IMPLEMENTING TRUCK RENTALS AT YOUR FACILITY

Transcription

1 IMPLEMENTING TRUCK RENTALS AT YOUR FACILITY

2 You ve decided you would like to offer trucks to your tenants A rental truck is an excellent source of ancillary income with a proven track record across the storage industry. If you have thought about starting a truck rental program, use this guide to learn more about the process to begin and excel at your facility. There are several truck rental programs available, each offer different options and styles to fit what works best for your facility. 2

3 Will you go with a local move or a one way truck rental program? ONE WAY LOCAL MOVE SERI OUS Your first question may be what is the difference between the two? One way moves are offered to the consumer that is moving a distance that does not warrant the vehicle to be returned to where it was rented. The truck is rented, the consumer leaves your office and you may never see them again. A local move is when you have a truck designated to your facility full-time and have complete control over where and how the truck will be used. Your truck can be customized and used to advertise your business. It is also a great marketing tool to rent more units. There are companies set up that specialize in both types of moves. If you are serious about your marketing and more interested in renting your storage units, then local moves are the way to go. You can offer free use of truck in lieu of free rent, maximizing the value of you storage facility. 3

4 Should you lease or buy a truck? Now that you decided you have to have a local rental truck business at your facility, it is time to decide if you should lease or buy your truck. Both options have benefits and you need to consider what is best for your facility. Most individuals prefer to buy their own home and vehicles as part of the American culture. However, with the unpredictable economic climate, leasing benefits are outweighing the buying benefits for most storage operators. The decision to lease allows your business to expense the cost of the lease monthly compared to carrying the liability on your balance sheet. Leasing frees up capital to invest in other areas of your business and allows you more credit flexibility. With the vast changes in technology and the competition in the automotive industry, vehicles change drastically from year to year. When you lease, you are at a better position to keep your truck updated. Your truck is one of the first impressions your potential tenants will see. You do not want an outdated truck representing your business. Ford Motor Credit strongly suggests a Terminal Rental Adjustment Clause (T.R.A.C.) lease as the most appealing for business owners. Some of the benefits of a T.R.A.C. lease include: 100% deductible as a monthly expense No accounting issues for a vehicle such as maintaining depreciation tables and mileage records Lower monthly payments Set purchase price at the end of the lease Flexible options at the end of the lease such as purchasing, extending and/or turning the vehicle in 4

5 Cost analysis illustrating a rental truck at a storage facility ASSUMPTIONS: 2012 Economics, 5-year TRAC lease, average rental rates of $40.00 per day and $.75 per mile, that the vehicle is rented 33% of the time, that the average rental distance is 50 miles, and that the vehicle is well maintained and in good condition when the 5-year lease expires. 5 year net with intangible income included: $109,200 Tangible income over five years: Daily rental (600 $40/day) $24,000 Mileage (600 days x 50 miles per rental) $22,500 Insurance Damage Waiver 50% (300 rentals x $20) $6,000 Other Equipment: Furniture pads & Hand 100% (600 $10/rental) $6,000 Increase in Occupancy of 6-8% with as a result of the truck TBD Total Equity in Vehicle (after 5 year lease) $10,000 TOTAL TANGIBLE INCOME: $68,500 Intangible income over five years: Advertising Value of $900 per month $54,000 as a billboard for the facility Tenant Goodwill of $300 per month $18,000 Increased Business Value using the Income Approach (Property A with a truck on site, $30,000 compared to Property B without) TOTAL INTANGIBLE INCOME: $102,000 TOTAL TANGIBLE + INTANGIBLE INCOME: $170,500 5 year expenses: Lease and Insurance payments over 5 years ($699 + $176 = $875/mth) $52,500 Maintenance (Oil changes, tires, tune-ups, etc.- est. $500/year) $2,500 Avg. TT&L and Registration costs $1,800 Advertising (Platinum package graphics show special) $4,500 TOTAL EXPENSES: $61,300 TOTAL NET INCOME: $109,200 5

6 Return on Investment When you have a truck at your facility, you have the ability to control how much profit you can earn. The truck will not only bring in extra rental income, but it will be your best advertising tool. You control how often it is rented and how much you charge meaning the sky is the limit. To maximize the cost analysis and to see incredible results, here are the top ways to get a return on investment for your storage facility: 1. Your truck is a moving billboard! Use it to create good will and give your company exposure in the community. a) Use your truck to run errands b) Offer complimentary truck use to customers when it is sitting idle c) Volunteer your truck at parades and festivals d) Offer your truck complimentary to charity drives 2. Marketing a) Mention your truck on all marketing materials including website, flyers, business cards and advertisements b) Create flyers to let local businesses know your truck is available for commercial use and post them at local businesses 3. Implement a loyalty card or frequent user program 4. Solicit joint ventures with other businesses such as apartment complexes and real estate companies 5. Handle rental and return with expedience and efficiency 6. Always have your truck clean 6

7 Return on Investment - cont. 7. Pricing a) Split Friday, Saturday and Sunday into two or three rental possibilities and/or rent your truck by the hour b) Charge premium rates on holidays and peak rental seasons c) Offer mid-week specials to encourage rental during down time 8. Graphics a) Sell back door space to local businesses b) Spend time crafting your message and consider having a professional design your graphics 9. Location a) Consider trading limited free use of your truck with a nearby business that offers better visibility b) Your facility may not have highway visibility but your truck does, every time it s on the road. 10. Develop a small moving business using your truck and hiring part-time movers 11. Incent your managers when they rent the truck 7

8 What type of truck is best for rentals? 1Due to the inexperience of every day drivers with moving trucks and the fact that most do not carry commercial driver s licenses, it is important to consider the size and weight of the truck when shopping. Sizes ranging from feet are the most common for local moves due to the ease of driving and the turning radius. It is also a safer size to navigate around your facility. 2The more fuel efficient your vehicle is the better for both the tenant and the storage operator. Locate a truck with an aerodynamic design that also offers flex fuel. These options will make a box truck up to 20% more fuel efficient. 3You also want your truck to have an extended ramp, preferably covered by the back door, to make it easier for your customer to load their belongings. Also, your truck should include a hand truck and furniture pads. These are not things that most tenants possess. 4Since most of your tenants are not professional movers, finding a box truck with reinforced walls, tie downs, and lighting makes the move more efficient and protects their belongings. 8

9 What type of insurance/license coverage should you obtain? Whether you buy or lease a truck, it will need to be insured! With the significant investment you have made, it is recommended to contact a rental truck insurance specialist to find out what programs are available. When you call your insurance agent, make sure to let them know you plan on renting your truck out to the general public. If they are able to quote you this type of coverage, make sure your limits fully protect you above and beyond the value of the truck. This type of liability generally requires $5 million in liability coverage. Keep the age of the renter in mind when binding coverage. Twenty-one years of age and older is recommended. 9

10 What kind of graphics do I put on the truck? The most effective marketing tool in the industry today is a custom branded moving truck, because they are moving billboards everywhere they go. Whether it is being used by a customer on a move or just parked in front of your facility, the visual impressions it creates each day are extremely powerful. When designing your graphics, some things to consider that are important to put on your truck, include: Company name Address Phone number Website Logo Rent with me use this truck for free or another catchy slogan Features of your facility QR code Social media information With all these characteristics, you will have your own rolling billboard generating leads for your facility daily. 10

11 Now for the fine print... In order to provide truck to the general public, there needs to be an agreement between you and the renter. Make sure it follows your state s regulations and guidelines and that you submit it to your legal counsel. Once you have the verbiage approved, you must have the document printed for triplicate copies. You will need one for your records, one for the renter and one for the insurance company in the event of an accident. There are some truck rental specialists that provide all the documentations that you may need to rent your truck out. 11

12 Conclusion When you are ready to implement a truck rental program, carefully evaluate the options available to you. What works best for you? You do not need to reinvent the wheel and should contact several truck rental providers to assist you in making your decision. There are several qualified companies that have outstanding references. Allow them to assist you on your truck rental journey. Now is the time to think about truck rentals. With the hovering economic crisis and the need to differentiate yourself from the competition, it is time to become the competition and offer truck rentals. On The Move is your one stop shop for everything truck rental. Contact us today to increase your occupancy and value through your own moving billboard. 12 Scan this QR code to learn more IH 10 West Boerne, Texas 78006

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