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April 15, 2022
When evaluating whether you should buy or sell a self storage facility, the best decision could actually be to stay put! With the market experiencing crazy trends, there are multiple ways you can increase the value of your existing facility.
In this Gabfocus spotlight, Kris Bennett of PassiveInvesting.com, Jane Sauls of Sauls Storage Group, and Matt VanHorn of Black Swan Storage Advisors share different methods of adding value to your facility that can benefit your customers or even become a selling point for a potential buyer in the future!
Question: "How do you add value to your self storage facility?"
Check out the video clip below to hear their answer:
In this Gabfocus Session: Buying & Selling Your Self Storage Facility, we spoke with Jane Sauls (Sauls Storage Group), Kris Bennett (PassiveInvesting.com), and Matt VanHorn (Black Swan Storage Advisors). We had a great time discussing the state of the self storage real estate market.
Check out the full Session to dive deeper!
If there's land to expand on, you can add on more units, whether that be parking for boats and RVs, which is really popular right now. You can land bank it. Maybe what you do now, if you're a little bit scared of the construction stuff, if you don't want to go and bite that bullet, right, maybe you want to land bank it and say, okay, I'll put in parking. Parking is super easy to do some gravel down, paint it, stripe it if you want to. Use some rope to make some lots of parking spaces or whatever, put that in your system. It's really easy now when you bring it to us or somebody else. Hey, here's the meat on the bone. You can go and develop this over here. I didn't want to at the time. So that's a way to add value. Add some parking, some portable containers. That doesn't affect your real estate tax value because it's not considered real estate value, it's not attached to the ground. So there's some ways you can bring in some ancillary income. Obviously, adding tenant insurance. If you buy a facility that doesn't have tenant insurance in place and there are plenty of them that don't, you can implement a tenant insurance program. You basically take a portion of that as let's say it costs $10. You might get $5 per policy and make it a policy at your facility that everybody has to have some form of tenant insurance, whether that's bought through you or with their homeowners insurance policy or whatever. So that's actually good. It makes money, yeah. But it's actually a good thing to protect their stuff so they don't get mad at you or whatever. It's a hassle if something happens to it, but at least they have a policy in place to cover it. Now, you can sell boxes and things like that. We don't do that at our facilities, but you can do that as well. Admin fees, late fees, Overlock fees. If they don't clean out the unit, you have a little sign at your facility, it says and in your agreement that says if you don't remove all your stuff and leave it in broom swept order or cleanliness, then we're going to charge you $250 as a move out fee because we have to go in there and clean it. I've seen that all over the place. Different facilities, some are 50, some are 100. I think it should be 250 because that stings. Right. So I'm going to make sure I clean it all out $50. If I'm in a rush and just trying to move, I don't really care. Whatever. You might charge me $50 and don't care about it. So that's some ways you can make extra income. - Kris Bennett
Sometimes we'll show up with an owner and he's like, oh, yeah, I just want to paint the do this or that, and then I want you to come back and take pictures and sell it. Okay. So big misconception there... go ahead and take obviously, you need to take care of your deferred maintenance, but your curb appeal is for your customer and then you make your customer pay more rent. And so that's the way that increased the value works. Don't wait and let your facility look rough and then think you're going to cut the grass for pictures for the listing. No, keep your grass cut. And then be sure you're pushing those rates and doing those things and increasing your revenue. - Jane Sauls
Have a revenue management program at your property. That's one of the reasons that's one of the big benefits of having a software, those kinds of things. If you're talking about other than what Chris and Jane said, the revenue management part is and do it automatically, have these rates going out automatically. And then I'd rather go to a property, send out 400 increases and then deal with the two or three people that have a problem with it than try to figure out who doesn't need it or who can't handle it or something like that. So you're doing that. You're constantly dealing with that and then review your expenses. What do you need? What don't you need? And this goes into when you're buying a property as well. I mean, someone else's five and a half cap might be your five point 25 after property taxes and the expenses that you need. So some of these numbers, like caps and stuff, can be a little arbitrary. You need to know what you're going to do when you take it over. But in terms of that cut your expenses where you can increase your revenue where you can and put a revenue management system in. - Matt VanHorn