Hiring the Right Management Firm for You

Maurice Pogoda and Tom Berlin Comments
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2. Investment/private equity groups. These groups are formed for the sole purpose of buying portfolios of self-storage properties, and they usually have no interest in managing properties themselves.

It is not unusual for these groups to use pension, insurance or securitized funds for the sake of securing a stable rate of return and future appreciation. Often the source of funds won’t allow the groups to self-manage the properties. Having an experienced management company with a proven track record is often a requirement to close the deal.

These investment groups are under intense scrutiny from their funding sources to reach projected goals. A management company must be able to meet demanding reporting requirements, keep high standards for maintenance and appearance of the stores and, in general, have a very high level of sophistication.

3. Financial institutions. With the economic challenges of the past few years, banks, pension funds, insurance companies and numerous other funding sources have found themselves taking back properties after owners have defaulted on loans. Obviously, these "owners" are not in the business of managing real estate. Their goal is to quickly remove the loan from their books and recoup as much of their investment as possible.

Rarely does a store go back to lenders with 90 percent occupancy. In order to achieve a sale at a reasonable price, they must improve operations over the previous owners and increase revenues and occupancy.

Financial institutions use a professional self-storage management company to run the property and increase occupancy, while decreasing expenses and delinquencies in an effort to get the property ready for sale.

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