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5 Operating Strategies to Ensure You Get Top Dollar for Your Self-Storage Property

By Isaac Rothermel Comments

There could be any number of reasons why you’re ready to sell your self-storage property. No matter the motivation, you likely want top dollar at the closing table. So how do you get what you deserve for your facility? Here are five operating strategies that will put a smile on your face on settlement day.

1. Implement a Revenue-Management Program

In the past, perhaps you’ve only raised rates on tenants when you increased your vacant-unit pricing, or maybe you’ve never raised them at all. Now’s the time to reconsider that strategy. Implementing rate increases on a schedule can significantly improve your bottom line. Increasing rates just $5 on 300 units will result in an $18,000 annual revenue gain. When you apply an 8 percent capitalization (cap) rate to that gain, you get a $225,000 increase in facility value.

2. Reduce Delinquency

All self-storage operators have past-due renters, but it’s damaging to the business to be too lenient. Not only are delinquent tenants causing you a headache, they’re taking up valuable space you could be renting to a paying customer. You might normally pass an overlocked unit, sigh, and mentally write off the $120. But at an 8 percent cap rate, you’ll lose $1,500 in facility value for every month that unit goes unpaid! How much are you prepared to lose? Get delinquents to pay, and you’ll improve value.

3. Improve Occupancy

The goal is to fill units and increase your number of paying renters. Here are four quick ways to boost physical occupancy:

  • Improve your facility’s Web presence and search engine optimization.
  • Implement a referral program, and perhaps a discount for new customers.
  • Create a revenue-based incentive programs for your facility managers.
  • Enhance your facility’s curb appeal.

4. Reduce Expenses

Every dollar you cut from your expenses adds exponential value to your property value and, therefore, sale price. For example, at an 8 percent cap rate, each dollar in expenses saved translates to $12.50 in additional facility value. Here are a few examples of costs you can easily eliminate:

Dumpsters. Unless this is a selling point for your tenants, why would you allow them to eat into your profit by filling your dumpster? Either put a lock on it or switch to a municipal waste-collection program that gathers only your manager’s office waste.

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