Self Storage- Marketing- 2024 review

[Henry Clark]

Taking a break from working on our 2024 bookkeeping and taxes.  All of our self-storage run at basically 100% occupancy except for our most recent addition.  Was just going over with my wife both the increase in Occupancy revenue change and the 2023 versus 2024 Marketing spend for this location.  We are starting to get near max occupancy on this location.  The last year we increased 5% points in occupancy.

Our Marketing spend:

                               2024                         2023

SEO                       $18,000                 $21,000  Paying to get our website and location occupancy up as fast as possible from 0% to ??%

Bus Benches          10,000                   24,000  intentionally reduced number of benches last year.

SP aggregator          6,000                      8,000  as our occupancy gets closer to the top, less demand goes through this aggregator.  We pay 1.75 months of rent per new customer.

Total                      $34,000                $53,000

Once your location gets close to full occupancy for 2 or 3 years.  It creates its own Vortex of customers.  Returning, recommendations, Street presence, etc. to where it feeds itself.  At first though you want to spend as much as possible, so you're not paying the banker the full nut.

Talking with my wife we will drop all of the Bus Benches and the SP aggregator this year, around $16,000. This will fall straight to the bottom as profit. As long as our occupancy doesn't drop, we are ahead. Using a CAP rate of 7%, the $16,000 becomes= $228,000 of added value. If our occupancy starts to drop, we can increase google adds by month or reinstate the bus benches and SP Aggregator.

Our cheapest advertisement is our Billboard Road sign out front for $18,000 one time.

I always say it's your money.  Your always right even if you're wrong.

Let's check next year if we made more profit or if our Occupancy% declined.  If no change, we added $228,000 to our value.

[Henry Clark]

Quote from @Ronald Rohde:

What are your buyers doing for debt if you're assuming a 7 cap? Isn't that negative or neutral leverage at best? 

We're underwriting all my single tenant industrial to an 8 cap exit right now.

 Depends on the buyer.   This was a local buyer.  They actually could have floated a 6 cap.  If in the same market area Self storage locations create synergies between the locations.  They now will own 80% of the market.  The last 20% won’t expand.  The new buyers will make money on the deal itself.  But then they can raise the rent just $10 per unit per month and create another $600,000 in value across both theirs and the ones we sold.  Next towns are 20 miles away.  And they are all full.