Self-Storage help

[Matthew Fragassi]

Hey everyone! I am looking into purchasing a self-storage unit from my in-laws. They're in the golden years and don't want to deal with it anymore. I was coming to the forums here because I need advice! :-) The storage is an absolute mess! They have managed it very poorly, little to no upgrades or advertising has been done, but they still manage to bring in a decent amount of cash-flow. What are somethings that can be done with storage to increase value, be able increase rent, etc...? I don't have much info in the storage area of real estate so any help/advice would be beneficial. Thanks everyone.

[Scott Meyers]

Hey Matthew,

There are many ways to increase the value and force appreciation such as: 

1.  Cleaning up the Aged Receivables by enforcing your state's lien laws.  by the way, get to know them, or you could land in hot water if you don't follow your state's guidelines.  

2.  Raising rents on all customers not paying current street rates

3. Performing a CMA to determine whether to raise your street rates.

4.  Market the facility to fill vacancies - adding/updating a website so that it is not only responsive, but can also reserve and/or rent units online. 

5.  Hire a Rock Star Manager that can lease it up and collect the rent 

6.  Add as many of the Ancillary Profit centers in Self-Storage that you can such as selling locks, boxes, moving supplies, pack n ship services, truck rental, renter's insurance, etc. 

Above all else, learn the business and manage it like a pro, not like the thousands of Mom and Pop owners that we buy our properties from, who have allowed their businesses to fall behind. 

This is simple business, but it isn't easy if you don't take the time to learn it. 

And if you find you aren't interested in buying it, give me  a shout.  

Cheers! 

[Michael Wagner]

It sounds like you have a potential opportunity.  As long as the "mess" is a fixable "mess" you can stand to force a lot of value out of the property.  Just be sure to buy based on its current value (which is a factor of its current physical and financial condition). I've bought two facilities that were certainly classified as "a mess" when I bought them and today they are worth 4X and 2X what I paid for them respectively....and it was just a matter of fixing the "mess". One word of caution would be to make sure that the "mess" is indeed fixable.  If its not, you may end up feeling like your in laws currently do...not wanting to deal with it. @Scott Meyers is a great resource to learn from.  I encourage you to check him out on here and elsewhere. I took his course before buying my first facility and found it more than worthwhile! I'd be happy to answer any questions you might have as you move forward.  All the best, 

Mike