\nIn this video chat, we are joined by Greg Ellsworth of Self Storage Consulting Group, Amy Bix of Toy Storage Nation and Terry Anderson of Tenant Property Protection to discuss nuances of the boat and RV storage sector. We’ll cover site selection, differentiators between class A, B, C and D facilities, development considerations and insurance concerns. Additionally, you’ll learn about how this tenant base varies from traditional storage customers with their expectations and tolerance for price increases. Tune in to learn about the booming boat and RV industry or read the full transcript below!<\/p>\n
Alison: What criteria do you think investors should consider during site selection?<\/p>\n
Greg: It\u2019s important to keep in mind that self storage, specifically RV and boat storage, is not industrial class property; this is still retail and we need to keep in mind that drive-by traffic needs to be substantial as well as the amount of land that you\u2019re acquiring. In traditional storage you\u2019re looking at a lot less space\u2013five acres or less, but in RV and boat we have sites that go on up to 32 acres. Acquiring land that still has drive-by traffic and yet has that much square footage available is not something a lot of traditional storage developers are used to. It\u2019s important to keep in mind per capita income as well. We are targeting a higher per capita income than traditional storage. Then finally are the population numbers. Although in boat and RV storage you can still succeed on the fringe, it\u2019s still important to have those population numbers at least in an area that the bank is willing to take a risk on that development.<\/p>\n
So to recap, the important factors are drive-by traffic, per capita income and population numbers. Those are the three things that I factor in heavily when looking at site selection.<\/p>\n
Amy: I\u2019ve learned that with this market, this is an expensive undertaking and you always want to go to the experts. We\u2019ve had some folks who\u2019ve made some very expensive mistakes. I\u2019m always very careful on certain things so I don\u2019t know, I\u2019ll connect you with the right person.<\/p>\n
Alison: Whereas traditional self storage mile radius (for tenants) was three to maybe five miles, what mile radius are you looking at for RV and boat storage?<\/p>\n
Greg: Boat and RV storage is unique in that you can collect rentals from multiple states. We have snowbirds in Arizona from northern states who store their vehicles here to keep them out of the snow. So when underwriting the project we will go 7 miles out to gather that data to substantiate development. A lot of this revolves around how the bank is going to underwrite the project. We have found that going out to 7 miles, the bank is still able to use that data, but going out to 10 miles they don\u2019t feel it\u2019s the direct market.<\/p>\n
Terry: There are some outliers, though, especially in densely populated areas that where mileage can be farther out. We had an individual flying out from the East Coast to get to their RV in Seattle, which is closer to their favorite traveling destination, so destinations play into this also. Lastly, in site selection, there\u2019s a variety that\u2019s coming out, but what we\u2019re seeing is Executive Class A level is very important because this clientele is coming in to build a community as well as protect what they are taking care of (their expensive RVs and boats) and that\u2019s a significant very important asset.<\/p>\n
We\u2019ve kind of crossed over a little bit in the camping. and resort, and park area. Individuals that attend TSN (Toy Storage Nation) workshops are seeing a drop at campgrounds, resorts, and parks at certain times. At the same time, we can see that correlates with locations where storage is starting to grow. We know this is a tremendous field of opportunity, with over 25.5 million boat owners and over 14.5 million RVs out there and growing, so it\u2019s a future massive storage opportunity.<\/p>\n
Amy: In the past it used to be that RV and boat storage might have been just in the sunbelt area, but it\u2019s really all over now. There is one factor that is really driving this: When people are going out to buy these expensive toys, they are not thinking about, \u201cWhere am I going to put this?\u201d And HOAs are not allowing boats and RVs to be parked at home. So this is what\u2019s driving a lot of this. Folks want to buy these toys to play with but don\u2019t have a place to put them. It\u2019s not specific areas of the U.S. anymore, though. It\u2019s all over.<\/p>\n
Terry: And Greg can probably speak to the planning and zoning in cities, where they are getting them off the streets.<\/p>\n
Greg: Presenting a site with a good aesthetic appeal, whether it\u2019s block or steel-enclosed facility, in order to take care of these assets is really the approach we like to take with these cities and show them pictures of examples of other projects that have gone through the process before. HOAs flat out will not allow RVs and boats in their communities, so we need to put them in a place where we can take good care of them. We\u2019re finding this is becoming a lot more valuable in states (where we hadn\u2019t been before like) Utah and Illinois where people don\u2019t want their RVs and boats to be destroyed by the elements throughout the year.<\/p>\n
Alison: I have to ask about your tenant level. If I\u2019m storing a $2 million toy, it\u2019s not just going to go anywhere. Can you talk about what constitutes the classes in terms of upgrading your facility and what impacts it and why? More specifically, what are the different classes of storage?<\/p>\n
Terry: There are four D\u2019s in the storage world, but that is changing. With RV and boat storage there\u2019s a fifth D \u2013 and I call it Delight. In this industry, we\u2019re not dealing with people through the typical self storage D\u2019s: death, divorce, departure, or declutter. Owning and operating an RV and boat facility is a delight. And so are the tenants! And so is operating a storage facility for these tenants.<\/p>\n
The old days of a chain link fence, razor wire, dirt lots, \u2013 these things are moving into the past. These tenants are interested in finding a place that can to address their concerns: How can I replenish my RV and how can I care for it? I need a trip charge. How can I keep the battery and tires alive? We\u2019re not just looking at open lots, we\u2019re looking at canopies and enclosed units \u2013 and so that level of service to be a Class A includes a secure gate, a keypad, concrete, and asphalt \u2026 all these amenities as well as ancillary services that will come into play.<\/p>\n
Some offer concierge services, including anything from detailing to parking to having their vehicle all ready to go. Some have offices with a mini retail store \u2013 not only with chocks and oil plan, and but also RV Park \u2018n\u2019 Protection Coverage! gap coverage and protection. Gregg has developed a solar energy based trip charge to keep the battery going that doesn\u2019t depend on electricity! This type of storage provides a strong vital family community service, which includes a place for kids and a doggy park. And so, Class A is taking on a whole new level. Class B would be a step down\u2013maybe not as much enclosures or canopies and fewer amenities from that Class A., and Class C is back to the chain link fence, razor wire and dirt. We have about 3,000 Class A storage facilities in the country and growing.<\/p>\n
Greg: You need to know what\u2019s going to drive your rental rates. Think about the scenario of kids, dogs, wife and dirty clothes on the road. They need somewhere to clean their RV when they\u2019re heading back \u2013 somewhere to make the return a better experience, Class A is providing convenience specific to RVs that justify a higher rate.<\/p>\n
Amy: For TSN overall, we talk about Class A \u2013 amenities couldn\u2019t be more on point. But it needs to be gated, fenced, covered in some way whether that\u2019s paved or asphalt. Class B is not paved. Class C would be the old days of having your Rv stored on the back lot or maybe traditional storage. You really need the levels of security protection and convenience for Class A. If you\u2019re not doing it somebody down the street will.<\/p>\n
Alison: Can you talk about developing RV and boat storage facility compared with traditional storage?<\/p>\n
Amy: The demand is there. A lot of folks are saying this is just driven by the pandemic and it\u2019s going away. Did a lot of people buy more boats and RVs during that time? Yes. But it was already trending. You\u2019re looking at the babyboomer generation where a lot of them are retiring sooner, they have a much more active lifestyle and they want freedom to go where they want. And, they have the income. Not only were people buying them, but during the pandemic there was a backlog of RVs from manufacturers. You can see the data at TSN (toystoragenation.com). So the need for it is there, and it\u2019s really not going away. You simply cannot deny the need \u2026 so there are a lot of people getting involved. Now is the time to get into this industry! Exponentially you can find a market that is in need of it and HOA\u2019s rules aren\u2019t going away; they\u2019re getting tougher.<\/p>\n
Greg: In traditional self storage the concept was \u201cbuild it and they will come.\u201d That was the mantra in storage since the late \u201970s, \u201980s and \u201990s, that self storage has always been underserved in many markets. In RV and boat storage, we really look at diversifying our unit mix to allow any type of tenant to rent from us. There\u2019s enclosed boat and RV storage, covered boat and RV storage, and there\u2019s potential for uncovered on pavement.<\/p>\n
In our research, we see 30% of our tenants have traditional storage as well. You park your RV and take your bikes and put it in your storage unit. RV and boat storage are giving us more flexibility than ever before. Contractors and small business owners are using the RV and boat units for storage space right now because it\u2019s less than traditional storage. (Also discusses how developing larger areas require more dirt work, above ground retention and below ground retention of water, to make the numbers work, factors that go into developing RV and boat storage as opposed to traditional self storage). The demand is there, but absolutely your pricing needs to follow that demand. For areas that lack RV and boat storage, rates should follow.<\/p>\n
Terry: When you go to canopy structure, there is opportunity door is open to solar and allows a little income generation, and You also have the ability to adjust to the market. In some markets, covered is just fine, but sometimes enclosed or semi-enclosed is needed. There\u2019s a difference in cost, it may be less cost but greater upside of rental. Steel has always played a factor in both industries, which is a challenge with inflation. I\u2019ve noticed with management groups and experts in building RV and boat, if you have land, now is the time to get it ready. That extra square foot play is different income opportunity in the boat and RV storage sales and, can have certain returns.<\/p>\n
Greg: Of the 40 million RVs owned in the U.S, 38% are owned by millennials. And over the 2015-18 time frame, ownership of boat and RVs increased by 3% in that demographic. So, younger crowds are buying and living and vacationing in these instead of doing international travel.<\/p>\n
As far as developing, your numbers aren\u2019t going to translate from traditional the same way \u2026. A lot of infrastructure is going to be exposed so wood is just not an option.<\/p>\n
Steel structures last longer, and there\u2019s less to go wrong; there\u2019s no door in a canopy unit. You have a roof, but it\u2019s a different process.<\/p>\n
Alison: Is there anything else about the expectations of tenant base that we should know? These tenants can spend more, we see, to protect their vehicles, but if demand starts to level off, if prices are too aggressive, they can just drive their vehicle off the lot. So what\u2019s the sweet spot?<\/p>\n
Greg: Yes, items are more mobile, because it\u2019s not traditional self storage. But we go back to the supply and demand. We do feasibility studies so we have data that shows that tenants may store their RV yearvround and use it three weeks a year, combined. During that three weeks, they don\u2019t move out of their RV unit, but they\u2019re paying for it. There is such little storage out there, especially Class A, so if they only use it for a month, they\u2019re probably going to stick around.<\/p>\n
If they come back after the summer, they\u2019re not going to find another spot. So there is a seasonality approach, but on the sites we manage in Florida and California, typically there\u2019s a wait of one year on these waiting lists. So they\u2019re going to maintain that rent even when they\u2019re out.<\/p>\n
Terry: Individual tenants, if they do travel, I\u2019ve seen a variety of data on how long they\u2019re out. But they don\u2019t want to give up that space because down the road you\u2019re not going to find that space. But there\u2019s another factor: When they find the type of services that meet the needs of what they have, and you\u2019re always trying to prove that, they\u2019ll stay. We\u2019ve found that they\u2019ll stay during rate ups; they don\u2019t want to leave that location because of the proximity to their house or to their destination and so they like that comfort and ease. That\u2019s very important.<\/p>\n
Longevity has a community aspect, too. We\u2019ve seen people come together in groups at these places and like it. Some commercial vehicles are coming in here, even someone some owners who has have an Amazon or other delivery business and they like how nice and secure it is in these Class A RV & Boat Storage Facilities.<\/p>\n
The vehicles are changing, electric vehicles coming into play, and driverless. We see a lot of changes in transportation, rideshare, and now more about RV share and boat share, so another whole world is opening up. The place that can be a central place for this to happen is an RV and boat facility.<\/p>\n
Alison: Can you add to the importance of amenities and enclosures and security?<\/p>\n
Amy: This is a demographic that buys these expensive vehicles and want safety, convenience and protection. They are going to be paying for those amenities, and they\u2019ll be happy to be coming to your facility to do that. You\u2019re not going to have trouble getting folks to pay; they\u2019re often writing checks for the whole year.<\/p>\n
Terry: It\u2019s not just RV and boats going into these facilities. We\u2019re talking trailers, and jet skis and the quads. Greg has about 1.000 vehicles on his lots, so he can probably talk about this more, too, because, There is this idea of having storing your sport, your activity, your hobby-release, and going out with your family. I saw one full of bikes and motorcycles. So you have a whole different play in this arena than others.<\/p>\n
Greg: You can have a boat with three owners, so you have three guarantors on that rent. If you have a sandcar to go to the dunes, you want to have it near your friends. So we\u2019re developing sites with a reception area in the office for these individuals to meet and hang out and then go out to their vehicles. It\u2019s a congregation area for them and they\u2019re happy when they come, not like when they see their wife\u2019s Christmas decorations or the husband\u2019s golf clubs (like self storage), but they\u2019re happy.<\/p>\n
They also don\u2019t want to go delinquent on everything they\u2019re storing at the site (so they rarely miss rental payments).<\/p>\n
Alison: Do you have any idea of what the average length of stay is for a tenant?<\/p>\n
Greg: We\u2019ve actually seen tenants who will store for 20 years and never use that vehicle. We have jetski trailers that have been sitting there since 1995 and it hasn\u2019t moved, but they\u2019re not willing to get rid of it because it\u2019s grandpa\u2019s jetski. But they will store, year after year. Whether or not a vehicle is lost in bankruptcy or repossession, that vehicle still needs a home. So whether or not the bank will option it off or sell it, the new owner will still need to put it somewhere. So that unit may change hands but the unit maintains occupancy of that vehicle.<\/p>\n
Terry: I\u2019ll add that well over a million people are living in RVs and variety of sprint vans. I don\u2019t know the exact number. But they are living behind an extra vehicle or things they need to leave behind and they like to leave it in one location. So they\u2019re going to stay there because of the convenience. It\u2019s really important for these individuals to keep (their stored belongings in a permanent location) and continue to travel.<\/p>\n
Alison: These are very impressive assets. Is it a tough sell on tenant insurance?<\/p>\n
Terry: One of the greatest assurances you\u2019ll have with this are two things: inexperienced drivers who will knock hit your buildings, around and your gate, and keypad. It is a problem. Your general P&C (Property and Casualty Insurance) is going to be tapped. You have to think and plan it through how wide your aisles are for making turns, etc., so it\u2019s really important to have someone like Greg come in and do a really good site plan. Also, fires, that is a big play coming around; you\u2019re seeing more and more and have to make sure people are very cognizant about what and how they store, like batteries, and what materials they\u2019re leaving behind, and so we want to be very careful from a general P&C side.<\/p>\n
You want to make sure when you have 500,000 of liability sitting in one space you know what you\u2019ve got there at the end of the day. You need to have boots on the ground when people are coming in \u2026 you need to have eyes on it. Also from a protection standpoint, it\u2019s very important to know that a lot of these vehicle owners are there for a long time. They can downgrade their vehicle coverage \u2013 sometimes all the way down to where it\u2019s just liability, so if they do something to their own vehicle, and there\u2019s no comprehensive or collision coverage, they might look for someone to blame. So we (our RV Park \u2018n\u2019 Protect Program) have entered into that phase now.<\/p>\n
You need to make sure that tenants know that when they rent space, their responsibility is coming in and out of the property safely, and ensure that they are storing goods safely. By the way, we have a program, RV Park \u2018n\u2019 Protect, that can protect you when you come in that gate: It will protect you from dings and scrapes and mirrors being pulled off; it will protect you at the end of the day (within the three plan levels\/deductibles). The bottom line is we have to have a product to cover those things and provide a deductible reimbursement \u2013 RV Park \u2018n\u2019 Protect. And then there\u2019s content coverage for other things that get stored inside RVs like a computer or generator \u2026 (discusses more details about police reporting, etc., and protection for supplemental items).<\/p>\n
Amy: You\u2019re dealing with very expensive toys and people who are inexperienced moving them around, so it\u2019s a nice service and\/or product to offer to folks insurance at your facility, for sure.<\/p>\n
(Terry and Greg discuss animatedly about AI and Go Pro security.)<\/p>\n
Greg: It\u2019s important to know that you\u2019re inviting people onto your lot with 100s of gallons of fuel (self storage prohibits storage of such), so it\u2019s important to have the right protection in place. The right P&C is huge (reviews canopies, sprinklers and losses, with regard to plans approved by the city). It\u2019s important to talk with someone on how to insure these within your jurisdiction so you get paid if there\u2019s a claim.<\/p>\n
Amy: It goes to show how much goes into an RV and boat storage facility. There are so many different aspects whether you\u2019re talking financing, construction, feasibility, software, the gamut, that\u2019s what this group (TSN) is coming together to provide this information through workshops. There are so many pieces of it. The other thing we\u2019re seeing is that 70% of people coming to workshops are completely new to storage, so it\u2019s a whole new group of people coming into this industry that have never had outside previous storage experience.<\/p>\n
Alison: You\u2019re absolutely right. There\u2019s so much to think about.<\/p>\n
Amy: To be connected with people who are experienced in their different areas that can walk you along\u2013that\u2019s what we\u2019re trying to provide through our website or the events that we have. The folks that are getting into this industry are needing their hands held and they are very grateful to have the assistance that people like Greg and Terry provide to people just getting into the market.<\/p>\n
Terry: There are topics that we didn\u2019t even scratch here. We can talk about feasibility studies, the funding side, the legal side, leases, insurance, ancillary services, lighting packages, that you can discuss during that day at the workshop. It\u2019s also very key that you\u2019re building your site with managing it in mind, not just build it and put it out there. You have to have a whole marketing and management concept, which you get when you come to TSN workshops and build your advisory team!<\/p>\n
Greg: Hiring the old professionals that know traditional self storage is not going to translate directly to the RV and boat storage industry. We look at it from the end user standpoint, which is operations, and we are able to decrease costs\u2013by looking at the endpoint and building around that. We start as early as in the feasibility study by gathering data on the unit demand in that market, then draw our site plan on the parcel that we want. Once we have the site plan, we build our financial projections on that site plan and then go into architectural design.<\/p>\n
More Information<\/p>\n
Greg Ellsworth\u2019s contact information can be found at sscg1.com.<\/p>\n
Terry Anderson can be reached at tanderson@tenantpropertyprotection.com. Company websites: tenantpropertyprotection.com and RVgapcoverage.com<\/p>\n
Amy Bix can be contacted at amy.bix@toystoragenation.com, 602-909-3910, Toystoragenation.com. \u201cLook for lots of content and information about our workshops, our first of which will be in Las Vegas, April 14, in cooperation with ISS. Go to our website\u2019s \u2018Events\u2019 page to sign up for information about future workshops.\u201d<\/p>\n
To reach Alison DeJaeger: Alison@listselfstorage.com, 248-795-8126. \u201cVisit ListSelfStorage.com, our new platform for buying and selling RV and boat storage, self storage, development and conversion properties for sale.\u201d<\/p>\n
Participants<\/b><\/p>\n
Greg Ellsworth<\/b>, Member of the Toy Storage Nation Advisory Board, and President and Founder of Self Storage Consulting Group, specializing in third-party management of storage properties across the United States, with a wide range of experience consulting through the entire development process, including due diligence, feasibility, design, construction and operations. Focused on developing the most profitable sites by building properties based on data prior to<\/i> development.<\/p>\n
Terry Anderson,<\/b> Chairmen of the Board at Toy Storage Nation, President and CEO of Tenant Property Protection, providers of insurance products and services specific to self storage, RV and boat storage.<\/p>\n
Amy Bix<\/b>, Director of Sales for Toy Storage Nation, The Independent Voice for the RV and Boat Storage Industry<\/i> and a resource for people venturing into the business or industry veterans, offering a website with a compendium of content and comprehensive workshops that give the A-to-Z on how to get into the market, as well as achieve and maintain success.<\/p>\n","protected":false},"excerpt":{"rendered":"
In this video chat, we are joined by Greg Ellsworth of Self Storage Consulting Group, Amy Bix of Toy Storage Nation and Terry Anderson of Tenant Property Protection to discuss nuances of the boat and RV storage sector. We’ll cover site selection, differentiators between class A, B, C and D facilities, development considerations and insurance concerns. Additionally, you’ll learn about how this tenant base varies from traditional storage customers with their expectations and tolerance for price increases. Tune in to learn about the booming boat and RV industry or read…<\/p>\n","protected":false},"author":7,"featured_media":2989,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[17],"tags":[],"gutentor_comment":0,"_links":{"self":[{"href":"https:\/\/listselfstorage.com\/us\/industry-insights\/wp-json\/wp\/v2\/posts\/2988"}],"collection":[{"href":"https:\/\/listselfstorage.com\/us\/industry-insights\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/listselfstorage.com\/us\/industry-insights\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/listselfstorage.com\/us\/industry-insights\/wp-json\/wp\/v2\/users\/7"}],"replies":[{"embeddable":true,"href":"https:\/\/listselfstorage.com\/us\/industry-insights\/wp-json\/wp\/v2\/comments?post=2988"}],"version-history":[{"count":3,"href":"https:\/\/listselfstorage.com\/us\/industry-insights\/wp-json\/wp\/v2\/posts\/2988\/revisions"}],"predecessor-version":[{"id":2992,"href":"https:\/\/listselfstorage.com\/us\/industry-insights\/wp-json\/wp\/v2\/posts\/2988\/revisions\/2992"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/listselfstorage.com\/us\/industry-insights\/wp-json\/wp\/v2\/media\/2989"}],"wp:attachment":[{"href":"https:\/\/listselfstorage.com\/us\/industry-insights\/wp-json\/wp\/v2\/media?parent=2988"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/listselfstorage.com\/us\/industry-insights\/wp-json\/wp\/v2\/categories?post=2988"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/listselfstorage.com\/us\/industry-insights\/wp-json\/wp\/v2\/tags?post=2988"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}