By Jason “Jay” Allen and Carl E. Touhey
Over the past decade, the self-storage industry has undergone significant changes none of us could have predicted. Our business is constantly evolving, and keeping up can be a challenge. What may have worked for you in the past may not be successful today.
Even still, increasing your bottom line, which translates into a greater facility market value, can be very simple. The key is to not treat your self-storage property as if it were a triple-net leased property for which minimal management is involved. This is a management-intensive business, and you must keep a watchful eye on your asset. With a little attention and creativity, your bottom line can grow significantly over time using some of the simple tips below.
When evaluating a self-storage property, today's investors look at several things: location, local market, actual income and market expenses, all of which get them to a true net operating income (NOI). Buyers today are extremely conservative, and lending standards are still strict, which means a property must be bought “right.” If a potential seller is able to increase his income while decreasing some of his expenses prior to a sale, a higher price can be easily achieved.
All of us have seen TV shows on networks like TLC about curb appeal and how improving the look of one’s home can translate into a higher sales price. Although these shows focus on residential real estate, we can easily translate these tips and apply them to our own storage properties.
For example, take the color of your buildings. Have you ever noticed the difference in color between a first-generation facility and a modern one? Brown on brown is just not attractive, especially when you look at the color schemes of newly built properties. Repainting your entire facility may not be in the budget, but how about just painting the trim another color like red or blue? This simple and cost-effective change will be noticed by current tenants and people driving by.
We aren’t saying this will immediately increase the value of your property, but over time, your facility may be more noticeable to drive-by traffic, which should translate into more walk-ins. Another great benefit to doing this is your current tenant base will see you making changes to the property, which can help justify your rent increases. Here are some other curb-appeal tips:
- If you have large trees in front of your property, trim them up from the ground so drive-by traffic can see you.
- If you have a chain-link fence with plastic or wooden slats, take them out so people can see your facility.
- Paint trim, awnings, flower pots, etc., a standout color like red, yellow or blue.
- Improve your signage and replace plastic inserts in monument signs.
- Buy an A-frame sign and advertise specials on the street to drive-by traffic.
- Reconfigure your office to allow room for a merchandise center and sell moving supplies.
One of the easiest ways to increase your facility value without spending any money is to cut expenses, or “trim the fat." You don't want to get rid of things that are necessary to your operation such as utilities or payroll, but by reviewing your profit-and-loss (P&L) statement each quarter, you may be surprised at what you see and what you can cut or adjust.