How to Manage a Self-Storage Facility to Decrease Operating Costs
When a real estate investor is eyeing opportunities in the self-storage industry, they might overlook a simple truth: Owning a self-storage facility means managing the physical property and the day-to-day business.
Self-storage property is a unique asset class in commercial real estate in that renters are on a month-to-month basis. As old tenants move out, there is a constant need to find new customers. The ebb and flow of customers, known as churn, requires frequent adjustments to pricing, promotions, and marketing efforts in order to maximize revenue.
If you’re weighing investment in a self-storage facility or own a facility but you’re a relative newcomer to leasing self-storage units, here’s an overview of the basics of self-storage management.
1. Choose your management method
Particularly if a facility you’ve purchased is your first brush with the self-storage sector, you need to carefully weigh how you want the facility to be managed. Remember, the facility is more than a piece of real estate — it’s a business that needs people to operate it and technology to keep things running smoothly.
Self-storage management boils down to three options:
- Maintain on-site management, with employees handling day-to-day operations. In this case, you can be more hands-on and maintain a regular presence at the facility or more hands-off and entrust the bulk of management to on-site professionals who are on your payroll. Either way, don’t forget that you’re not only in the real estate management business but the people management business.
- Remotely manage the facility. Technology has made this option much more appealing. You can set up self-service kiosks for customers to rent units, and enable those customers to enter their units electronically and pay their rent online. Of course, this requires a hefty investment in technology, but that investment can be offset by the need for fewer on-site employees (or no on-site employees at all).
- Turn things over to a third-party manager. Across the country, management companies and major self-storage operators run self-storage facilities for the owners. Yes, you’ll be handing over a certain share of your revenue to the third-party manager, but you won’t be saddled with day-to-day management details. They will assign a facility manager to your property instead of it being your responsibility to find and hire one.
2. Zero in on customer service
Regardless of how your facility is managed, you must pay careful attention to customer service. Great customer service can keep existing renters and attract new ones, while poor customer service can cause constant tenant turnover and push down your occupancy rates.
Consumers typically have several self-storage options within a few miles of their homes. If you deliver superb customer service, your renters may never give the alternatives a second thought. Any facility manager that interacts with your renters should be rigorously trained on how to provide excellent customer service and how to properly deal with upset customers.
3. Pay attention to customer feedback
In person, online or over the phone, customers often will let your property managers know whether you’re doing a great job or a poor job. Use every bit of this feedback as a learning experience. Double down on the things that customers tell you they love about your facility, and work to correct the things they wish you’d improve.
4. Focus on technology
Not that long ago, many self-storage owners kept track of each and every business transaction with paper and pencil. In the 21st century, it’s time to throw out the paper and pencil, and lean on technology. Especially if you’ve settled on managing the property yourself, you’d be wise to look into self-storage management software such as Sitelink. This type of software can enhance efficiency, improve the customer experience and boost revenue. Common features of self-storage management software include facility management, inventory control, online rent collection, access control and website design.
If you end up enlisting help from a third-party property management company, be sure its self-storage management software is top-notch.
5. Promote your business.
This may sound elementary, but you must market your facility. You can’t count on tons of business from people simply driving by your property.
These days, most folks find self-storage facilities online. Therefore, you need to solidify your digital marketing efforts. This includes maintaining a robust web presence, such as an easy-to-use website and some online promotion (like listings on self-storage marketplaces).
Traditional marketing can help attract renters, too. This might include printed brochures and fliers, on-site events, easy-to-see signage and incentives for current renters to refer potential customers.
Part of a self-storage manager’s job will be to follow up with all of the leads generated by your marketing efforts. Always be cognizant of the price you pay for leads, but overall marketing is an important investment for increasing the profitability of your storage operation.
