees.

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