That’s why location, location, location are still the three most important considerations in storage development and advertising. Odds are that a customer will choose a storage center that is close to home or the office or along his commute. Building a store on a high-traffic street with great visibility is an advertising cost you only pay once.
Although many customers use the Internet to find places, there are still many who thumb through the Yellow Pages before making a selection. A great advertising program makes use of a top-notch location, the Internet, and a print YP ad, linking it all together with a manager who can close the deal.
Myth No. 4: It’s Good to Be Full
When it comes to putting food in your stomach or gas in your car, full is good. Having a full self-storage facility is also good ... to a point.
I’ve heard some managers proudly proclaim their facilities are “full.” Some say without apology that they have been 100 percent occupied all summer, or haven’t had any 10-by-10 units available in six months. In these cases, the facility is not being managed to its greatest potential. The key to success is to manage net operating income, not occupancy.
Let’s say I own a facility with 100 10-by-10 units rented at $100 each and I’m at 100 percent occupancy. A new customer may be willing to pay more for one of my units, but it doesn’t matter if I don’t have one to rent. The market is clearly telling me that a 10-by-10 is worth more than $100, but I’m not listening because I’m just happy to be full.
This same facility at $110 per unit and 95 percent occupancy produces more operating income than at $100 per unit and 100 percent occupancy. I should methodically raise my rents until occupancy begins to drop, using total revenue as my goal. Ideally, even a “full” facility should always have a few of each unit available to be rented at a higher price to the next customer. That’s how you constantly raise your revenue without an across-the-board rate hike.
Myth No. 5: Wherever You Build it, Storage Is a ‘Cash Cow’
I’ve visited hundreds of storage facilities across the United States and Canada and seen a few that were doing so well they may as well have had an extension of the U.S. Mint in the back room cranking out dollar bills. But those kinds of stores are the exception, not the rule.
There are many older facilities that have long since paid off the mortgage and earn a good stream of cash. However, the owner who wants to build a facility today should beware the lure of the “cash cow.”
Frankly, it’s a load of bull. For today’s investors, the trick is to find a location that will provide a solid and satisfactory return on investment. To use a baseball analogy, if you can build three or four stores that hit a “single” or a “double,” you won’t need to wait and worry, trying in vain to find the one location that’s a “home run.”
Myth No. 6: Anybody Can Sell Self-Storage
Let’s face it, there’s nothing exciting about three walls, a roof and a roll-up door. Since there’s not much differentiation of product, customer service and people skills become vital in the selling equation. We spend millions of dollars on state-of-the-art storage facilities, then pay someone a wage below the poverty line to operate it. It seems prudent to make an investment in your facility by finding a quality manager, even if that means paying a little more.