Wait and See
Your only other option is to wait and see. If you’re in a fantastic market, you’ll reach stabilization eventually without spending much on marketing. As I see it, two problems exist with this type of thinking. I’ve never been a fan of unpredictable, passive growth strategies. You have no idea when you’ll stabilize and are gambling with fate.
Empty units are worth absolutely no cash flow to you. They’re only worth the land they sit on and the dismal value of used-building materials. During stabilization it’s much better to have a paying tenant in a unit—even if you don’t see a penny of profit for 7.5 months—than it is to have an empty unit. After you reach stabilization, having 5 percent to 10 percent of each unit size empty is essential. But until then, get tenants in those units.
Ideally, you’d profit from new tenants from day one and wouldn’t have to spend a penny on marketing to acquire them. I completely agree with that. However, that’s simply not a reality in competitive markets.
The bottom line is this: Marketing is an extremely lucrative investment. The wealthiest people in the world realize marketing and innovation are usually the only two things that make you money.
If you don’t have the cash to invest like you should in marketing, beg or borrow to get it; it will be well worth it. After all, this billion-dollar marketing lesson has been working since the beginning of free enterprise and will continue long into the future.
Derek M. Naylor is president of Storage Marketing Solutions, a full-service, results-oriented marketing and advertising agency dedicated to the self-storage industry. For a free subscription to his e-newsletter, call 800.941.4805; e-mail email@example.com; visit www.storagemarketingsolutions.com.
“Be passionate about getting more referrals and repeats from existing and former customers. These are the lowest-costs rentals you can get. On the other end of the spectrum are the highest-cost per lease tenants—those garnered through Yellow Pages, newspaper and radio/TV ads.”
—M. Anne Ballard, Universal Management Co., Inside Self-Storage Factbook 2008
“Our best bet for marketing has always been referrals from previous or current customers. We offer a $25 credit or gift card to the tenant passing on the referral and $25 credit to the new renter. We still have referrals coming in from tenants who rented years ago! We love that!”
–Submitted on www.selfstoragetalk.com, the online forum for the self-storage industry