Here’s another bonus to hiring a management team: more free time, which is exactly what owners like Stan need. “In addition to the direct financial benefit that third-party management companies offer, they free up their clients’ time, which is very valuable in its own right,” Middlebrooks says.
Myth 2: They Don’t Have ‘Skin in the Game’
One of the biggest myths about hiring an outside company to oversee daily operations of a self-storage facility is it won’t treat your store as its own. In other words, the third-party provider doesn’t have any “skin in the game,” so it won’t work as hard at attaining success as, say, the facility owner, whose livelihood depends on it.
“This is a concern that comes up in almost all initial sales communications with potential clients looking at third-party management,” says Dale Payne, client relations/sales manager for Uncle Bob’s Management, the third-party management arm of Sovran Self Storage Inc., a REIT headquartered in Buffalo, N.Y.
The opposite is true if you go with a company that has the staffing, buying power and expertise to oversee many properties at once. Typically, these management companies will standardize their services.
“The larger third-party management companies treat their owned and managed stores the same, operating them in concert as one single portfolio,” Middlebrooks says. For example, a single operator managed by a third-party company will receive the same website placement, search engine optimization and marketing, sales-center treatment, and training support. “There really is no difference. Managed stores actually have the added oversight of a dedicated third-party management team,” Middlebrooks adds.
Essentially, the best management companies operate stores “blindly to ownership,” says Springer. But don’t take a company’s word for it. “Ask referrals how this has worked for them and if they feel that their properties receive the same level of service as the management company’s owned stores,” Springer advises. “I would question a company that differentiates between the two so as to provide gain for their owned stores at the expense of those managed.”
Moreover, the proof is in the doing. A good management company will have a plan for your facility, including a budget, maintenance schedule, sales goals, staffing or training agenda, marketing strategies, and everything else tied to the successful operation of a storage facility. And they must be willing to share this information with ownership.
“A good management company should provide the owner a detailed budget every year and reports to show how they’re performing compared to that budget on a regular basis,” says Mel Holsinger, owner of Tucson, Ariz.-based Professional Self Storage Management, which oversees 44 properties in Arizona, California, Colorado and Texas. “Each line item should be thoroughly explained so that there are no misunderstandings about how they will spend your money.”