Are you thinking about retaining the services of a property-management firm to operate your self-storage business? Perhaps youve even narrowed your search to a couple of companies that charge similar fees, and you feel you could work well with either. Their serviceshiring and training employees, marketing, advertising, customer service, facility maintenance, bookkeeping, accounting, etc.all seem to mirror one another, so much so that you begin to wonder, "Is there really a difference?"
While many property-management companies may look the same at a glance, and even upon further investigation, not enough self-storage owners get to the real heart of the matter: the importance of reporting. How much and what specific information about your self-storage operations will the property-management firm report back to you? Thats the question that really needs to be asked and answered. In fact, the answer may just be the tie-breaking decision maker for you.
Its All in the Packaging
Some states have specific regulations and guidelines dictating what property management companies must report to self-storage owners regarding sites they manage. These regulations and guidelines are devised to protect you, the property owner.
For example, regulations may outline how property-management trust accounts are to be set up and who can be a signer on the account. These guidelines often outline the frequency of reporting and what should be included in the reports. Check with your state regulations first to review and familiarize yourself with regulations affecting your business needs.
When it comes to financial reports, you should expect to receive a full accounting package at least monthly. This package should includeat a minimuman income/expense report, balance sheet and check registry. For many property-management companies, this information is processed in a generic accounting program, presented with a cover sheet and proceeds check.
If this is all you get, you may have many unanswered questions specifically detailing your facilitys operations. The void may mean youll have to spend a lot of time trying to get to the bottom of things.
Property-management firms that understand the importance of good communications and strong financial reporting will take a different approach when reporting back to you. These companies will prepare and deliver a full monthly package to you, typically within five to 10 days of the close of business on the last day of the month. Professional companies will also report to you on a weekly basis via the Internet or other form of communication. Some even utilize software that you can access anytime to receive real-time live updates.
A quality month-end package will focus on the following:
Month-end call report: This report will address any problem areas at the facility, what actions have been taken and the outcome of the resolution. It will also include a summary of projects or goals completed this month, those set for next month, anticipated outlook for the following month, explanation of extraordinary expenses, a comprehensive rate survey of immediate competitors and monthly/year to date (YTD) trend analysis of key result areas in an easily understand format.
Financial report: This section will include an income/expense statement utilizing general ledger accounting principles for the current month, YTD, same period this year (TY) versus same period last year (LY), YTD TY versus YTD LY, current month to budget and YTD results to budget, a balance sheet including any journal entries provided by your CPA (such as depreciation, etc.). A complete check registry will be included along with a series of optional reports (some owners do not want all that detail), such as bank account reconciliation worksheet, detailed trial balance, payroll documentation, cash flow analysis (statement of cash flows) and invoice distribution reports. Sound financial reporting like this will aid you immensely in year-end tax preparations, bank financing and estate planning.
Facility reports: These are reports directly from your self-storage facilitys computer system. At the very least they should include management and financial updates, such as summary reports, potential income (revenue) reports, reports showing deviations in rents by unit as compared to standard rates, transaction-summary reports showing total daily business for the month, collections reports, rent roll, reports showing concessions, fees waived or other credits by unit number or transaction. The packet should also include any other reports you request.
A complete and thorough reporting package should be laid out in such a way that you can easily understand what is going on with your facility at first glance. For example, the package may include a comparative trend analysis, complete with charts graphed for key result areas such as physical occupancy, occupied square feet and economic occupancy on a YTD basis. Right away you will be able to see peaks and valleys allowing quick identification of seasonal trends. However, if you choose to delve into all of the data supporting these facts, you have this information right at your finger tips.
Property-management companies utilizing advanced reporting methods will also typically handle compiling and mailing the same reporting packages to your investors and partners, but it is a safe bet to ask the question and confirm they will go this extra mile for you so there is no misunderstanding.
The decision to go with a management company is yours. You can easily see that finding a company that provides comprehensive reports will save you time by getting to the heart of the matter. Hire a company that puts the right information at your fingertips. Your self-storage site deserves no less.
Raymond E. McRae is the vice president and director of operations for Mesa, Ariz.-based Storage Solutions, which conducts feasibility studies, third-party management, market surveys, consulting, auditing, acquisitions and development for the self-storage industry. For more information, call 480.844.3900; visit www.storage-solutions.org.