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Auctions at self-storage units appear to be rising as renters fall behind

01:00 AM EDT on Thursday, June 18, 2009

By Paul Grimaldi

Journal Staff Writer

Auctioneer Ed Benson, center, begins the bidding on a storage unit at United Storage, on Putnam Pike in Johnston. While there’s no industry-wide data, auctions seem to be keeping pace with home foreclosures.


The Providence Journal / Kathy Borchers

A loose ring of people milled about a recent morning in the parking lot of United Storage on Putnam Pike in Johnston.

They waited for a gray-haired man dressed in a windbreaker, a dress shirt and blue jeans to emerge from a glass-fronted office.

When he did, they followed, like hound dogs on the scent.

The group, mostly men on their own, and one couple with a child, had come to Johnston for one in the regular string of auctions being held these days at storage-unit properties in Rhode Island and elsewhere in Southeastern New England.

“It has everything to do with the economy,” says Michael Zarzycki, property manager at the United site.

Although no one keeps industry-wide data, auctions at self-storage units seem to be tracking along with the home-foreclosure sales happening with regularity during this lengthy recession.

“The last six months we’ve had more pods go off at auction than in the last three years,” says Tom Meschino, manager of Rhode Island Portable Storage in North Kingstown. “It used to be three auctions in a year was a lot.”

These auctions are low-rent affairs. Transportation is heavy on pickup trucks, minivans or SUVs –– some with trailers; dress trends to sweatshirts or T-shirts, blue jeans and work boots.

No BMWs, no numbered programs, no complimentary buffets.

Either an auctioneer or a property employee calls out the name of the renter and how much is owed before perfunctorily clipping a lock with bolt cutters, or a reciprocating saw on occasion, to unveil the detritus of financial collapse.

Bidders are barred from entering the units, aren’t allowed to open boxes or move the contents. So they crowd door frames, standing on toes or crouching down to see into the units, holding flashlights like police looking for clues at the scene of a burglary.

The buyers look for favored items — electronics they can sell on eBay or craigslist, furniture and knickknacks for yard sales, or collectibles they know are in demand. Some come to fill their own second-hand stores.

“They have to be able to look in a room and, in 30 seconds, be able to tell what it’s worth,” says Ed Benson, an auctioneer with Storage Auctions USA of Yarmouth Port, Mass. “The guys who are a success have more than one way to get rid of it.”

Typically, people bid blindly, hoping that neatly stacked plastic tubs hold binders of vintage baseball cards or inside dresser drawers is forgotten jewelry or something else of value.

It’s a poker game of bluffs and feints and studied camaraderie, with bidders trying to throw each other off by playing down estimates or pushing up bids to squeeze out competitors.

“You’ve got to play poker –– that’s all it is,” says Paul Russel, of Providence. “You’ve got to make them honest.”

The regulars bring locks, strung on belt loops or stuffed in pockets, to slap on doors as soon as they win an auction round. They’ll come back later — often after dark — to sort the good from the worthless.

And most of the stuff is worthless, or nearly so. Trash bags crammed with old clothes, used mattresses, dusty boxes filled with arcane documents, broken children’s toys and out-of-date college textbooks. Much of it destined for a landfill –– at the buyer’s expense.

“It’s a treasure hunt,” says Dave Conti, of Mansfield, Mass. “You never know what you’re going to find, and sometimes, you get burned.”

Some units are stuffed solid with jumbles of trash bags, random household goods and bric-a-brac piled to the roofline.

Bidding starts low on these units and barely budges. A lifetime’s hoarding can go for $10.

“It’s too much labor,” says Russel.

A unit rented by a deejay, which held amplifiers, mixing boards and other electronics, went for $1,250 at the United Storage auction in Johnston. Too bad for the company — there was $4,000 in rent due on the 10 foot-by-30 foot unit.

Even a spirited auction, like the one for the deejay equipment, can take less than five minutes. A household’s worth in a minute or two.

Unsettling things turn up on occasion. Such as the April auction in Providence for two storage units that turned out to be filled with the customer financial records of a struggling mortgage business. Row upon row of cardboard boxes filled with Social Security numbers, bank account numbers and other personal information were put up for sale –– but no one showed up to bid, leaving the documents in the possession of the building owner.

“We were just astounded at what was in the units,” says Christopher Little, a lawyer and principal of the property company that owns the building.

Use of self-storage units spread far and wide in the last decade. There were 51,250 in operation in the United States by the end of 2008 –– providing about 7½ feet of storage space for every man, woman and child in the country.

The self-storage units are most often one- or two-story prefabricated metal buildings with garage door entries for every unit. The units range from closet- to garage-size. Most businesses enclose their properties with chain-link fences and create gated entries that renters access using a pass code. Some have climate-controlled units.

At the same time, Internet auction sites such as eBay and personal advertising sites such as craigslist made it easy to find customers for all manner of collectibles, household items and gimcracks.

Many self-storage businesses hold auctions monthly, to sell off the property of people who’ve fallen behind on their rent. Some businesses hold auctions less frequently as they let the delinquencies accumulate to the point where there should be enough to attract plenty of bidders.

“It’s like having a tenant who doesn’t pay rent,” says Benson. “If you don’t clean it out you can’t rent it. If you can’t rent it, you can’t make any money.”

And the bills pile up, sometimes more than $1,000 or more.

“We let them go a little bit,” says Meschino. “The last thing we want to do is disrupt somebody’s life.”

Laws governing storage-unit auctions are detailed, requiring property managers to contact renters numerous times –– including by certified mail –– and requiring legal notices published twice in local newspapers, before items can be put up for auction.

No firearms can be sold. Liquor can be bought only by liquor-license holders, such as a bar owner or social club.

The formal notices often are preceded by phone calls to renters alerting them that they’ve fallen behind on payment. One company that operates in Rhode Island keeps a two-page checklist for property managers trying to collect overdue rent.

Renters have right up until the auction of their units to start to pay the bill.

Property managers will sometimes place “reserves,” or minimum bids, on units, hoping to get back a greater portion of the rent.

Typically, bidders pay a 10-percent buyer’s “premium,” in addition to sales tax for the goods won at auction. Winners must pay in cash and usually have just 24 hours to clean out the units.

“It’s usually the same people,” says Jamie Cardoza, manager of Uncle Bob’s Self Storage, in East Providence.

They come rain or shine.

“The weather doesn’t make any difference,” Benson says. With bad weather “everybody figures nobody’s going to be there and I can go in and get everything cheap.”

pgrimald@projo.com

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