Vendor member, Storage Investment Management, INC., is our guest blogger for the month of May.
Professional Self Storage Management and Consulting
A question we are often asked is - How much does it cost? I realize this is a valid concern for owners but the real question should be - What will you do better for me than I can do myself? The answer I will give is to provide focus, eliminate headaches, and improve income. “Well I can do that all myself”. True but owners typically have other business or personal interests that prevent them from spending 100% of their time focused on their storage business. We live and breathe storage all day every day.
Additionally I have broad and deep experience in all types of markets and properties. After managing some 300 properties over my career there are few problems or concerns I have not successfully overcome. That wealth of experience is a resource that is included when my company works for you.
Back to the original question, maybe a better response would be – How much is doing it yourself costing you? Please don’t take that statement as arrogant because it’s not intended to be. Each time we assume management of an existing, operating property we have achieved excellent increased income. In most cases within the first eight months new income exceeds our monthly fee. By the end of our first year we typically see Net Operating Income (NOI) increase in a range of 15-30%. NOI is income less operating expenses including property taxes but before paying the mortgage.
Not quite ready to turn over your investment to others? No worries, we custom design our management plan based on the needs of the property and preferences of the owner. You are never forced to accept a cookie cutter system. Some owners prefer to be hands off receiving reports and profit distributions while others are more comfortable with some form of closer involvement. We’ll work together the way you prefer.
We also provide consulting services for all stages of ownership. Everything from development which includes such things as evaluating proposed locations, assisting with site layout and unit mix, financial proformas, etc. For existing properties we are often called on to evaluate their current performance and identify areas for improvement. We take that a step further by creating a step by step plan to achieve those improvements and can provide guidance as they are implemented.
Another type of consulting we are sometimes engaged for is exit strategy planning and preparation. This can involve such things as suggesting value if the owner is considering a sale or refinance, and often a review of the physical asset to recommend improvements that should be undertaken prior to listing the property for sale. Many times owners will have us manage the property to boost the NOI thus increasing the value for a sale or refinance.
Here are a few actual case study results:
Property A – a conversion property. The owner who did not have any storage experience did a nice job converting the property for storage. After five years of operations he called us to say he just broke even and wanted to make this investment profitable. SIMI assumed management within a few weeks and found his manager was dishonest as well as absentee much of the time. After replacing the manager and implementing our systems we ended the first full year with an increase of 36% to NOI and year two with a 32% increase. The story continues the same way with the average annual increase to NOI of 12-14%. Seven years later the property was sold for 200% of the original investment!
Property B – a suburban single story traditional drive up type property. The owner developed the property. A family member was the manager. We were called because the owner had attempted to sell and had no takers because the property did not appear viable. Realizing his occupancy and income were rapidly declining and delinquency was growing exponentially he needed help to turn the business around. We replaced the manager, implemented our programs and promptly eliminated virtually all delinquency while rentals spiked allowing us to raise rates and implement rent increases to customers. This assignment was intended to be two years to resurrect this property in order to be sold. After 13 months we had doubled the NOI and cleaned up the property which was under contract to be sold within two weeks of listing it.
Property C – an urban conversion property with virtually no visibility. The owner converted a portion of the property to self-storage and had been open a year. We were called because they had only achieved occupancy of 20% or 20 of 100 units. Again delinquency was high and the manager was inexperienced as was the owner. Marketing would be critical for a property with zero visibility to make people aware they existed. The marketing that was in place was poor and inaccurate including a wrong phone number. After assuming management, developing and implementing a new marketing plan we achieved occupancy of 90% within six months. The owner promptly asked us to oversee expansion of storage units to 350. A year later we have achieved 70% occupancy or 245 of 350 units. Income has increased 300% in that time.
How can we help you? Let’s talk about it. Call us today for a FREE consultation.
Storage Investment Management, Inc. (SIMI) is an exclusive self storage management and consulting company operating across the Northeast.