Meet Your Neighbor: Interview with joseph woodbury,  Neighbor.com

They say necessity is the mother of invention, and when it comes to Neighbor.com, this old adage holds true. In 2017, one of the company’s founders, Preston Alder, had just gotten married. A week later, he and his wife were bound for South America to partake in humanitarian efforts. Suddenly, they had two households worth of belongings that needed to be combined into one – and nowhere to store it all. They looked into self storage, but found that all the facilities near them were at capacity. The closest location available for rent was 45 minutes away, with pricing at a premium. For the newlyweds, this wasn’t an option.

“They got creative,” says co-founder Joseph Woodbury. “They found a friend who was willing to let them store their stuff cheaply in his garage. It wasn’t until they got back that the ‘Aha’ moment happened. That’s when Preston thought, ‘I’ve saved money and had peace of mind knowing our belongings were stored with someone we knew. There ought to be a marketplace for this sort of thing.’” 

“I thought everyone was out of great ideas,” continues Woodbury. “But this was something new. We knew there had to be empty space in every neighborhood in the country. Why not let people monetize that space?” 

That’s when Neighbor.com was born, sort of an “AirBnB for belongings.” Today, Neighbor is the leading platform for people to rent out unused space in garages, attics, basements, sheds, driveways, offices, retail stores, and more to others who need storage. Run by Alder, Woodbury, and Colton Gardner, and headquartered out of Lehi, Utah, Neighbor says it eliminates the need for building new storage facilities, and that it enables hosts to earn extra income. The company has active users in every state, a presence that Woodbury estimates would have cost around $7 billion to $8 billion if they had actually built new space. 

Joseph Woodbury, Colton Gardener, and Preston Alder, co-founders of Neighbor.com. 

We recently spoke with Woodbury to gain further insight into the business.

MSM: How has the reception been toward Neighbor.com from others in the self storage industry?

Woodbury: It’s been good. In fact I just saw an Extra Space chairman the other day, and we had a fun chat. Honestly, the industry doesn’t view us as competitors. Self storage is really supply-constrained and most facilities are full. They have wait lists. So no one is feeling the revenue impact. With us aggregating space, we’re just serving those renters and that unmet demand. 

MSM: Tell us about your pricing structure.

Woodbury: That’s where some self storage owners might feel our presence. Price pressure. Our hosts' prices are typically $30-50 cheaper per month compared to a facility. Plus, when you rent on Neighbor, the price you pay on day one is the price you pay until you move out. I read a report from a publicly traded company in which they bragged about increasing the price for renters over time. That doesn’t happen with Neighbor.

MSM: So a host cannot raise the price even if someone is there for years?

Woodbury: Correct, once someone has rented the space the price cannot be adjusted until the renter moves out and the host re-rents it. But we can help them set pricing in advance to be sure they get a fair rate. We know what space is renting for in each city. We have such good data about how much to charge based on space, access, and so on, and hosts can use that data to set their price. They can also use our Smart Pricing system, where they basically hand over the keys to us and we change the price when it’s vacant based on seasonality, demand, and so on.

MSM: How does Neighbor make money from the transactions?

Woodbury: As a part of each monthly rental payment from renters, Neighbor adds a small service fee that enables the company to provide services and protections. The amount of the service fee is based on many factors, but mostly on where and how you decide to store your items. 

For our hosts, we charge a small 4.9% + $0.30 processing fee to each monthly payout. Both fees help us keep Neighbor secure, provide responsive customer service, and many more protections.

MSM: What happens if a host decides they need to use the space themselves? Can they remove the renter?

Woodbury: No one is locked into a contract, it’s month to month. The renter can move out when they need to, and if the host decides they need the space and it’s still being rented, the Neighbor platform will find the renter a new space to store their stuff.

MSM: Is Neighbor strictly a residential program?

Woodbury: We serve the commercial sector as well. There are many business owners that have extra space. Ecommerce has killed a lot of brick-and-mortar businesses, and COVID had an impact on office space. So we have clients that have room in the back of their retail shop, a bunch of empty offices, or extra parking spots the city made them create that they don’t need. We help them rent that out.

We have big real estate portfolios as well, and work with some of the largest real estate owners in the country… $10+ billion portfolios – retail, office, multifamily. We’ll go to them and say, “About 15% of your portfolio is vacant. Give us 10% of the space that hasn't been rented in five years. No one wants that space, so we’ll convert it to storage.” Some of these clients have earned millions of dollars per year in ancillary income through our platform.

MSM: What happens if a renter stops paying the host? How do they get rid of the renters' belongings?

Woodbury: In those instances, Neighbor keeps paying the host until we can get the items moved. Every state has different eviction and auction codes, so we go through the formal process on behalf of the host and they continue to get paid by us. Normally we can get a delinquent renters’ belongings removed in 30-60 days, and sell it via online auctions.

But this is very rare. There is a lot of social capital with Neighbor. People typically rent in their neighborhood, so they don’t want people in their social circle badmouthing them. I think we get much higher quality renters than most self storage facilities because of this.

MSM: Are most renters short or long term?

Woodbury: I’d say we’re very similar to the self storage industry. There are renters who have been with the same host since we started in 2017, but the average is 6-14 months. Many are what we call ‘purpose renters.’ They’re building a house, moving, or need summer storage. Then there are non-purpose renters, people who just don’t have room for all their stuff, who tend to rent longer term.

MSM: You mentioned access. How is that controlled so a host doesn’t have someone coming and going at all hours of the day or night?

Woodbury: When the host signs up with Neighbor, they set access rules. For a driveway or pad, where someone is storing a car or boat, they may offer 24/7 access as it doesn’t disrupt them. Or, they can set business hours, say 9 a.m. to 5 p.m. if they work from home. Let’s say they work during the day. Then, they can set after hours access times, or weekends only. Some hosts give renters keys, others require that they are there to open doors. It’s up to the host and the renter, and it’s all agreed upon up front. Plus, hosts and renters can easily connect and chat on our secure app.

Ultimately, though, most people don’t need access that often. People don’t store stuff that they need to get at all the time.

MSM: If a host has a large empty space, say an entire garage, can they rent it out to multiple renters?

Woodbury: Absolutely they can host shared spaces. Many of them will partition off sections of a large space to accommodate multiple renters. 

MSM: Is there concern about theft with shared spaces? And is a host on the hook for anything that is stolen?

Woodbury: No. Again, we tend to attract high quality renters. There are very few bad actors on Neighbor. And with shared space, typically the host will require that they are home to give a renter access. 

We also have great property protection plans, up to $50,000 in coverage to cover theft or damage. I’m not aware of a self storage facility that offers this much coverage. Plus, residential properties are rarely broken into. You’re much more likely to have a theft at a self storage facility than at a home.

MSM: Do hosts have any concern about a renter storing illegal stuff, and getting them into trouble?

Woodbury: Neighbor prohibits firearms, perishables, and other items like that. Renters are required to submit a list of what they are storing to hosts, and the host has the right to inspect the items to be sure they match up with the list. Storing with a neighbor or local business, people are more likely to be on their best behavior. If they want to store something illegal, they are much more likely to go to a random facility where no questions are asked.

Neighbor Looks to the Future

Neighbor plans to continue expansion, bringing in new hosts and attracting new renters. Woodbury says his team finds satisfaction in the knowledge that hosts are earning money and renters are saving on storage. He says this extra income for hosts and savings for renters are helping people pay their mortgage, save for their kids’ schooling, or indulge in a vacation. But that’s not all.

“The other great thing about Neighbor is in our name itself. This platform is a great way for people to get out and meet others in their community. They may never have known the person three doors down, but now they’re renting space and they’ve become friends,” explains Woodbury. “Small businesses too. Someone rents space from them, and they get new customers who never knew the business existed.”

“Ultimately, Neighbor is helping to bring back the idea of a ‘nuclear community’ that seemed to be a thing of the past until now.”

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Brad Hadfield is a staff writer and news researcher for Messenger magazine. He also manages the Modern Storage Media website.