Is Your Storage Facility Properly Insured? Probably Not.

Most self-storage investors have never actually verified they're properly insured... and the ones who find out they weren't usually discover it at the worst possible moment.

Joe Downs sits down with Terry Campbell; commercial insurance specialist at Johnson Insurance and a storage industry veteran who has built facilities, underwritten SBA loans at Live Oak Bank for seven years, served as CEO of Copper Storage Management, and personally owns eleven self-storage locations across the Southeast. 

Terry brings a perspective almost no insurance professional can: he sees coverage gaps through the eyes of an owner, an underwriter, and an operator simultaneously. 

From FEMA flood remaps that sent one facility's insurance from $11,000 to $84,000 overnight, to coinsurance penalties hiding in aging policies, to the specific coverages first-time buyers almost always skip, this episode is a direct challenge to every storage investor who has ever assumed they were properly covered… without actually checking.

Listen For:

4:58 Why should every self-storage buyer check the FEMA flood map before making an offer?

14:47 How do you know if your current self-storage facility is underinsured right now?

16:07 What replacement cost mistakes are self-storage owners still making after the COVID price spikes?

22:15 What coverages does Terry Campbell say every first-time self-storage owner must have at closing?

29:55 How does insuring a boat and RV facility or small bay flex space differ from traditional self-storage?

CONNECT WITH GUEST: TERRY CAMPBELL, BUSINESS DEVELOPMENT MANAGER | SELF-STORAGE & FLEX SPACE 

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Joe Downs on LinkedIn

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Transcript

Joe Downs (00:00):

$11,000 a year, that's what one storage owner was paying to ensure a building against flood damage. Then a remap happened, a FEMA remap. Nothing changed about the property, nothing changed about the roof or the walls, and that same coverage came back at $84,000 a year. Same building, same physical risk, nearly an 8X jump overnight. My guest today sees this exact scenario play out across deals nationwide. By the end of this conversation, you are going to know exactly how to find out if you're one remap away from a number like that before it finds you. I'm Joe Downs and welcome to the Storage Muggles podcast. My company's acquired over 20 self-storage facilities and over 70 million in assets across multiple storage niches. And I've seen this business from most angles, educated hundreds of students and learned firsthand who succeeds and why. And that's what drove me to build this storagemuggles.ai, which is an AI powered community with the tools, the structure, and the guardrails to teach people how to buy their very first storage facility.

(01:16):

It's sort of like bowling with bumper rails. And that's exactly why we launched this podcast too, to bring you the lenders, the brokers, and other industry pros like today's guests, as well as the real people who've successfully purchased their very first storage facility so you can hear their stories and learn this business from the folks living it every day. And I'm actually, I don't know if I'm fired up about today's conversation, Terry, and I don't mean no disrespect to you. It's just insurance. And my opening hook there about that one buyer, that was me. So this is a little bit of a PTSD to live through today with you. But I am excited to talk with and share with you my guest today, Terry Campbell. Terry is a commercial insurance specialist at Johnson Insurance, and he's focused on self-storage and flex space. But here's what makes him different and why I said that.

(02:11):

He sat in every seat in this business. He started on the construction side, building storage facilities. He spent seven years at Live Oak Bank underwriting SBA loans for storage deals, folks. And pay special attention to that detail because I know a lot of you who are getting it into your first storage deal someday. SBA loan is. Are you ready for this stat, Terry? There's a 90% chance they're going to use a 90% SBA loan. I made that stat up, but there's a very, very high probability they're going to use an SBA loan someday to buy their first storage facility or maybe their second. And then Terry also ran third party management as CEO of Copper Storage Management. And today he personally owns about a dozen self-storage facilities. So while insuring the same business he owns, he's been in every part of it. So folks, if you end up talking to Terry, you're not getting an insurance guy.

(03:05):

You're getting a guy who's seen this business from a lot of angles and that can be very, very beneficial. So Terry, before we get into it. Oh, first of all, welcome to StorageMoguls Podcast.

Terry Campbell (03:16):

Thanks for having me.

Joe Downs (03:17):

I do a few true/false questions every episode here, Terry. It's all about the industry. I have a high degree of confidence that you're going to get them right. So here it goes. True or false, the average self-storage tenant pays around 2% of their household income for their unit while the average apartment renter pays around 35% of their income in rent.

Terry Campbell (03:41):

So that's probably true.

Joe Downs (03:43):

That is true, Terry. Per the 2026 self-storage state of the market report, storage tenants spend about 2%. And when you rent, you're spending about 35% on your apartment, which is exactly why a $10 rate bump barely registers and why existing customer rate increases work as a revenue lever. All right. Let's start with a number that should make every storage owner listening and even those who are thinking about it a little uncomfortable. Terry, $11,000 a year in flood insurance coverage remapped overnight to $84,000 for the exact same building, same property. This is not hypothetical. It's a real deal. We consulted you on it. You didn't do the policy obviously because we had to back out of the deal and not do the deal. And this was over six months ago. So I'm sure you've looked at a lot of deals in between, but that's the kind of blind spot that shows up in due diligence after it's too late to walk away.

(04:52):

Terry, what actually happened there? What triggered that remap? When does the buyer typically find this out?

Terry Campbell (04:58):

Well, as far as why did it happen, who knows how FEMA goes about their process and thought process on when they do remap. Maybe they've seen something that's happened a lot in a certain area and they go back in and review things and change their maps. There's also companies out there that go in and look at FEMA maps and are able to undo these things. So there's no solid answer to be able to know why they're doing these things. But it's definitely one of a couple of things, especially that an owner or a potential buyer should be investigating. Part of your due diligence should definitely be looking early on at what your insurance is going to cost. You should definitely early on be looking to see if you're in a flood zone, a FEMA flood zone. Normally a bank during their due diligence is going to catch that before closing, but sometimes they don't.

(05:58):

We had one just recently, a customer reached out. He already owns the facility. Just last week, he owns the facility and he wants us to quote it. And one of the habits that I have is anytime somebody calls me or sends an email, I pull up that address and look at it on Google Maps. Do I see anything particular that stands out that might be an issue? And also, are they anywhere near any kind of body of water, river, anything like that? But in addition to that, my next thing that I do is pull up the FEMA map, everyone, and just see, is it in a flood zone? Is it near a flood zone? It's very easy. Is it in a flood zone? Because when I let this customer know last week, when he sent me this email and we were on the phone and I pulled it up and looked and I said, "Hey Matt, you didn't select flood insurance as something you wanted quoted.

(06:52):

Did you handle that separately? What's the story with that?" And I took a snippet from the FEMA map and stuck it in the email, sent it back to him. And he said, "Oh my gosh, I had no idea it was in a flood zone." The bank didn't catch it that it was in a flood zone. And it wasn't just recently remapped. So always make sure, because that flood insurance can be higher than your property and casualty. It's per building. You got to get it quoted per building. And it is not cheap. If you're in a flood zone, it's expensive. Now, we always push people to consider flood insurance because if it rains where you're at, you could potentially have a flood. There are several scenarios I could give you that people. Western North Carolina a year ago, well, it's almost two years now in October, got devastated, devastated from Hurricane Helene.

(07:45):

People who were nowhere near a flood zone. Some that might've been near one, but weren't in it. They didn't have a flood insurance. And everybody, all of us by nature are of the, "Oh, it's not going to happen to me camp." Well, there's a lot of folks that it happened to and they lost everything because their buildings got destroyed, demolished.

Joe Downs (08:06):

That's why we pay for insurance, Terry, so it doesn't happen. It wasn't that the hundred-year map changed. The seller knew he was in the hundred-year flood zone and even he never had flood insurance actually. He was 80-something years old, lived there his whole life and said, "There's never been a flood here in 80-something years." And it wasn't the hundred-year, now that I remember, it was the 500-year to add insult to injury. So they changed the 500-year flood map. He didn't even have flood insurance. We obviously had to back whip for a first time buyer, new buyer. Terry nailed it there if you missed it. Your lender is going to probably require it usually, especially if you're in a flood zone. Terry, I want to speak now directly to the owners. So if you already own, our seller in this scenario, he now knows he's in a 500-year flood zone.

(09:03):

You mentioned you know folks that can do something to unwind that. He's convinced there's never been a flood here, never will be. Obviously he doesn't know that. But if he is so convinced and so moved that he wants to spend money, how do you go about undoing it?

Terry Campbell (09:18):

If it's able to be undone, there's a company, there's probably more than one. There's one that I know of that I actually met at a self-storage trade show quite some time ago, and they have been successful. Now this is a double-edged sword. They have been successful at going in and looking at the FEMA information and then being able to do surveys, use elevation maps, do all sorts of technical work that they're able to do and go in and get this changed back so it's not in a flood zone or in maybe not one of the bad flood zones, but maybe one of better if you want to call it that. But there's companies out there that do that. You can't really do it yourself. It's very difficult to do by yourself, but hiring a company like that that can do it. Now I said it's a double-edged sword.

(10:10):

We as advisors, insurance advisors, want to advise you to do things that are going to protect you against certain risk. And we always tell people to consider flood insurance. Like those folks in North Carolina I was just talking about, Western North Carolina, that's where I'm actually at. I'm in Central North Carolina, but those folks in Western North Carolina, if they would've had flood insurance and if they weren't actually in a flood zone, it's not that expensive. It's not that bad. So we always tell folks, consider it. Look at it. If you're near a flood zone or you're near a place you know that there's a good potential that something could happen, you might want to consider it.

(10:52):

So that's why I say it's a double-edged sword. We recommend everybody consider it because technically the way we look at it, if you're in an area where it rains, you're potentially in a flood zone. So I guarantee you there's a lot of people that never had flood insurance that aren't technically on the FEMA map in a flood zone that have bought it because they lived through it. So we say we recommend it, but at the same time, if you got a situation like you're talking about and you want to try to undo it, there are ways of doing that. And I can connect you with the company that does that for anybody who's interested in trying to go that route.

Joe Downs (11:22):

Yeah. And to be clear, I wasn't suggesting people try to get out of flood insurance your most basic. This was the hundred year to 500 year. It took us from $11,000 we would've happily paid to $84,000, which would've taken the value of our facility from 1.5 million to 600,000. So obviously just the deal didn't work for us. And that's why I asked that question. But now you nailed it. And that's the real question underneath all this is are you overinsured or underinsured right now in general, but in particular with flood insurance and would you actually know? Most owners have probably never even actually checked. Terry, is that something owners can do? Can they check with you?

Terry Campbell (12:00):

Yeah, absolutely.

Joe Downs (12:01):

All right. Make sure at the end of this, we'll have you give everybody your info. All right, Terry, I want to understand how you got here because most insurance people I meet have never actually built or owned a storage facility.

Terry Campbell (12:13):

Sure. You've

Joe Downs (12:13):

Sat in basically every seat in this business before you ever sold a policy. You built them, you financed them, and then you managed them and you own them. And that's actually pretty rare. So how'd you end up wearing the insurance hat?

Terry Campbell (12:28):

Like you said, I was a building supplier. I mean, I was actually with BetCo for 20 years. I started there as an estimator. And long story short, I started as an estimator when I left. I was executive VP of operations and VP of sales and marketing. And we did a lot of self-storage. And Live Oak Bank, they were looking to start a lending team for self-storage in the SBA realm. And they reached out to me and said, "We've had a couple people say, we need to call you. You're the guy that we need." And they explained to me, "We want you to teach us the self-storage industry. We're going to teach you the lending industry specifically SBA." I said, "Okay, let's do it." So I left and went to Live Oak, started their lending team. I was there for seven years. At the time, I was an investor with Coppers at Copper Storage Management.

(13:16):

We'd been friends for years and had invested in facilities and they were looking for somebody to come in and take the third party to the next level. And so I came on as CEO and part owner of Copper Storage Management there for a couple years. But that whole string of years and all those things that I had done after about two years, I'm like, "Guys, I am burnout. I'm going to be one of those guys that retires early." I was 57 years old and I was like, "I'm going to retire." So I retired and whoever said six months won because it was right at maybe a little less than six months that I was back in the industry. But Johnson Insurance, who's in our hometown of Moxville, North Carolina, I've known the folks there. I met the CEO at an event, even though I knew his mom from being a school teacher, because that's the town my wife and I both grew up in.

(14:07):

And they reached out, wanted to start a division to specialize in property and casualty for self-storage. Well, it didn't take much for them to convince me to unretire. And I did, and that's how I've ended up here. It's been two years since we started this vertical at Johnson and it's been very successful. It's been good. That's how I've ended up here. I still am an investor in 11 self-storage locations in the Southeast. So I see it through the eyes of the owners as well and the people looking to get into the business. I'm not just a vendor. And I even offer our insurance folks other advice as needed. So it's been good from that perspective.

Joe Downs (14:47):

Terry, here's a fear I think almost every storage owner has and almost nobody says out loud. And I don't actually know if I'm properly insured and I won't till it's too late. I don't know if people are wondering this, but they should be. That's the scary part is they're probably not wondering it.

Terry Campbell (15:04):

You're absolutely right. People, they think of insurance as a necessary evil. It's there. I got it because I have to have it. I deal with it once a year and I put it away. I don't think about it. I see people who are underinsured because prices of replacement costs have gone up and they have not. Number one, they haven't, but their agent has not done a good job in staying on top of it for them and making sure they are properly covered. That's one of the things you saw back in 21, 22 when steel prices went through the roof, people weren't updating their replacement costs. So if they had to replace it, they would've been in trouble.

Joe Downs (15:44):

Maybe I've been ignorant about it, although this is not my role at our company to have to worry about. But I think you're right. So when the cost to replace something went up, if I was locked into a dollar amount of cost of replacement and it went up by 25%, let's say, I am now only replacing 75% of my facility. Is that right? At least that's what the insurance proceeds will provide?

Terry Campbell (16:07):

That's a sort of a yes. But if you've insured your facility for at least X percent, you're going to still be covered. Here's the thing, the insurance companies, the carriers say most of the time, you've got to be covered for at least 80% of that value. So if you're covered for at least that and the replacement value stays the same, you're good. But we always try to do this and encourage, and I won't say require, but we try to force that you put a replacement cost in place, a policy in place for 100% of today's value. That way, if it does go up in that year and it goes up 20%, then you've got that cushion where you covered it for 100%, but you're required by the carrier to cover at least 80% to get it replaced.

Joe Downs (16:58):

Well, let's take a realistic scenario in today's world. I buy a facility for a million dollars today, it's 10,000 square feet. Five years from now, the cost to replace the facility because there's a new steel tariff or something is up 30%. I bought it today, million dollars. I insured it for 100%. Four years from now, it's going to cost $1.3 million to replace that facility. What's my actual coverage if I haven't changed my policy?

Terry Campbell (17:37):

So it's four years from now, there should have been at least four conversations with your agent and they should have been making sure that you've increased the value. But if that didn't happen -

Joe Downs (17:47):

I've ignored my agent for four years because I don't want to talk to him because I know he just wants me to pay more for insurance.

Terry Campbell (17:53):

There's a penalty, it's called a co-insurance penalty, and you're going to get hit pretty hard. You're going to be paying a big difference. Instead of your deductible of whatever it is, you're going to be paying a huge amount because you were underinsured. And there's a formula to that.

Joe Downs (18:11):

This isn't a buy it, set it and forget it. This is

Terry Campbell (18:14):

Something

Joe Downs (18:14):

I need to stay on top of every year and make sure I'm

Terry Campbell (18:16):

Properly insured. Every year there should be a conversation held. And if you do anything to your facility, if you do improvement, you should be getting a much better rate because a lot of the factor, the cost is depending on the roof of a building.

Joe Downs (18:31):

Are you saying my insurance rate could go down?

Terry Campbell (18:35):

It potentially could go down. Your rates should go down. Your total premium may not go down, but your rate should. People ask. Some of the things that insurance carriers like to see is new roof. They like to see tenant protection, tenant insurance in place, security fencing, gates, things of that nature. But even electronic locks, like a Bluetooth smart lock type thing. They like to see that as well. And I asked one of the carriers point-blank, I said, "Look, if my customer puts in smart locks, is that going to lower their premium?" They said, "What it's going to do is going to increase the value of the facility." I said, "So if it increases the value of the facility, it increases the replacement cost. So it's going to be more." He said, "Theoretically, but it's going to drop the rate. So in the long run, it'll probably offset it, but your rate will be lower." So

Joe Downs (19:33):

More coverage for the same rate or maybe a slight bump in rate or

Terry Campbell (19:36):

Something

Joe Downs (19:36):

Like that?

Terry Campbell (19:37):

Yeah.

Joe Downs (19:38):

So the fix here isn't complicated. What I'm hearing is you need to answer the phone. You need to have an attentive agent. You should probably become friendly with them, answer the phone where they call, do an annual audit so you're not guessing.

Terry Campbell (19:53):

Absolutely. It's

Joe Downs (19:54):

Not just about paying more, it sounds like. It sounds like I might be missing out on more coverage for the same payment.

Terry Campbell (20:00):

But the important thing is having the correct coverage so that you are taken care of if there's a claim. I mean, that's the whole purpose for it. We had one that renewed last year. We took over the portfolio. And one of the things we found during our application process, they had not told their previous agent that six months before they added a million dollars worth of new buildings to the site. Those weren't even covered. Anytime you do anything to your site, let your agent know. Make sure you do that. Have a conversation at least once a year. Have you done anything different? Have you made upgrades? Have you added a building? What's going on? So you got to have that conversation to make sure that everything's being looked at. There's not a one size fits all. It's, okay, what have you got? What are the buildings made of?

(20:52):

Have you done any roof improvements? Whatever.

Joe Downs (20:56):

That's solid advice. Terry, true or false, the biggest self-storage REITs treat tenant insurance programs purely as a pass through cost to cover their own liability, not as a way to make money.

Terry Campbell (21:06):

False.

Joe Downs (21:09):

You are correct. That it's false. Tenant insurance programs are actually listed as one of the REIT's structural advantages, a revenue positive expense offset. So the big operators aren't just covering themselves, they're running it as a profit center. So that's something to consider.

Terry Campbell (21:24):

Absolutely. Absolutely. In fact, one of the facilities I'm an investor in, one of the big boys, I won't say who, manages it for us. It's in Florida. And they make about 130,000 a year in tenant insurance off of our customer base and we don't get a dime of it. Wow. Very annoying when I look at what that does to the NOI and my value. But I will say at the same time, we got them to lower their management fees and also kept them. So it helped offset a little bit, but I'd rather have the income. But they do a good job. I mean, we're 95% all the time. We still raise rates every month. So I can't complain too much, but it would be nice to have it.

Joe Downs (22:04):

Let's get tactical here. So if you're buying your first facility, here's what actually needs to be in place before you own it. Terry, you run this process for real deals. So what's that checklist look like?

Terry Campbell (22:15):

What we're going to do, we're going to send you an application. It's going to have one that's a spreadsheet. It's called an SOV. It's going to ask you about every building. We're going to send you another. It's two parts. The other part, you tell us, okay, this is the deductible you want. This is the coverage you want. These are the things that you're doing with your facility. So we combine those, we ask questions. If we see anything unusual, we come to you and talk to you about it. But the coverages that you want, I mean, number one, a lot of times the bank's going to dictate what you've got to do and the amount of coverages. But you're always going to have property insurance, general liability. I said you should always, in my opinion, have the two coverages that are specific to our industry. Sale and disposal liability and customer goods, legal liability.

(23:06):

You should always have those. And my recommendation is you have a minimum of a quarter million dollars for each of those, preferably a million if you can get it because those claims can, the legal expenses and awards, depending on what it was, again, you never know what's going to happen if anything does, but it could be bad. It can be expensive. There have been some very expensive ones out there, especially if you make the horrible, horrible mistake of selling the unit of somebody who's active service military. But those are the ones you definitely got to have. You're going to want to consider flood. Look and see, are you in a flood zone? Are you close to one? Consider it. Cyber, you want to definitely consider cyber. You want to consider hazardous materials and pollution of that policy for the pollution and hazardous materials. You want coverage.

(24:08):

It's usually going to be a separate policy because when you get your policy, your property and casualty, it'll probably have a line item for some pollution. It won't be much, but it'll be for you. It'll be on for anything you do. It won't be for third party. So if some of your tenants bring in something and calls a spill or they build a meth lab or whatever, it's not going to cover that. You need a third party coverage. And we have some of that that we've sold a lot of and it's very reasonable for what it covers. So you want third party hazardous materials and pollution. And like I said, cyber because of all the technology that's out there these days and information being stolen. If you get a breach or somebody breaches your customers and gets their information, at the very least, you're going to end up paying for one year of credit monitoring per facility or per unit.

(25:03):

That can get expensive.

Joe Downs (25:04):

Let me ask you a couple rapid fire questions here. What's a safe rule of thumb for projecting insurance in a pro forma while you're waiting for the quote back?

Terry Campbell (25:16):

It is so hard to do. It's so hard. Normally, I would say contact, if you're using an existing policy that's in place, if you're doing an acquisition and you're looking at the numbers from the current owner, get their policy, look at it, find out what it looks like, that'll give you a baseline. But a lot of times policies that have been renewed years and years and years, the new owner, it starts over. It doesn't mean it's a good number. We bought a facility when we underwrote it, we looked at the current owner's numbers, we doubled it. When we closed, it was triple. My opinion -

Joe Downs (25:53):

Why is that? And that's actually my next question is what jumps out at you when you're looking at a seller's P&L as

Terry Campbell (26:01):

To

Joe Downs (26:01):

Why it's going to jump for a new buyer?

Terry Campbell (26:03):

Well, if they've been with the same carrier for many years and they've never had a claim, that carrier just lets it just keep riding. And number one, if they ever had a claim, that's going to change. But if they've never had a claim, it's going to jump. And a lot of these policies that are in place now, they don't have customer goods and legal liability. So you don't want that policy anyway, and you have no idea. But I tell folks all the time, look, if you want a ballpark idea to using your proforma, call me. We can do what they call a price indication. There's a couple of carriers out there that we'll go to and they'll pull up the address and say, "Based on these assumptions, it'll be roughly this." And we can do that. Sometimes we can actually pull up recent quotes and extrapolate and say, "Yours is 20,000.

(26:57):

We just did one that was 40,000. We can come up with a per $100 in value rate and assign it." Something to close. But it used to be easy, but it's not anymore, especially the way prices, the rate premiums have gone up the last several years. So that's what I would do is call somebody, call an agency, talk to them because it is so hard to use somebody else's existing numbers. And things have changed so much in the last few years. It's difficult.

Joe Downs (27:31):

How could you explain to the listener the delta between a facility that has no security features and one that has cameras lighting, a gate and fencing?

Terry Campbell (27:43):

A dollar amount? I will say there is a difference and it's considerable. In fact, those things are so important that some carriers that do a pretty good job most of the time on coverage and price won't even quote it. They won't touch it if it doesn't have a fence, if it doesn't have a gate. I mean, cameras are, most everybody will do them if they've got cameras or not. It's just going to affect your rate. But when you've got no fence and no gate, some carriers won't touch it. So that's definitely going to drive your price up. So definitely if you're looking at buying one, take that into consideration in all of your calculations that you may need to put a fence and a gate in. If you're operating remotely, you pretty much need one anyway to make sure you're keeping people who don't belong out since there's no manager to stop.

(28:29):

Manager to

Joe Downs (28:30):

Stop. Is it worth in your underwriting then, is it worth going to you and saying, "Hey, give me a quote as is, or I'm going to add cameras and lighting, whatever. Give me a quote like that, but then give me one where if I fence this thing and gate it, I want to see what the difference is." Because to me, that's a math equation, right? A CapEx expense today versus a reduced ongoing insurance bill, right? Yes. And what does that do to the NOI and the performance of the facility?

Terry Campbell (29:04):

Yeah, we can do that. We can get those same carriers that I mentioned to give me a quote as if right now it doesn't have a fence, it doesn't have a gate, if you're willing to quote it. And if they add these things, what will the difference roughly be?

Joe Downs (29:18):

All right. Does anything jump off the page? We're out there looking at boat and RV facilities. We're building Store Pros, which is Pro Storage. We just bought another small bay flex pro storage style facility. So Boat and RV, Small Bay Flex, let's just say Pro Storage is one category. And then traditional drive up, non-climate control self-storage. What jumps out at you in terms of the differences of insuring those three types of facilities?

Terry Campbell (29:55):

Well, with boat and RV, it's similar to self-storage Other words, the thing that is different to me that I always try to mention is make sure that when they park and rent from you, that you have evidence that they have full coverage on their units. A lot of times people want to go park their RV and as soon as they get it parked, they want to go cancel their insurance. You do not want that. You want to make sure that they have the insurance, they have it in place, you've got evidence, and also try to get named as additional insured on those things. For example, if it's a boat and RV facility and somebody parks their nice RV and they had three e-bikes and overnight lithium battery catches on fire and burns their RV to the ground and took the five RVs beside of it with it and then also ruins your canopy, you want their insurance covering this.

(30:50):

So you need to make sure they've got coverage. And in addition, if you've got a lot of the higher end, higher valued units that are parked there, you yourself may want to lessen your exposure by having an umbrella coverage. Try to get a little bit higher coverage on your initial GL instead of. The typical is one million and two million aggregate. That's typically what it is. Maybe try to get a two million four, but if you can't, if the carrier doesn't want to do it, then get an umbrella and add another million/two million to it because you know there's extra liability there because of the cost of these things. So that as far as boat and RV. Now flex space, if we're talking flex space, like you're renting out a space to somebody who has a business, you're renting out somebody, it's an Orangetheory or whatever.

(31:42):

It's a different animal because you have to underwrite to all the businesses that are renting those units.

(31:50):

If you've got say a body shop that's doing any kind of hot work, it's going to be hard to insure. If they do welding, if they do anything that's hot, if you've got whether it's actually a garage, mechanics or a body shop, either one, if they do any kind of hot work, it's dangerous. If they've got a lift, there's a liability issue there. So the more risky, I guess you should say, the business that are renting, the more the coverage is going to be. But you've got to make sure you know who those businesses are renting from you, what their nature of their business is, that they've got liability coverage in place. So a little different animal, but because you've got to underwrite to all of those businesses that are there, not just your business.

Joe Downs (32:35):

Interesting. Now Small Bay Flex, it's a tangential cousin to storage, but it has its own nuances. I want to unpack something there. So I didn't even consider that. So Small Bay Flex, you need to consider who you're leasing to.

Terry Campbell (32:50):

Yes.

Joe Downs (32:51):

And what their style of business is going to do to your insurance coverage.

Terry Campbell (32:57):

If it's what it costs, it's what it costs. And the higher the risk. If you've got somebody high risk and you get rid of them or they leave, bring somebody that's not, it's going to bring your price down, increase your NOI.

Joe Downs (33:09):

Yeah, that makes sense.

Terry Campbell (33:10):

But it's all relative. Those high risk ones may pay a lot of rent.

Joe Downs (33:15):

That's

Terry Campbell (33:15):

True. We're the ones that are not arms them up.

Joe Downs (33:18):

It's a fun business. Terry, true or false, new self-storage construction starts are actually down more than 20% from their 2023 peak. And supply growth is projected at under 2% a year through 2027.

Terry Campbell (33:31):

True.

Joe Downs (33:32):

That is true. Construction starts are down, folks, 21% from the 2023 peak. And the supply growth is actually 1.5% as they're rounding up there. Terry, last thing before we wrap here. If someone's sitting on a facility right now, or they're sitting on the fence right now trying to decide, and they're either they own a facility or they're looking at one, they're underwriting one, they're in the due diligence process, they're looking at the facility, or they currently own a facility and they're wondering about their insurance coverage. What's the first thing they should do?

Terry Campbell (34:14):

Call us. Let's talk through what you're looking at. Let's see what you're looking at doing. Let's look at, like I said, I want to pull it up and look at it online when I'm talking with you. I want to look at the FEMA map while we're talking, and then have our next steps in place on what we need to do to get you some pricing so you can have your numbers. I always like to say, look, let's wait and save the application until you have vendor either an LOI or a PSA, but we can talk about ballpark numbers. And we can also talk about your other one that you have. If you have other ones, we can look at that at the same time and say, are there some synergies? Are there some economies of scale? If you've got more than 50% common ownership, let's do a master policy and save you some money overall.

(35:02):

So having that conversation in general, to me, it's never too early to have that conversation and that call. I used to say that in lending. It's never too early to have that conversation because the longer you're armed with info, the better it's going to be in the end. So call, let's talk about it. Let's see what you got you're working on, see what else you may have and see where opportunities may lie.

Joe Downs (35:24):

And how do they get in touch with you?

Terry Campbell (35:27):

They can get in touch with me by emailing me, terry@gojohnsonins.com, or they can call the office number. It'll switch over to me. It's 800-255-7777. And just give me a call, shoot me an email, and we can go through whatever you want to talk about.

Joe Downs (35:54):

Terry, I close out these podcasts with maybe an unusual question, but hopefully you'll walk away enjoying the question. Have you heard of the book, Be Your Future Self Now? Bottom line, have you heard of Mr. Beast?

Terry Campbell (36:08):

Yeah.

Joe Downs (36:08):

Okay. I don't expect you to be intimately familiar with Mr. Beast, but the fact that you heard him is good. He is the most followed person on YouTube, so he's the most followed person in the world. Book opens up basically about him. What Mr. Beast did was essentially what Cortez did. He did the virtual version of Burning the Ships. He released publicly, this is what's going to happen. Six months, one year, five years, 10 years, this is who I'm going to be. And that's what the book is about. Being today is who you expect to be or want to be. So it's be your future self now, not later. So the way I ask this question is this, if you could get in a time machine and go five years in the future, tell us who Terry is five years from now.

Terry Campbell (36:57):

Well, I'll tell you, if I turned 60 this year, five years from now, see, retirement for me is going to be working a couple days a week. So I think probably doing what I'm doing now, some. Our sales storage portfolio we have, I think by that point in time is probably maybe sold because some of my partners are several years older than me, so I think they're wanting to sort of ride off into the sunset. So for me, it'll be doing this, doing some consulting. I do a little bit now. Mostly what I do is consulting around site visits or helping out with SBA direction, trying to help them get a loan. So something probably along those lines, and then continuing to spend more time with these five grandkids as they're growing up than working. So I think for me, five years from now, that's definitely going to be that because I'm not going to retire and sit down and just play golf and fish and all that.

(38:03):

I can't stand it. I mean, I like it, but I can't stand to do that all of that. So that's something along those lines is for me.

Joe Downs (38:09):

Okay. And what are you doing today to make sure that's the position you're in?

Terry Campbell (38:14):

I'm working with a couple of financial advisors to make sure that all these pieces are coming together as they should.

Joe Downs (38:23):

And it sounds like you're already doing those things as well, like consulting and building your portfolio. And that's great. I enjoy asking that question because I like forcing people to think about, "Hey, where do I want to be? And am I on that track? Am I doing those things today to make sure that that's where I end up?" Well, that's great. Well, Terry Campbell, thank you for joining us today. Again, folks, you can reach them at terry@gojohnsonins.com. And folks, look, Terry's whole story proves the point of the episode. Insurance isn't the boring line item at the bottom of your performance. The thing standing between you and one bad flood remap and losing a deal. If you're underinsured, I'm sure that's not your intention today. We all want to save a buck, but let's do it the right way. Let's do it the smart way. So get the audit before you close, not after, and do it every year.

(39:22):

Every week on storage moguls, we're covering the full storage vertical, self-storage, boat and RV, storage, pro storage, industrial outdoor storage, truck parking, small bay flex light industrial. And if I haven't covered it yet, it's coming. So please like, subscribe and share. And here's why the share matters. Don't forget when you share this episode, you're telling everyone in your network that you're in this business, and that signal's going to go a long way for you. So share something based on what you heard today and share something specific and share it loud, share it proud, share it often, share it everywhere you are because you're going to want everyone to know you're in this business at some point in the future. And this is the passive, easy way to do it. In the meantime, check out storagemoguls.ai. If you're not involved, love to have you as a member there.

(40:07):

Folks, there's a seller out there right now who's ready to sell. So stop watching, start moving, drive for dollars, send the LOI. We'll see you next week.