As we leave the dynamic storage market of 2009, it’s time to review the items we can successfully change in 2010. It may be time to evaluate and update your facility’s curb appeal, marketing plan or payroll. It may be time to approve a capital repair you didn’t complete last year or institute a new policy or procedure left for another day. You might even be in a position to refinance or sell your facility.
Regardless of your situation, an experienced self-storage management company can help you navigate these waters. Choosing a third-party management company is one of the most important decisions you can make for the overall success of your investment.
An experienced management company will handle all the day-to-day operation of your facility, including marketing, manager acquisition and training, bookkeeping, curb appeal, lien sales, software and computer installation, Internet management, vendor negotiations, and auditing. This allows a self-storage owner to focus on other interests, but still allows him input on operational decisions.
Do Your Homework
Before interviewing management companies, first determine if you’ll be comfortable handing day-to-day operation to someone else, and if the cost of hiring a company is compatible with your financial situation. A storage customer will typically rent where he feels the most comfortable, and choosing a management company is no different for you. If you’re not at ease with turning over your investment to a third party, the relationship between owner and management company will quickly deteriorate.
Once you’ve made the decision to work with a management company, research each that interests you. There are a number of highly rated and experienced self-storage companies. As an owner, you need to decide the most important factors in your decision. Here are some questions you should ask in the initial interview:
- How long has the management company been in business?
- What is the experience of the staff?
- Is the company in the same state as your facility?
- How often will they visit your facility?
- What kind of progress reports will you receive?
- Does the company handle the facility’s bookkeeping?
- Does it have references?
- Does it prefer specific management software?
- What are the costs associated with hiring the company?
Also, how much reporting should you expect? Should the third-party management company report information to you daily, weekly or monthly? Would you prefer conference calls or in-person meetings? Communicate your expectations at the outset to learn whether the company will be able to meet your needs.
Budgets and Costs
A typical third-party management company will charge a monthly fee ranging $2,000 to $4,000, or 4 percent to 6 percent of the facility’s monthly gross. These fees vary depending on the company, but usually fall within this range.
Once you’ve completed research and visited with the management companies that fit your requirements, ask them to review your facility’s economic situation and create a preliminary budget. A management company will require some financial data, such as profit-and-loss reports, to construct one. As an owner, you’ll want to know how the economics of the facility may change. Here are some questions to ask:
- What kind of rental activity and income does the management company expect?
- How much payroll will be requested?
- What costs will be associated with marketing?
- How much will be requested in maintenance and repairs?
- What are the expectations for utility costs?
- What is the expectation for net operating income?
All these items are needed to make a realistic projection of the facility’s future performance. Review each of the budgets and make notes on the line items that concern you. Remember, if a line item seems too good to be true, ask questions. The prospective hire should be able to give you a satisfactory answer for all your queries.
The Marketing Plan
One of the most important aspects of managing a facility is the marketing plan. As an owner, you should carefully review all aspects of a potential management company’s marketing budget. How will it market your facility? What is the budget for Yellow Pages advertising, the facility website, direct marketing, fliers and other marketing methods?
To gauge the value of any marketing program, it’s important to track leads, so be sure this is part of the plan. Another area to scrutinize is online marketing. Will the plan include search-engine optimization, or will your facility be listed online industry directories?
Some management companies will heavily market a facility within the community. Ask if they will work with the community to sponsor events, host chamber-of-commerce meetings or customer-appreciation days. Will they form partnerships with realtors, apartment complexes and other local businesses? Review each of these items and ask questions to determine how the company plans on marketing your site.
Regardless of where your facility is located, there are a number of great self-storage management companies available. Determine which is right for your operation. Research, ask questions, look for experience and check references. A third-party company can provide experience and exciting new ideas for your facility. Take your time, and review each prospect thoroughly to find the one that fits your needs.
Matthew Van Horn is vice president of Cutting Edge Self Storage Management, a full-service third-party management company specializing in management, feasibility studies, consulting and joint ventures within the self-storage industry. For more information, call 866.970.EDGE; visit www.cuttingedgeselfstorage.com. On Twitter, follow Cuttingedgemgt.