If you are like most self storage investors, you got into the self storage industry to create passive wealth, not deal with the day to day management of a business. Self storage in unique in the commercial real estate industry as it is both an investment AND an operating business.
The business demands time and attention to give a strong return on investment. Whether you want to free your time to chase more deals or relax on a beach, we suggest hiring a self storage management company (like us!)
If you are like most of our customers, you have some questions before you are ready to give a management company the keys to the kingdom. We get it. Here are some things to think through before you decide on hiring a self storage management company.
There are basically three options in regards to self-storage management companies: REIT, Private Storage Management Company, or Boutique Self Storage Management Company.
To hire a REIT, your store has to meet specific criteria. It will be integrated into a network of hundreds of facilities very quickly. The operating systems, marketing campaigns, sales programs, and facility reporting come pre-installed. Your store will be re-branded (at your expense) to the REIT name and identity. If you decide to cancel management at any time, you need to re-brand back to your original name. A REIT management company may choose to purchase your property when you decide to sell.
A private management company is privately owned and may have 5 - 200 properties. Private management companies may or may not make you rebrand your property. There is less consistency among private management companies, so be sure to do your homework to make sure they are a good fit.
A boutique management company (like Atomic), is a true partner in your company. Boutique companies believe it is their obligation to run your storage business to the best of their ability and take care of your asset. Boutique companies give their customers care and attention and do not just see them as a number on a spreadsheet. They focus on the small things that matter to yield the largest benefits for their customer. They focus on the bottom line just as much as the top.
At the end of the day, it all comes down to who you feel comfortable with? What are your goals for your business?
When hiring a company to manage your self storage investment, specifics matter. How the management company you interview defines the word “management”? Let’s start with general self-storage operations.
As competition heats up in our industry, you need to know how your self storage management company plans to take on this challenge.
Most self-storage managers are not natural marketers so training this discipline is critical. The answers to these questions will give you a good idea of the kind of exposure your investment will receive in your local market.
Marketing is integral in driving potential customers to your facility. The sales program will determine how many of those potential customers will turn into actual customers of your facility. The facility managers must be able to close these leads to make a difference.
As with marketing, most self-storage managers will need some sales training. It’s vitally important that any management company you choose takes the time to implement this type of training. Customers have less patience than ever, so the best sales plan will win.
Next, you need to start asking questions on financial management. Request a budget projection for your facility. Review it and then ask yourself if the projection seems reasonable?
The financial viability of your self-storage facility is paramount. Don’t leave this to chance and ask as many questions as you need to feel comfortable.
Finally, it’s time to talk about communication. Communication is a major factor in how well the relationship will work with your self storage management company. In addition, a regular reporting schedule will help keep you informed on the health of your self-storage facility. Most self storage management companies will provide you a monthly report on your facility. Typically, this will be comprised of a facility summary, financials, bank reconciliation, software reports, etc. While you are completing your management company research ask the following questions.
Understanding how the communication process works will directly impact the relationship you have with your management company. If regular meetings are required to increase the comfort level between you and your management company, then be upfront with that necessity in the beginning.
You will need to feel comfortable hiring a self storage management company and believe they have your best interest at heart. This will allow you to step back and let them do their job so you do what matters most to you.
The costs related to hiring a self-storage management company are fairly homogenous across the industry. The monthly price is normally a set monthly fee or a percentage of gross revenue. The choice is going to come down to something more intangible than just financial compensation.
One of the most important parts of hiring a self-storage management company is finding a company that meets your expectation level. Your comfort level with the management company you choose will be a determining factor in regard to the length and success of the overall relationship.