Budgets and Costs
A typical third-party management company will charge a monthly fee ranging $2,000 to $4,000, or 4 percent to 6 percent of the facility’s monthly gross. These fees vary depending on the company, but usually fall within this range.
Once you’ve completed research and visited with the management companies that fit your requirements, ask them to review your facility’s economic situation and create a preliminary budget. A management company will require some financial data, such as profit-and-loss reports, to construct one. As an owner, you’ll want to know how the economics of the facility may change. Here are some questions to ask:
- What kind of rental activity and income does the management company expect?
- How much payroll will be requested?
- What costs will be associated with marketing?
- How much will be requested in maintenance and repairs?
- What are the expectations for utility costs?
- What is the expectation for net operating income?
All these items are needed to make a realistic projection of the facility’s future performance. Review each of the budgets and make notes on the line items that concern you. Remember, if a line item seems too good to be true, ask questions. The prospective hire should be able to give you a satisfactory answer for all your queries.
The Marketing Plan
One of the most important aspects of managing a facility is the marketing plan. As an owner, you should carefully review all aspects of a potential management company’s marketing budget. How will it market your facility? What is the budget for Yellow Pages advertising, the facility website, direct marketing, fliers and other marketing methods?
To gauge the value of any marketing program, it’s important to track leads, so be sure this is part of the plan. Another area to scrutinize is online marketing. Will the plan include search-engine optimization, or will your facility be listed online industry directories?
Some management companies will heavily market a facility within the community. Ask if they will work with the community to sponsor events, host chamber-of-commerce meetings or customer-appreciation days. Will they form partnerships with realtors, apartment complexes and other local businesses? Review each of these items and ask questions to determine how the company plans on marketing your site.
Regardless of where your facility is located, there are a number of great self-storage management companies available. Determine which is right for your operation. Research, ask questions, look for experience and check references. A third-party company can provide experience and exciting new ideas for your facility. Take your time, and review each prospect thoroughly to find the one that fits your needs.
Matthew Van Horn is vice president of Cutting Edge Self Storage Management, a full-service third-party management company specializing in management, feasibility studies, consulting and joint ventures within the self-storage industry. For more information, call 866.970.EDGE; visit www.cuttingedgeselfstorage.com. On Twitter, follow Cuttingedgemgt.