Learn more about how and why remote third-party self-storage management works
Tess Toth and Terry Campbell from Copper Storage Management and Anna Taylor, head of self-storage lending at Live Oak Bank, discuss ways to maximize your self-storage facility investment through remote third-party management solutions. Learn more about how it works, why it works, and hear a few success stories from self-storage facility owners.
Transcript
[Tess Toth] (0:20) Thanks everyone for joining today. My name is Tess Toth, I am the director of sales and marketing at Copper Storage Management. Today we are joined by Terry Campbell, who is our CEO, who will be discussing remote third-party management solutions for your facility. We’re also joined by Anna Taylor who heads the self-storage division at Live Oak Bank.
(00:44) Anna, Terry and I have actually, a fun fact, worked together in some capacity over the past eight years. So, Terry and I started at Live Oak, and we’ve got a great relationship with them. I will be recording this presentation. I will be sending it out in the next couple days once it renders and whatnot, so if you don’t mind going on mute until the end. We will then open it up to discussions and Q & A. But I’m going to let Terry take a few moments to just give a little bit about his background, and then Anna to do the same and then we’ll jump into the presentation.
[Terry Campbell] (01:20) Awesome. Thanks Tess. It’s good to see uh so many folks that are piling in here. We had quite a large registration and that’s good to see that the health of the interest in the industry is still going strong. It’s one of the best industries that I know of that you can make a good living in legally. One of the best industries, it’s just great. I hope that for those of you who aren’t in it now, that in some way, shape, or form we can all help you get there. (01:50) Just a quick little bit about my background. I’ve been in the industry, January 3rd will be 28 years for me, that I’ve been in the industry. I was with BETCO, which is a self-storage building manufacturer here in North Carolina. I was there for a little over 20 years. Kind of grew up in the industry there. I left there after my 20 years to go and start the Self-Storage lending team at Live Oak Bank. So, I was there a little over 7 years, and less than six months into building the team I was lucky enough to get Anna on our team and she’s been on there ever since and has done a fantastic job. And when I left there, she actually took my spot. So Live Oak is, as Tess said, we’ve all worked together. It’s a great company, a great Bank, and the team specializes in self-storage, and they know it inside and out. There’s second to none as far as knowledge and abilities in the self-storage industry.
(02:47) I left there in April of this year to come on board as CEO and partner at Copper Storage Management. We are a remote third-party management company specific to self-storage, and specifically remote. We don’t do anything typically with actual managers on site, we were able to build this model using our own portfolio over the last few years. So, trial and error on ourselves, different tweaks and changes here and there, you know, consistently you are doing that. But that’s kind of a quick snapshot of who I am and where I’m at. And, you know, I don’t just talk the talk, I walk the walk, because I’m partner in 7 self-storage facilities. So as I was saying for those of you who heard a few minutes ago, once you do one you typically don’t stop it at one because it is such a good business. Anna?
[Anna Taylor] (03:45) Thanks Terry. So, my name is Anna Taylor. I’m the head of self-storage lending at Live Oak Bank. I took over for Terry earlier this year but worked with Terry since 2015 in the Self-Storage lending team. So, I’ve been, for the past 7 years, helping people buy, build, expand, refinance self-storage facilities.
(04:06) And I couldn’t agree with Terry Moore that it’s just a great industry and a great business to be a part of. And I like it so much that I recently became a self-storage owner myself, and so I’m just really excited to be with you guys today and talk about what Terry’s doing at Copper Storage Management, because I truly feel that this is the future of the Self-Storage industry. And this is a way to help kind of improve margins, make more money, and automate the processes that you have to keep your business running smoothly. So just really excited to be a part of this webinar today, and I guess with that let’s get started.
[Terry Campbell] (04:48) Awesome. Tess, I guess you’re going to be manning the controls?
[Tess Toth] (04:52) I will. I am going to let 2 more people in, and we will get going.
[Terry Campbell] (04:59) While you’re doing that I’m just going to say, without it sounding condescending, I’m very proud of Anna for getting into the ownership. She’s watched and helped so many people make a ton of money over the years, so I’m looking forward to seeing what she does here.
[Anna Taylor] (05:16) I figured after seeing it happen so often it should be my turn next.
[Terry Campbell] (05:21) Absolutely. Absolutely.
[Tess Toth] (5:23) Can everyone see my screen?
[Anna Taylor] (05:24) Yes.
[Terry Campbell] (05:25) Yes.
[Tess Toth] (05:27) So we will go ahead and get started with Terry.
[Terry Campbell] (05:29) Super. And I’ll try to I’ll try to touch on things at a higher level. You know I could get in and talk for a long time, but I know we only have a certain amount of time, and we’ll have a Q & A, and you’re you’ll be able to reach out and ask questions later. So, I’m going to try to stay at a higher level.
(05:45) The unmanned, remotely managed facility. Why does it work? We’re going to talk a little bit about why it works, how it works, and we’ve kind of gotten to the point where we’re now saying, “remotely manners”. We try not to say “unmanned” and the reason for that is, it’s not totally, completely unmanned. I mean, you do not have a manager there every day running the facility, but you don’t have to have people involved in certain aspects of it. So, you’re not totally 100% automated. So, we try to call it “remotely managed facilities” now, so we’ll go into why it works. Tess, if you would go ahead and advance the slide.
[Tess Toth] (06:24) Sure.
[Terry Campbell] (06:25) Some of the things we will cover here… some of the winds have changed, you know? Customer service expectations these days. People want things faster. They want it now, they want it fast, they want it easy, they want it convenient. So, some of the changes that have been made by going to an unmanned, excuse me, a remotely managed model will allow for that. I’m going to give you a quick example.
(06:51) We were managing a facility for some folks this summer. I think it was June, July, something like that. And it was in lease up, it was a new facility and we rented 83 units in 3 days. You cannot physically do that with a manager on site because you’re going to have people standing in line, they’re going to get aggravated, they’re going to get upset, they’re going to get mad, they’re going to leave. So, the customer service expectations perspective, that’s what some of the things that can help with this model.
(08:00) Hiring changes. I think everybody knows, everybody has seen that the hiring changes, or the hiring challenges that we have these days. I mean, it’s just hard to find anybody to work. It’s hard to find anybody that wants to do certain jobs. It’s hard to find anybody that wants to work for what the job pays. So, hiring challenges has been something that’s really progressed the speed of adaptation of this model in the industry.
(08:33) Some of the modern paradigms, you know, if we if we want to call it that, is folks are using their mobile devices these days for everything. You’re able to use them for, you know, you order your meal at Chick-fil-A. You book your hotel room; you get your digital key. There’s just, you know, people want less interaction with people. They just want to do it, take care of it and be done with it.
(09:00) Technology is another reason that this model is continuing to accelerate because the technology that maybe wasn’t there a few years ago, such as e-sign. Being able to do DocuSign on your mobile devices and things like that has really sped up this model. And you
know your smartphone is a is a big driver of why this is being used. You know, some people think of kiosk when you talk about remotely managed. If there’s nobody there, some people think of kiosk. Well the kiosk was a great thing when it first came out, but everybody has a kiosk in their pocket now and when you go to rent a unit or anything else for that matter, it’s going to auto populate your name, your address, your credit card information, things like that. So, it’s much easier and faster to use than a kiosk.
(09:50) So, you know, several of these things are causing the acceleration of people adapting to this this type of model. Now, “less risky developments” is something that should be interesting to everybody. Including the bank, because when I say, “less risky development”, you can do a smaller project and still make a good amount of money. You can phase it by doing these things. You’re going to need less equity out of your pocket, your loan is going to be smaller. So, you’ve got less expenses and the bank is going to look at it more favorably. I’m sure Anna may touch on that later whenever she has her items that she covers. Tess?
[Tess Toth] (10:35) Yup!
[Terry Campbell] (10:36) Okay. What does “remotely managed” mean? Okay, like I said, no on-site manager. There is no person actually on site working in an office running units anymore. That person has been taken out of the office and they’re put in their home office. They’re working from home and they’re able to handle 5 – 6 facilities instead of having one person that’s using 20% of their time to do anything, because most of the time they really don’t have anything to do if they’re on site. So, you’re moving them into a situation where they’re working from home and they’re handling 5 or 6 facilities. And they get better at what they do when they’re having a lot of interaction with customers. Better at the sales process, so it’s just a better situation all the way around and it’s going to cost less.
(11:25) You also, without having an on-site manager, having that one person that’s running your business, you’re dependent on that person. Over the years I’ve seen many situations where people have had their manager just leave, quit, maybe even pass away. But they were the ones that knew everything about that business, the owner didn’t. So, you’re betting the whole thing on that one jockey. So, you know, if you’ve got the on-site manager which no longer exists in that space who was part of a team that is off-site now you don’t have to worry about that. You’re going to have a constant, basically a stable of folks that are there to answer questions and help rent your units instead of depending on one person. And that on-site person, that on-site manager, they’re typically in the industry now they’re saying two to three times a year there’s turnover. So, each time you have turnover you lose time, you lose money, there’s cost involved, expenses, opportunity costs, a lot of things that, you know, you don’t want to have to deal with and you don’t have to anymore. And obviously there’s no payroll if you don’t have that home site manager there.
(12:36) The maintenance schedule. One of the things that we do, this is one of the reasons I’m saying you can’t say totally unmanned anymore, is because we hire what we call “boots on the ground”. That’s a person who is local to that facility, who can do some light maintenance, who will clean up the facility, make sure that there are no weeds, you know. They’re going to take care of just cleaning empty units that need to be rented, putting locks in units. They also are going to do things like overlock units when someone’s delinquent and maybe if the gate’s down or something. You will have someone there, so it’s not totally, completely unmanned. You’re going to have access to an actual human on that facility.
(13:16) Now the use of technology is a big part of this. The use and ability and availability of technology now that didn’t really exist a few years back. Again, you go back to the e-sign, you’re able to e-sign now. That’s a big, big component. You’re going to use websites, you’re going to be driving all of your business, or most of your business is going to be driven through the website, through SEO and through digital marketing pay-per-clicks. Things like that.
(13:46) Again, the smartphone is really giving our industry the ability to move forward with this. You know, this is not something that’s new. A lot of people think, oh the pandemic really started this and drove it. No, it didn’t. It was already in existence. I mean, I think most of us on this call have used our phones and apps to book rooms, booked flights and order food all sorts of things, so it already was there. It was already in existence. The pandemic may have sped it up some and given more opportunity for it to you to for it to work. But the technology is what’s really pushing it and driving it.
(14:29) Now customer friendly. You know some people are like, what do you mean customer friendly? How is it customer friendly? Well, we make it easy to rent. Some people think because there’s no person there that you can actually physically talk to in person, that it’s not customer friendly. Actually, it’s just the opposite. We make it easy to rent because you can rent 24 hours a day on the website. Our call center that we have is available from 8 A.M to 8 P.M in every time zone. So, if you’re having issues and you can’t do it or take care of it on the website, or you just want to talk to somebody, you’ve got the call center there that’s available for you to talk to. So, it’s very easy to contact people through either the website or also through the call center. And, you know, it’s easy to pay. Again, you pay online, or you set up auto pay and you can call the call center to make payments if you want to. So, we try to make it very customer friendly. Okay, Tess?
(Tess Toth changes the slide.)
[Terry Campbell] (15:30) Just showing you some of the things that we do. We use signage to make it easy on the customer to navigate how to rent a unit or to find their way around the unit. We do use a lot of signage on these facilities. The one on the left, there was an office there, okay. The office was inside the gate so you can’t really rent it out, or you don’t really want to rent it out to someone to use in their own business because it’s inside, so it’s a security risk. So, the office is there. There’s a sign stuck up in the windows and the doors, very easy to see, “The Lights Are On, But No One is Home. You know, it gets their attention. We’re a remotely managed facility, explains it. Here’s the website, here’s a phone number. We also have signs like you see on the right. It’s very distinct directions on what to do. It’s got a QR code. We usually use QR codes all over the place as well. So, you can just scan that, takes you to a website and you’re able to lease your units. It’s very simple. And if you’ve got any problems, phone numbers are everywhere. So, we try to make it very easy.
(16:36) Some of the challenges that you have to think about when you’re moving to a remotely managed facility, and the things that we’ve worked on and dealt with and came up with answers to. Cash payments is one, okay? We give people a transition period of 60 days to give us a credit card. There will be no cash payments accepted. You know, some people say, “Well it’s illegal, you’ve got to take cash”. You only have to take cash if you actually have someone on site. If you have a manager on site, you have to take cash. But if you don’t, you do not have to accept cash. I mean, look at Amazon. I mean, they don’t have anybody, you know personally on site you’re dealing with. And they only take credit cards. So, cash payments, you don’t do that.
(17:25) Checks. Whenever it’s time for a payment we don’t accept checks either. We’ll give them 60 days to rotate it out of the of the checks. We’ll accept checks for 60 days then they’ve got to give us a credit card. Now a lot of the facilities we’ve taken over, the owner or the manager said, “Hey that’ll never work here. These people only want to pay cash or check”. And the reality of it, is most people, when we take over, go “Oh my gosh, thank goodness. Thank you for allowing me to be able to pay with a credit card now”. So tired of writing checks. You know, it costs money for the checks. Nobody wants to do that anymore. And maybe one person out of one to two hundred units when we take over facility, we might lose, because they only want to make a cash payment. So that really isn’t an issue.
(18:08) Customer expectations. That’s another thing. Communication is key. Let’s say, for example, we’re taking over a facility that exists already. It’s an acquisition. You’ve got to communicate with customers, you’ve got to let them know how things are working now. You’ve got to let them know that, hey you know, there was a manager here before, but there’s not now. Here’s how things operate. Here’s how we work; here’s how we communicate. But you just have to, I don’t want to sound bad, the way I put it. But you’ve got to train your customers on how we’re going to do business from now on. And sometimes, you know, it takes about a month. Some of them get a little upset, they complain, and then it stops. It goes away. You know, people finally realize it’s actually not that bad and probably better in most cases.
(18:51) Overlocks is a question that people ask a lot about. Overlocks is what you do whenever somebody is delinquent and doesn’t pay the rent on time. After so many days you overlock their unit. And the way we do it is we have our boots on the ground person put that on. We do first of the month billing, so they can, when they’re out on their one day a week at the beginning of the month, they can go out and put the overlocks on while they’re already there, so it’s very efficient. So that’s how we deal with delinquent units.
(19:21) Now, phone calls, as you see, phone calls again that challenge, you’ve got to have a good call center. It is very imperative that you have a good call center because people still want to be able to talk to someone. And just because they’re not on site and not in that office, doesn’t mean you can’t have someone to talk to. So, we built our own call center. We’ve gone through several iterations and several trials and errors, and we really got it down now. We’ve got it running smooth. We’ve got a great operation with our call center now So that’s something you’ve really got to take into consideration and it’s very, very vital to have them.
(19:58) Again, talking about the technology. You know, as we were saying, you got the driver, which is the ability of the smartphones now, to be able to uh use uh applications and software and so forth. Mainly the e-sign. Throwing into that technology thing there is the gate technology. You got to have a keypad that talks to the software that we use. So, if it’s not in existence, if it has a keypad that doesn’t work or that when it doesn’t integrate with their software, that’s something you’ve got to change out. So, you got to make sure that all those things talk to each other and link together.
(20:35) Auctions is always a question. How do you do that? So, you know, obviously there’s a process and each state’s different as far as the auction process. The way we do it is, like I said, you put the overlock on after X number of weeks. You go through the lien process, which we handle that as well, and you’ve got to make sure you do the lien process properly per state or you can get in trouble. So, either you got to make sure that you really know what you’re doing, or you got to hire somebody that does.
(21:04) So, we use one of the companies, there’s a couple of good companies out there; Late2Lien, AI-Lean. We use Late2Lien, so that helps protect you as the owner and us as the manager from having some wrongful sales. Which is one of the worst things that you can do is to sell storage facilities and have a wrongful sale. They will send out letters for us, they’ll do all the notifications, all the all the proper things you got to do for the lien process. And then again, you know, we’ve got the lock. So, during the auction process, when it’s time, the boots on the ground guy, he’ll cut the lock, he’ll take inventory via pictures of what’s in there, and then he’ll upload it through an app to the auction software that we use. So that all of these processes are things you’ve got to take into consideration, and you got to be able to handle right.
(21:53) Okay. And there’s a picture of The da Vinci lock. And just really quickly, for anybody who’s never seen it or doesn’t know what it is, this is basically a combination disk lock. You can see there’s a code imprinted on that lock. And the way it works is, our boots on the ground person will go out and place one on a delinquent unit. So, when they place it on the delinquent unit they enter into the app. It goes into the software. Hey, this unit 123 has, you know, this lock with this code on it. And when the person pays their bill everything’s automated. So, when the person pays their bill, they get a message. They get a text, get an email, that tells them- okay this is the combination for the lock that’s on your unit. Now you can get back in. You can go to your unit. Then the person takes the lock off and throws it in a box. We have boxes around the site, like you see on the right there, where you return those. And there’s a deposit on the person’s credit card. So, if they don’t pay it, they’re paying 50 bucks for this lock, and they really don’t want to do that. I don’t think we’ve ever had any issues with anyone not returning this lock.
(22:57) Okay, Tess. (Tess changes the slide) Now, some of the other challenges you got to think about, you know, unit layout is something to think about if you’re building a facility. Because if the facility’s already there you can’t really do much about the unit layout, you can just make sure you got good signage everywhere. But if you’re building a facility you want to take into consideration making the layout of the buildings, the hallways, and things like that very easy to navigate. Maybe you have long hallways with half glass personnel doors on the end so somebody can look in and see all the way down that hallway, you know? Just, they’ll feel safer by being able to do that. So that’s something you want to take into consideration.
(23:39) Again, signage as we mentioned. We have signage everywhere. You know, it’s got how to rent, how to reach our call center, how to get to the website. But also, how to get to their unit. It’s just like, you know, if you go to a hotel. Let’s say you go to a Hampton Inn. You’re going to have a sign that says, “Elevators this way”. You’re going to the elevator, you get off on your floor, and then it points you in the direction of whichever way your room is.
(24:04) On the larger facilities, works the same way. I mean, we’ve done really huge facilities and you’re just going to have more signage, you know, in a large facility. I compare that to maybe a hotel casino in Vegas or, you know, Caesar’s Palace. You’re going to have big signs down through the hallways going “This wing is this way”, then you get to “The elevators are this way”, you get to a bank of elevators. “This set of elevators takes you to these floors”, “These to this floor”. You get off on your floor and then it shows your room. So, same exact thing. It’s a way, you know, I like to communicate that is, in a lot of ways running a self-storage unit is like getting in a hotel room because you could do it online. You can get digital keys; you can do everything without talking to anybody. And personally, I love it. You know, sometimes it takes a while to grow on people, but I really like that because you never know how many people are going to be standing in line when you get there.
(25:00) The website. I just need a modern, simple, easy to use website. We handle that for you, you know. If we manage for you, we handle the website. We use a company called Go Local that we’ve got a master website. So, every facility goes up under that. That way we get some extra SEO advantages there. So, we want it to be simple, easy to use, quick and efficient, you know? And all the information on there that Google likes to see to help with the SEO’s.
(25:30) And office space. With office space, you know, most of the time, I just touched on it a minute ago. Normally you don’t do much with office space because if it’s outside the gate and you want to rent it to somebody and get a little extra income, hey super, that’s great. If it’s inside the gate you really don’t want to. So, you just got to determine what you’re going to do with it. You know, sometimes you can convert it to rentable square footage. So, if you can convert it to rentable space that’s great, but we’re, like I said, you can rent it to a local business. But you just you got to look at each one individually and see what is the best scenario for the office.
(26:10) Okay, Tess. (Tess changes the slide) Now some of the advantages. The obvious one is reduced expenses. Obviously, the top one is payroll. You’re going to have a lot less payroll expenses, payroll taxes, benefits, and, you know, other things you don’t really think about. Some of the office expenses, maybe office supplies that you’re not going to have. You can, actually, you’ll save money on your electricity because the lights aren’t necessarily on all the time. You don’t have… the heating and air conditioning can be set at a wider variable then so tight so that it’s comfortable, you know, for somebody to be in there all the time. There’s just a lot of expenses that you can save there.
(26:48) And you know these, between reduced expenses and increased revenue, and I’ll go over that in just a second, but the value that you can gain with this, you know? If you were to increase your NOI, so lower your expenses, increase your revenue by like 56, 5700 bucks and at like a six cap. If you did that per month, at a six cap, that’s over a million dollars in value that you can add pretty quickly. And, you know, if you buy a facility and you remove the manager from that facility and you go with this, you can almost do that. You can do most of that right away. You can increase that value by that much right away.
(27:32) Increased revenue. Some of the increased revenue that you would have is not just, you know, through revenue management, which is something that we obviously will handle for you. We do stay on top of that. And we use different methods and different software to make sure that we’re increasing your revenue or keeping you competitive where you need to be. We don’t have the big fancy algorithms that, you know, Extra Space and Keep Smart, some of those guys do because they’ve spent a lot of money on that. And you know, for what we do, it’s, we’re not there and we don’t think we need to be just yet because what we’re doing is working really well.
(28:10) But some of the increased revenue that you’ll get through using this model is, you know, when you’ve got a face-to-face relationship with a tenant and a manager. When you’ve got that they come in they say you know, “Oh, I’m not going to be able to make my whole payment this month.” Or “Not going to make my payment.” They’ll, you know the manager sometimes will give in and take a partial payment or they’ll waive late fees. They’ll waive other fees. They’ll waive the requirement for tenant insurance. And I’m not, I don’t want it to make it sound like all managers are bad people or thieves because they’re not. But there’s been a lot over the years, a lot of managers, who’ve found ways to steal money and embezzle money.
(28:51) So, you do away with those things. You increase revenue by not waiving these fees. You increase revenue by requiring everybody to have tenant insurance, which we do, we do with every one of our customers. We require tenant insurance on every unit. And the only way for them not to get it is if they can prove they already have it covered some other way. Maybe their homeowners or renters’ insurance. And if they don’t provide that within a certain amount of time then they’re automatically going to be billed for it. And it’s something we highly recommend that you have. It just adds another layer of protection between yourself and the customer as well as giving you an extra revenue stream. And that can add up. So those are some of the things that can really affect your value there between reducing expenses and increasing that revenue.
(29:40) And again, enhanced customer experience. You know, again, I’ve already kind of touched on that. You got the longer call center hours. Let’s say that, you know, you can rent 24 hours a day on the website. Or you can rent 12 hours a day via the phone. And you know, if you need to rent a unit, normally with a manned facility, they’re there from you know 9-5, typically. So, you’re going to have to leave work early. You’re going to have to leave, you know, go at lunchtime or something, to running it. This way you can do it, rent it, whenever you want and go whenever you want. I have actually gone to rent a unit before and gotten there and there is a sign on the door, “Manager will be back in an hour”. So that was, you know, not a very good customer experience with a manager.
(30:21) So all these things combined are just, you know, huge reasons and I hope I’ve made a case for why this really works. And like I said, I can get into more detail later and we’ll have some questions. You can call me, email, whatever, but I’m finished with my portion except for doing a couple of case studies here for you, I’m going to show you. And then we’ll let Anna talk about the important part where you get the money.
(30:49) But this first case study I want to show you. This is one that I was actually an investor in this facility. We bought it for $1.375 million. First thing we did was remove the manager. Well, first of all, the owner that we bought it from was supposed to let the manager go. Well, when we show up the first day we take over and they don’t even have a clue what’s going on, so you know, bad situation from the get-go. Just so happens her husband is the chief of police, so she’s like, “I hope you guys never need the police to be here because they’re not going to come.” Nobody’s going to go to credit card, nobody’s going to, you know, do this, do that. Well, the first thing, you know, obviously we do is get rid of the manager. All that goes to the bottom line. We added tenant insurance, and we have a very high penetration of tenant insurance we had there. We increased the rates that were like 30% below market. So, you know, that’s what the manager is supposed to be doing is maximizing your investment and she’s 30% below market rate. Yeah, she’s full but, do you pay your bills with occupancy, or do you pay it with income? That’s what you know I like to look at.
(31:53) So we increased the rates, we didn’t lose anybody, we stayed full. We cut the delinquency. We got rid of the non-payers, we got people in that paid. Long story short, you can kind of see it on the right-hand side of the page there. We paid $1.375 for it. And less than 18 months later it appraised for $4.2. Well, somebody wanted to buy that from us this spring. Do you think we kept it? No, we bought these things with what we had in mind was to buy it and to build cash flow. But this was way too much, too good of an opportunity not to go ahead and sell it. So, we did.
(32:29) The next case study is actually, was an acquisition. I’m sorry, a new construction, it was a conversion. So, it was a lease situation. Totally lease up. It was a little over 31,000 square feet in Michigan. It was built, they had $1.8 million in it when they built it which included their first year of operating expenses. And after only 11 months of using this model, it was 74% occupied and they were at a six cap. The value was already over a million dollars less than a month later. A year later. And at the projected stabilization, it was going to be worth $3.8 million.
(33:05) Well, these guys just sold this thing a couple weeks ago, and they made a fortune on it. And they were so happy. And they wrote us a big testimonial, all sorts of things there. But it works on acquisitions. It works on lease up. A lot of people think that lease up, you need to have somebody in there to lease it up. No, you don’t. You really don’t because, like I said, we were handling one that was in lease up when we ran 83 units in three days. You really physically cannot do that with a manager on site.
(33:31) But that’s it for what I’ve got to cover. Again, just, you know, you can ask questions here shortly, but I’ll be quiet and let Anna take stage. Let me just unmute myself.
[Anna Taylor] (33:45) Let me just unmute myself. Thanks, Terry, for all of that really good information. I really, I truly, truly believe that that his model is the future for Self-Storage. And so, I just kind of wanted to speak a little bit about, you know, from a banker’s perspective how we evaluate projects and how we perceive this type of management model within Self-Storage. So, I just kind of wanted to back up a little bit. You know, just on the financing side.
(34:15) So Live Oak Bank we’ve got a team built out, you know, focused exclusively on self-storage projects. And we offer both traditional financing and we also do the higher leverage SBA Loans where people are putting 10-15 % down. But if you call the bank looking for a self-storage loan, you’re going to be talking to someone like me who all they do all day long is self-storage. So that really helps speed up the application process because you don’t have to explain the business to us. We can meet you where we are. We understand we can provide recommendations to different vendors that you might work with, including Copper Storage Management.
(34:50) So when I get a loan application, in general you know, what am I looking for? What does it take to get approved? It’s kind of one of the first questions I get when a customer calls me. And if I had to boil it down to two things you kind of have to check, two separate and distinct boxes. Number one, we want to make sure that we have a good project that’s going to make money and be profitable. And number two, we want to make sure that we’re lending money to a good, a good person who’s a strong guarantor. And really if we can show that we’ve checked those two boxes that’s really all it takes to get approved.
(35:23) So moving on to the next slide. What makes a good project? So, for me, cash flow is king. I don’t care about appraisal value, per se, what it’s worth doesn’t pay me back. I want to make sure that the facility or the project the proposed facility can make enough money to, you know, make the loan payments and then still provide the borrower with a good profit. Because I don’t think anybody’s in this business to lose money. If you’re in this business, you want to make money. So, it’s important that you pick a good project that’ll make money for you.
(35:54) So when we’re looking at the cash flow of the facility on acquisitions, we’re looking at both the seller’s historical financial numbers. So, their tax returns, their P & L’s, their rent rolls. But we’re also getting projections from the buyer. Why? Because I’m sure there’s many people on this, you know, on this webinar that have purchased something not because it was doing well at the time, but for what it could do. So, we’re not scared of the sellers, you know, doesn’t have a website. We’re not scared of the, you know, the rental rates are 30% below market. To us and to you guys, we see that as an opportunity. So almost always on acquisitions we’re getting projections in file to show kind of what the facility is going to look like under the buyer’s management.
(36:39) So on new construction. Obviously, there’s not a self-storage facility there so kind of how do we gauge if it’s a good project or not? We really rely on a feasibility study and we’re very picky about who we’ll accept those studies from. There’s probably only nine people nationwide that we’ll accept a feasibility study from and so, you know, Terry, Tess and I, we all work together at the bank. And I remember when I first started lending in 2015, you know, Terry said it’s very important we get a feasibility study.
(37:08) And I remember at the time after getting a couple of them back I said Terry, “Why do we require these feasibility studies? They’re always positive.” And he said, “Just you wait. We are coming off of the recession where nothing was built for a long time, and there’s a lot of communities with pent-up demand, but that will change.” And fast forward to 2022, that is definitely true. There’s been a lot of interest in self-storage, especially in the last couple of years, as other real estate investors have seen how well self-storage did during the pandemic, and said I want to be a part of that.
(37:40) So there has been a boom of new construction in self-storage, which means it’s more important than ever to get a feasibility study because not all markets can support more self-storage. So, when you get a feasibility study, they’re not only going to tell you here are the competitors within a three-mile radius and they’re 100% full. They’re also going to say hey, two people have requested a zoning change for self-storage. There are four projects where they are in the permitting process to get a permit for self-storage. And that’s really crucial for potential developers because, you know, if you’re in a market where everybody’s full, those older facilities aren’t truly going to be your competitor. If they don’t have any available units, it’s not like you’re competing with them for customers. But if another self-storage business opens up around
the same time and you both have kind of new nicer product, that’s who you’re going to be kind of battling against.
(38:29) So the feasibility study is very key to see, you know, if you should build it or not. But it also has very detailed projections and we use those in our underwriting to see month by month by month for the first couple of years of operations what is that going to look like? And I use that to see how much interest-only I need to build into loan, how much working capital I need to build into loan. Because my goal as a lender is to put all the support needed to get you through not only construction, but also the lease up period.
(38:58) So the feasibility study is really important, but it also matters how, you know, how much it’s going to cost to build. Because there are a lot of markets where the feasibility study might say there is a lot of demand for self-storage. You know, everything’s full, there’s no new projects. But you also have to look at the, you know, what it’s going to cost to build compared to the potential revenue.
(39:19) So if you’re in a market that’s super rural and everybody’s full for 50 miles, but the most you can get for a climate controlled 10 by 10 is $70, construction costs are so expensive right now it’s going to be really hard to justify the cost of construction.
(39:33) So when I’m looking at a good project for new construction, I am kind of balancing the feasibility study and the construction budget together to see is there enough demand for this for this facility? But also, can we build it in a most cost-effective way at a leverage point that the borrower is comfortable with? Because if I, you know, everything works, if I say yeah, we’ll do it, but you got to put 40% down, you might pass on it. Say that’s not the best use of your money. But if you’re looking for like, high leverage, especially on the SBA side, the feasibility study projections, the construction budget kind of work together to see, you know, what kind of leverage point that project will support.
(40:11) So moving on to good guarantors. You know, what do they look like? So, if we have a good project then the focus is now on the guarantor. So, you know, clear, easy stuff. You have to have good credit for us. 650 is really the floor. If someone has a lower credit score, then that is probably going to be a pass for us. Our credit team really does not like personal bankruptcy. So, if you’ve had a personal bankruptcy, even if it was 15 years ago, if you’re going to work with us, please disclose that on the front end so we can work through it. Just because that will make it more challenging to get approved.
(40:45) Obviously we like to see strong income. For a lot of these self-storage facilities that you’re looking at it’s probably not going to make enough money to pay all of your bills day one, right? So, what we’re looking for in guarantors to see that they have kind of outside sources of income that can take care of their personal obligations where they’re getting, while they’re getting this facility where it needs to be profitability wise. So, kind of in that vein we want to work with people that are financially responsible.
(41:10) So we look, like, we look for a 50% personal debt to income ratio. You know, just to make sure that people are kind of living well within their means. They’re not leasing five Tesla’s making forty thousand dollars a year. Just to show they’re kind of, you know, personally living financially responsibly because we feel like that will translate into the business.
(41:31) Solid liquidity is important as well because we’re going to have to look at your personal financial statement and say, okay where is the equity injection coming from? And then how much money are you going to have after that equity injection? Because I never want to totally clean somebody out with the required equity injection and leave them with zero liquidity after the fact. You always want to have a nice cash cushion, you know, in case things go wrong. If there’s a bump in the night with the facility or there’s money you need personally, you always want to make sure that you’ve got that kind of excess liquidity.
(42:00) The last thing I’m looking for in a strong guarantor is a plan for success. Self- storage is really popular right now. There’s a lot of people that are interested in self-storage and I want to work with someone who says, “Anna I found this facility and I want to acquire it because I love the location because of x, y, z. And once I, you know, once I buy it here’s the software I’m going to use, this is the website platform I’m going to use, this is who I’m going to use for third party management”. Those people I’m excited to work with because they’re excited about their project and I know they’re going to give it the time and attention it needs to be successful.
(42:32) People I’m not so excited to work with are people are like, “Oh yeah, I heard good things about self-storage. I heard you don’t really have to like, try that hard with it. I’m looking for, you know, just some mailbox money”. Those are not our kind of borrowers. Even if you are picking a, you know, a trusted partner like a Copper Storage Management, that’s great. But I want to hear, kind of, your reasons why you’re making that choice. Because we want to make sure that you’re kind of staying involved with your business.
(43:01) So automation and self-storage. You know does that impact our underwriting for self-storage? And I would say that automation, number one, we’re okay with it because it is everywhere. I can’t tell you the last time I went to the airport and checked in at the counter. I almost always either check-in on an app on my phone or go to the kiosk even if I’m checking a bag. For Starbucks, why wait in line if I can just order my coffee and have it be sitting by mobile pickup? And I can just kind of take it and skip the line. In the grocery store, if I’m just grabbing a few things, I’m almost always go to that little, you know, self-scan kiosk because it’s going to get me in and out faster than it would having to wait in line to get to a to a cashier. So, I think, you know, by default it’s something that people are very comfortable with in all other aspects of their life, so why not self-storage?
(43:53) And I think that the model has been proven in storage I remember when I first started in 2015, automation in general, you know, and can we remove an on-site manager was a huge hot button issue. And most people were like, there’s no way it’s going to work, you know? People are really craving talking, you know, face to face with a person when they’re, you know, booking a unit and everything like that. And I think that over time there have been more and more facilities where you kind of can run a unit using a kiosk or an iPad that’s there. Or you call a number and rent online or rent over the phone or online.
(44:26) And so I think the model has really, truly been proven in self-storage. And I don’t think that customers are necessarily missing the face-to-face interaction with the manager. I mean Terry and I, you know, back when we were both working at the bank, a big part of our job was doing site visits for our customers and visiting facilities. I can’t tell you how many times Terry and I would go to an acquisition site visit or they’re buying it from someone, we met the manager. And we both left being like, “Oh my gosh I can’t believe they’re letting that person manage the facility”. That either they were rude, or they, you know, were kind of unkempt, didn’t give off a good vibe.
(45:02) So the cool thing about kind of using Copper Storage Management is they’ve really thought about the customer experience and designed it to a T. And so, to know that any potential customer is going to get that, that thoroughly designed customer experience, should give you a lot of comfort that they’re getting a consistent customer experience every time. And you can probably have a lot of input on how that works.
(45:24) So, you know people always ask, “Well you know, I don’t know if I want to have a day-to-day manager, are you guys okay with it”? And the answer is yes. We are perfectly comfortable not having, kind of, you know, with the kind of remote management model. We’re perfectly fine with that. When we will take your projections in there, other banks will say you know what, I just want to be conservative and underwrite with the salary in there. We’re not going to do that to you because we know that it works. And so, we’re definitely comfortable with remote management in our projects and we have a lot of customers that have proven the model. They don’t have a day-to-day manager. They have a lot of processes that the manager would typically do that they’ve automated or figured out a new solution for it.
(46:05) So we know through our portfolio that it works, and it works really well. And if you’re looking to, you know, obviously you’re in this business because you want to make money. You know, if you want to make more money a good way to do that is to remove your large expenses. And you can’t get rid of property tax, your biggest expense. But you can certainly reduce the payroll expense and the expense that you take on to manage the facility. And that’s going to show up. I mean I’ve got customers that don’t have a day-to-day manager that are hitting margins in the in the 80s, which is incredible. And the more money that you make, obviously, you’re making more money each month.
(46:40) But to Terry’s point, you know, maybe you want to hold your facility forever and so making more money each month is important. But you’re also adding to your overall value because facilities are valued on a cap rate. So, the higher the net operating income you’re going to get, the higher of a value you’re going to get just in case someone wants to come and make you an offer.
(46:58) So we are definitely comfortable with automation in our projects. Copper Storage Management is, I believe the only remote third-party management company on the SBA franchise registry. They’re approved internally with us so there’s no separate approval process. So, we’re always comfortable if someone doesn’t want to have a day-to-day manager but we want to understand okay, if you’re taking that piece out of it what is your plan? Kind of, you know, what are the vendors that you’re using? And so, if you’re calling me and saying, “I’m not having a third-party management, you know I’m not having a day-to-day manager I’m going to use third party management”. And you say it’s Copper Storage Management, then we’re like okay, we’re comfortable with them we know they do a good job. That’s really kind of what we’re looking for.
[Terry Campbell] (47:45) One thing I wanted to add, to reinforce what we both just said about this model being, you know, not just the way of the future but the way the present. Is for those of you who are in the industry, you probably already know this, but Extra Space just recently bought Storage Express for $590,000,000. And the main reason is they wanted to get into the Remote Management business because Jefferson Shreve, who started that business years ago, I consider Jefferson to be like the pioneer of the unmanned self-storage model. And he sold to Extra Space 590,000,000, 107 facilities, 14 building sites and he’s on the board. And they did this purely because they want to get into the unmanned model in some way, shape, or form. So, this was a quick way for him to do it. So just a little reinforcement there.
[Anna Taylor] (48:49) Yeah, absolutely. And Extra Space, I mean, they are top-notch. They have so much data on self-storage, you know, and they’re smart. They’re sharp guys. They wouldn’t be making such a large purchase if they didn’t feel like this was the future of the industry. And they’re probably, you know, bought that portfolio to figure out what his kind of secret sauce is so they could implement it in other stores that they have across the country.
[Tess Toth] (49:16) Awesome. Well, we really appreciate both of your time and sharing all that information. I know it was a lot. We’ve had some questions coming through the chat so I will address those first. Yes, l I’ll follow up with all of you. I’ll send Anna and Terry’s contact information and a recording of today’s session, so don’t worry about that. Another question is about Noke locks from Janice. Terry, do you want to take that one?
[Terry Campbell] (49:57) Yes. We can definitely manage facilities that have Noke. We have facilities under management now that that use Noke. So, you know it’s something that integrates. The only issue with that I’ve had, is that I have asked them to get us, you know, some technical access. So, you know if somebody calls up, has an issue, you know, one of our tenants has an issue with either their Bluetooth, the app, or the lock itself or whatever. You know, our culture folks are not trained technically and shouldn’t be on that product, So that’s our only issue of concern. And I’ve had a couple conversations with them about it so hopefully that’s getting resolved. So that’s not any kind of an issue. But yeah, we’re happy to do that.
[Tess Toth] (50:48) Great. Another question, this one’s for Anna. Can the purchase price of the land be included in the SBA loan or does that need to be purchased separately?
[Anna Taylor] (50:58) That’s a great question. It can be financed through the loan and that’s always my preference if you’re looking at purchasing land. Just because I like having it rolled into the loan itself, so you know that absolutely everything is paid for when your loan closes. Because we’ll finance the land, the construction, all the closing costs, interest reserve, working capital. So, if you do buy the land prior to a loan closing, just know that you’re doing that at your own risk because if, for whatever reason, your financing falls through then you kind of, you’re stuck with the land. So, we can absolutely build that into the loan and it’s actually my preference as a lender to do so just to make sure that the customer is fully protected.
[Tess Toth] (51:37) Awesome. Can this work for boat and RV sites only? Terry, I’m assuming that’s on the management side of things.
[Terry Campbell] (51:43) Absolutely. Sure can.
[Tess Toth] (51:46) Perfect. Let’s see. What software does Copper use? So, Terry, feel free to tackle that one at a high level.
[Terry Campbell] (51:59) StoreEDGE. What we use and require is storEDGE. You know, there’s a lot of software’s out there. And this is just one that’s worked best through the process. It works best with integrating and things. And we require it, you know, if you don’t have it, you’re going to have to get it because we, you know, you can’t have everybody trained on three or four different types of software because there are differences, and it does cause problems. So, for us to be efficient we have to standardize so we can, you know, be better at it and continue to hold costs down.
[Tess Toth] (52:31) Perfect. This one is for Anna. If we have a facility about to be finished, they’re in phase one, would Live Oak and SBA be able to do a phase two construction loan as we pay off the phase one to another lender?
[Anna Taylor] (52:48) Yeah, absolutely. I think phasing is very common. We can lend in a phase two situation. Obviously, our preference would be to be the lender on phase one and phase two. But the cool thing about doing an SBA loan is that we can be in a second lien position in a phase two loan behind another bank and we still feel comfortable moving forward. So, the long and short answer is yes. We can absolutely help someone with their phase two.
[Tess Toth] (53:14) Wonderful. Another quick question. When do you recommend an owner engages with you in the planning process? And I guess that can be twofold for both financing and management if you both want to tackle that one.
[Anna Taylor] (53:30) Well I guess financing probably comes first. You know, again, so one of the criteria for a good guarantor is a plan for success. So, it’s never too early for me to know kind of what your plans for management are. And so, I would be excited to find out if someone was, you know, had chosen Copper Storage Management. Just because we have comfort, we understand what they do, we know that they do a good job. So that’s something that I would want to know on the front end just because that plan for success is so crucial for us. So, we want to know, you know, what is the plan after construction is complete?
[Terry Campbell] (54:05) Same thing here. You know, the sooner the better. I’ve always said the earlier the better. It’s never too early because you can always say, “Hey call me back in a month, call me back when you reach this point”. But you know, having some of those conversations early is always the best thing to do.
[Tess Toth] (54:19) Perfect. Anna, this one looks like it’s for you. What income or credit score are you looking for from the buyer, and do you loan based on the cash flow of the facility? I know you mentioned some of that in your presentation. but just to reiterate.
[Anna Taylor] (54:32) Yeah. So, the minimum credit score for us is 650. If it’s lower than
that, you know, call me and we can talk about it. Maybe we can make an exception. But typically, 650 is our floor. And in terms of income required, we don’t have a set income requirement because we lend all across the board.
So, I would say, you know, the amount of income that you have bringing in needs to make sense in kind of, in comparison to your personal obligations. But also, in comparison to the project scope and size. So, the amount of money that I would expect somebody to make for buying a $750,000 acquisition is probably a little bit different than the income I would expect if someone is asking for seven and a half million to do a beautiful ground up development project. So, the answer is, it’s different every time and we kind of look at it holistically to see what number is appropriate. And so, if that person has a specific project and wants to reach out to me directly, I’d be happy to kind of walk through the, you know, income and liquidity levels and see if that is sufficient for getting financing for what they’re looking to do.
[Tess Toth] (55:37) Perfect. Thank you. This is a question, just in general, since you both have so much industry experience. How do you find facilities? Via direct mail or brokers? What are your recommendations for folks in the room?
[Terry Campbell] (55:52) Well, you know, brokers are always a way to do it. You know, I’ve seen a ton of ways that people do this. Some cold call, some buy mailing lists. If you buy a mailing list don’t buy it for the facility, buy it for the facility owner. Because if it goes to the facility, a manager is going to get that and go, oh crap I’ll lose my job and they’re going to throw in the trash.
So, you know, try to access the actual owners. But cold calling in person, you know, when there’s somebody there, is a good way to do it. And finding those owners.
Sometimes networking at trade shows, especially trade shows can be very helpful. Sometimes they put together groups of owners that may be looking to sell. But, you know, looking at things on the market, there’s just a lot of ways to do it.
But some of the best deals and the best opportunities have been ones that, you know, people find by just reaching out and making contact with the owner or stopping by a facility. From what I’ve seen.
[Anna Taylor] (56:51) Yeah. I couldn’t agree more. And I’ve, you know, I’ve been trying to buy a facility for a long time and I kind of did it all. I reached out to brokers who had a listing, I’ve contacted owners directly and sent letters to their house, not the facility. So, you know, that’s something that you can look up if you are pretty good at kind of combing through tax records. But the one that I bought was just kind of a local connection to someone we knew was looking for someone to sell. So, I would say just, you know, always be out there and networking, because you never know what kind of connection is going to put you in touch with the right person.
[Terry Campbell] (57:27) And once you actually do it, once you buy one and you’re on the radar for the brokers and people who are selling. We don’t even look for them anymore because we have them sent to us almost every day. Because once people see that you’re real, you can make it happen, you can make them close. You’re going to see all sorts of deals, you know? You’re going to have to comb through them, but you’re going to have them brought to you quite often.
[Anna Taylor] (57:54) Isn’t that a nice problem to have? I think a lot of people on this call would love to have that problem.
[Tess Toth] (58:00) I was just going to say you can also join, like, your state associations. There’s a ton of self-storage Facebook groups where people network and put things out there. So, definitely worth looking into.
[Terry Campbell] (58:12) And that’s awesome. That’s another good point, Tess. I’m going to throw that out there. I’m sorry, I do this every time I’m on a webinar. Join your State Association, you know? If you’re in the business, join. If you haven’t, if you’re looking to get the business, join because you learn a lot of information. You get a lot of opportunity to talk to a lot of experienced people, you get the opportunity sometimes to find a facility to buy.
But there’s also legislative issues and things like sales tax and things like that, that State Associations can really help the industry and the people in your state with. So, I always say always, you know, join your State Association and another thing, most State Associations will give you is a copy of a tenant agreement for your state that’s been written by a self-storage attorney. So usually, whatever your fees are, that your dues are, for the association, are many, many times paid for just by getting your hands on one of those leases that are, you know, made specifically for your state.
[Tess Toth] (59:13) Awesome. Terry, does pricing for Copper, including the cost of all services, do you want to talk a little bit about our baseline pricing and how we scale it?
[Terry Campbell] (59:25) Sure. The way we price, we have a fixed amount, it’s not a percentage of income. Like, you know, all the other third-party managements typically operate on a percentage of the income. We have a fixed, flat rate depending on the number of units. Now once we get you to a certain point, let’s say we take your income on an acquisition up by 10% or we take you from zero lease up past 60% lease up, as far as physical occupancy, at that point we get a 1% success fee.
So, and one of the reasons we do that is when I first came on board back in April, I had several folks ask the question, “Okay, you’re a flat fee that’s great. I like it, but what’s your incentive to increase my revenue’? And I said, “Well, you know, other than our reputation, that’s a very good question”. And I had to ask enough that came up with that that way of doing a success fee. It gives us incentive to, you know, make more income. And it makes the customer feel good that we have a carrot out there to increase their rental rates. So, it’s a flat fee based on number of units, plus a success fee. It’s what we get as far as fees, you know. And then you have your cost of software. With our fee you get the cost of the call center software and the call center folks, which are usually, with everybody else, those are separate numbers in addition to the actual management fee.
(1:00:57) So you have boots on the ground person, we recommend that you budget 600 bucks a month, normally. It can vary depending on the location or size of the facility. And that person is actually a 1099 employee. They’re not an employee of ours. They’re 1099 for you. We offer bookkeeping services that we can do for you and obviously, if we’re doing that, we’re going to pay that boots on the ground person for you. So, you’re going to be paying for yourself self-storage software, your website, and bank fee.
(1:01:28) So you know that. Those are the things typically that you’re going to be looking at. And anybody who’s interested, you know, after the call, you know, Tess can send out to anybody that needs it or wants to see it, our actual pricing sheet we’re very transparent with it. So, we send it out, you can take a look at that and you can take a look at our agreement as well that we use.
[Tess Toth] (1:01:52) Absolutely. Well in the essence of time it looks like one more quick question. State Associations, please explain. Most states have a State Association if I’m not wrong, correct Anna and Terry? If not one in your region you can literally just Google “North Carolina Self-Storage Association” and their State Association will pop up and you can join as a member. And then you’ll have access to the events and resources and networking.
[Terry Campbell] (1:02:21) There’s a National Association as well, but you want to get you want to get involved on the state level.
[Tess Toth] (1:02:28) Perfect. I guess one more question and then in the essence of time we’ll let everyone hop off. Terry, someone has a manager in place, they’re about to acquire their first facility. What are some of the best practices for letting go of a manager that lives on site? Obviously, you know, you’re telling someone that you’re going to move to a different model and their services are no longer needed. So how would you recommend someone would handle that?
[Terry Campbell] (1:02:55) Well I would find out what your local laws are. If you have an attorney I would just, you know, have a quick conversation with them and maybe even the sheriff because you’re not only going to be, you know, letting somebody go, you’re going to be evicting them. You don’t want them on site if they’re not working for you. You don’t want to rent a, you know, residence out on site. Now if it’s outside the fence and it’s totally separate, you know, that’s maybe, you know, you keep them as a tenant if you wanted to. But I would just check into your local laws in regard to that, but I would wait, you know, as long as you can, but plan to give them some severance pay so they’re, you know, they’re not just totally taken off guard and thrown out in the cold. I would give them, you know, notice. Give them severance and that sort of thing, but I would check into the local laws, you know? I don’t want to weigh in too heavily on that because that’s exactly what I would do.
[Tess Toth] (1:03:49) Perfect. Well thank you everyone for joining. I know this ran a little past the hour. Thanks for bearing with us with the technical difficulties in the beginning, but we appreciate your time. I’ll follow up with you all um and then you can reach out directly to myself or Terry or Anna with further questions or needs.
[Terry Campbell] (1:04:09) Thanks everybody that was great having this.
[Anna Taylor] (1:04:12) Yes, thanks everyone.
[Tess Toth] (1:04:13) Take care.
[Terry Campbell] (1:04:15) Bye-bye.
