Self Storage Profit Centers

The value of a self storage facility is based off of the Net Operating Income (NOI). Gross operating income minus operating expense equals NOI. Divide this number by the cap rate and you get the value of your facility. Increasing this number means increasing the assets value.

Every dollar counts in this business. For example, every dollar added to the NOI at a 6% cap equals $16.67 in property value….$1.00/.06 = $16.67. You can easily add $500 per month to your facility by implementing one, or a few of the strategies listed below. This would generate $6,000 in additional income which at a 6% cap is $100,000 in value!

Here are a few ways to add revenue to your facility.

Most Common

1. Retail sales: Boxes, locks, tape, dust covers, etc.

Tip- Put your logo on each product, keep the shelves fully stocked, and always keep the display organized.

Tip- Advertise that you have moving supplies/boxes for sale.

2. Truck rentals: U-Haul and Penske are two common choices. By contracting one of these companies, you do not have to purchase trucks or worry about maintenance. You simply become a dealer and they give you a cut for allowing them to rent their trucks at your facility. They typically pay around 20%-25% in commission.

Tip- The cost and liability of owning your own truck is much greater than and less beneficial than hiring one of these companies. If your truck goes down for maintenance, you will be out for a week or two. Whereas, these companies have multiple trucks at your facility and replace/rotate them often.

3. Build: Maximize every square inch of the land that you possibly can. Build vertically if possible so you get everything out of the current footprint of the property.

Tip: Check your zoning laws on use of portable storage. If you cannot build more physical structures, you might be able to get away with putting a few shipping containers fitted with rolling doors on the property because they are not a fixed structure.

Tip: Always get a feasibility study to make sure there is demand for more units in your market.

4. Insurance/Protection Plans: Offer or require tenants to have insurance on their unit. This takes the risk off of your business. A license is required in all states except for a handful of states that allow a “limited license”. You can also decide to offer a protection plan instead. This usually means you assume some of the risk of covering the items stored. However, you can manage this risk by setting a monetary limit on the policy.

Tip: The use of a third party vendor is needed for both of these. Insurance plans are between insurance provider and tenant. Tenant protection plans are between the tenants and the facility. The facility has a contractual-liability insurance policy that protects the facility from any losses as a result of business practices.

Tip: Insurance plans pay operators on average 30%-40%, whereas protection plans go upwards to 90%.

Effect on value: If you require insurance for every tenant and the average policy is $12, you will roughly get $4.80 (40%) from the insurance company. If you have 300 tenants, that equals $18,000 in net revenue. At a 6% CAP that adds $300,000 in value. Opt for the protection plan and that equates to $38,888 (90%) in additional revenue. At a 6% cap that equals $648,133 in value.

5. Administrative Fee: Charge an administrative fee on all new move-ins. This fee ranges from $10-$25.

Effect on value: If you have ten move-ins every month and charge $25 you will have added $3,000 in annual revenue. At a 6% CAP, that equals $50,000 in total value added.

Tip: Many operators fear people will simply choose another facility if they charge such fee. I have never had someone refuse to move in because of this fee. It is rare that a customer will be upset over this fee.

6. Automation: This comes in many forms. Adding a basic website that can take payments and move-ins is a good start. A few other options include kiosks that perform move-ins, call centers, and management software that can be run remotely. Some operators run completely un-manned portfolios.

Tip: There are third party companies that offer services to fully automate a facility. Hire them or build the systems completely in-house.

Not-So-Common

7. Billboard

Tip: Lease the land to an experienced billboard company or build the billboard and rent the space. If you are leasing the land, make sure your contract has a rent escalation clause. This means that rent increases in specific intervals each year.

8. Cell tower- Great for long-term leases.

Tip: Talk to your local zoning department to make sure this is a viable option.

9. Boat and RV storage- Whether its gravel or fully paved, people will park their vehicles there.

10. Covered parking spaces- Covered parking for boats, RV’s, and even cars can warrant an up-charge in rent.

11. Record storage- Accountants, attorneys, and businesses of all types need files to be stored. Storing these files at their office means taking up precious and costly square footage in the office where there could be more employees making money.

Tip: Offer to retrieve, file, and ship or keep it basic and just provide the room to store.

Tip: Sell the record boxes.

12. Off- hour access- Offer 24 access for a few extra dollars per month.

13. Franchise business centers- Set up a mini business center that can copy, print, shred, and ship items.

Tip: If your office has enough room, contact a company like PostNet that already has these services. They have a franchise model that you could implement as well.

Tip: If your office is small you can always offer at least one of these services.

14. Common area maintenance fee- CAM fees are typically found in commercial leases which covers upkeep of the property. Some storage operators have mentioned charging this type of fee to their tenants.

15. Propane exchange- Not to be confused with refilling. Refilling in some states requires special permits. There are companies that offer services to set up an exchange stations.

16. Vending machines- Not just soda and snacks either. There are vending machines that sell locks and other small storage retail items. They are specifically made to withstand being outside which means you don’t have to take up space in the office.

17. Air and Vacuum stations- Tire fill up stations along with a vacuums are cheap to set up and do not require a lot of room. Coin operated systems run around $1,500.

18. ATM Machine- Add a mobile cash ATM to your office. You can buy the ATM and fully service them yourself. You can also choose to have a company come in and service the ATM for a percentage of the fee.

19. Store-by-the-bin- Slightly different business model than a typical storage facility. This model focuses on providing bins to customers who then fill them up. The facility then places that bin in a secure warehouse. The customer no longer has a unit they can physically visit. Rather, the storage facility places and retrieves the bins whenever the tenant wants. There are companies executing this strategy as their main business model. With a few systems in place you could easily convert a few large units into warehouse space to implement this strategy as well.

20. Mailbox rentals- Offer private mailboxes. This will appeal to your commercial clients.

21. Conference room- If you have a separate room, you can add a conference table and chairs. A quarter of small businesses operate from a home office which makes it hard to meet clients. Rent by the hour.

22. Mini-business center- Set up a computer and printer on a small desk in part of the office and charge for certain time increments.

23. Wine storage- This requires temperature and humidity control.

Tip: Offer a local wine club to hold tasting events at the facility.

24. Rooftop leasing- Lease your rooftop space to solar companies. With an increase demand for solar energy companies will lease your rooftop space for 10-20 years and install solar panels.

Tip: Urban farming is becoming popular and people have already leased commercial roofs for farming.

You are limited to your creativity. It’s a business so run it like one. At the very least, a few of these strategies should be implemented to increase your overall revenue.