Asset Management Keys - Self-Storage

Now more than ever, asset management is important to the success of a real estate project. There is an emphasis on operations to maximize asset value as the cost of capital (mortgage rates) increased in 2023.

We have been hyper-focused on operations of our self-storage portfolio.

While sometimes incorrectly referred to as ‘recession-proof,’ self-storage is more recession-resistant than most asset classes. Here are some of the strategies we are implementing to optimize operations:

• Tenant insurance

We mandate that every single tenant carries tenant insurance to cover their personal property that is being stored. It is a non-negotiable.

We have partnered with insurance carriers so we may offer the tenant options directly, and then we are entitled to a small percentage of the premium per customer. In exchange, the customer will have insured his/her belongings. It is a true win-win.

• Administration/setup fees

These one time “convenience” fees for new customers go a long way when added to a facility’s income and spread to a cap rate. This fee will help cover the expenses for cleaning and turning the unit, and ensuring a good experience is delivered to the customer.

• Monetizing vacant land - boat and RV parking and/or billboards

We try to monetize every foot of land that we have. We have used vacant land for parking, and even have billboard income at the Bigger Garage - Memphis facility.

• Expansion

Perhaps the most drastic way to increase the facility’s value is by building additional storage buildings. We recently completed a buildout at our Bigger Garage - La Porte facility.

• Ensure rents are at market levels

We monitor this throughout our portfolio, with an extra emphasis on increasing rents to market upon acquisition. If a facility was run by a mom and pop operator, it is likely that rents are below market rate. So long as your immediate radius – both its rates and supply/demand – can support a rent raise, you likely will not lose many customers by raising rents to market. After all, if they moved to a different facility, the rent would not be much different.