As we move into the second quarter of 2011, self-storage operators should assess their facilities’ progress to this point, especially those managed by a professional management company. But before meeting with your third-party provider, identify your own expectations.
Ask yourself: What constitutes a successful year for your facility? Is it a 5 percent increase in revenue, a 3 percent decrease in expenses, or a 5 percent increase in net operating income (NOI)? Are you swinging for the fences expecting double-digit increases and decreases across the board? Are you near your internal targets? Are your customers satisfied? Are facility managers content and properly trained? Is the facility’s curb appeal at an acceptable level?
Beyond these questions, how’s your management company handling the intangibles? Are you happy with the level of communication? Does the company provide you with the items it claimed it would in a timely manner? Do you enjoy speaking with your representative? All of these things should be factored into the evaluation of your management company.
Assessing Your Operation
The basics of evaluating a third-party management company are simple and straightforward. Evaluating intangibles is not always simple and relies on the judgment of the self-storage owner or investor. The main question is always: Is your investment better off since you hired a management company, or has facility performance been lackluster?
Now, taking into account that we’ve just experienced one of the worst recessions in history, along with crippling job losses and a devastated real estate market, is your investment better off than last year? In general, your management company should be performing in the following six categories.
Financial targets. These are extremely easy to review. Are your facility’s revenue, expense and NOI numbers in line with your expectations? Does its profit and loss report have any resemblance to this year’s forecasts? Did your management company give you any projections for 2011? If not, why? You cannot hold someone accountable for performance if there’s no benchmark on which to base it.
Marketing. Is your management company marketing your facility effectively? Do you have a successful Internet campaign complete with a website optimized for search engines? Are you making strategic alliances with businesses in the area? Do you have a strong referral program? Are you tracking your results to allocate funds for the most effective campaigns?
Training and manager evaluations. Are your facility managers content and well-trained? Does your management company have an effective training program? Are the lines of communication open between the management company and your managers?
Maintenance and curb appeal. Is your facility’s condition and appearance up to your standards? Have projects been contracted or completed? Did they come in at the projected cost?
Onsite visits and groundwork. Does your management company visit your facility? I recently consulted with a facility manager who had not seen or spoken to his district manager in three months. The only communication in this situation was through text messaging. This is not an effective way to manage a self-storage facility.