Raising Rents on New Self Storage Aquisition

[Andrew Cowles]

Closed on a self storage facility about 3 months ago. I've completed turnover with all the tenants so everyone is aware of the new owner and are making payments on our new website. I spent about 35k on renovations and the property looks brand new compared to when I purchased. There was a small exodus when I purchased and the occupancy is only at around 70% now and rents are at about 50-75% market rates depending on unit size. With that being said, even with such low rates and only 70% occupancy, the deal is still cash flowing a little bit so the value to be added is quite high. I should also mention this is not a long term play. I'd like to get all current rents raised to market and occupancy to 90% and have it operating at peak capacity to sell it in the next few years to 1031.

I have not raised any rents on inherited tenants but have raised street rates to market and have had no complaints on price from new customers. 

I'm trying to navigate raising rents on the inherited tenants to market. The current clientele at the facility are absolutely price based customers. And the rent raise required to get the rates to market will be significant. Best ways to go about this?

Should I rip the band aid off and raise all rents to market and deal with exodus that will follow and assume the increase in rent in the customers who stay will cover the decrease in rent from those who leave? Should I gradually raise rents and upset tenants from multiple rent raises? Should I only raise specific unit sizes at one time to see the reaction? Seems like there is no great way to go about this.