5 Ways to Shut Down Your Self-Storage Business!

The self-storage industry may be one of the most stable commercial industries in the market, but even self-storage can fail if you don’t manage it correctly. Here are 5 things that you should avoid at all costs. If you don’t, you may find that you are the business that is going under.

1 Overestimating Your Prices: If you overestimate or overprice your units, you are going to find that you have a low occupancy rate and a higher turnover rate than you should. It is so easy to price your units with your heart instead of with facts. You want to buy a property and so you come up with numbers that will justify what the seller is asking. This is the wrong way to buy and the wrong way to price your units.

Your feasibility study will help you avoid pricing mistakes, but you also need to do your research. What are self-storage units renting for within 3 to 5 miles of your property? It doesn’t matter what they are renting for in the next town over. Most people won’t store outside of their city. You must research your market! What does a similar unit rent for that is close to your unit. You may need to shrink your radius if there are a lot of properties within that radius. If you are hard to access or in a terrible location, then you will have to charge less to bring in the same clientele as a property in a better location.

If you estimate your rents high, your estimated gross income will be too high. This could have devastating consequences when it comes to your bottom line.

2. Location: Location, Location, Location applies to self-storage just as much as it does to other properties. When you are interested in investing in a facility or building a self-storage facility, you need to do your homework. You need to research how many properties are within a 3 mile radius. If there aren’t any, then you can go out to a 5 mile radius. If there is to much competition within an area, there are not going to be enough renters.

You also need to evaluate whether or not there is a chance that someone could build a self-storage facility between you and your potential renters. You do not want to get out-located. There is no reason for someone to drive past a closer facility to get to yours. Unless you have a different type of self-storage available for them to rent or much lower prices, they are going to rent close to home.

3. Oversaturation: You cannot control the market. You can control your prices and your services, but you cannot control how many people are going to rent a property. There has been enough research done so that you can determine the number of renters in an area fairly accurately. The key is to make sure that there are more renters than there are self-storage units.

Oversaturation can kill your occupancy levels. You may look at a self-storage property that is grossly under occupied and think, wow, I can do better marketing and get this property where it needs to be. However, if the market is oversaturated, a 30% or 40% occupancy level may be the highest that the market can bear. Make sure that you get a feasibility study done to find out what the current saturation levels are.

4. Advertising: If you are not marketing, then you are not in business. If you are not on the first page of Google, you are not in business. If you are not on the internet where people can easily find you, check your rates and reserve a property, you are going to get left behind. If you don’t know how to get on the front page of Google or how to build an online presence, find someone who does.

Online advertising is one of the most important things that you will do. This is how most of your renters are going to meet you. If you have a terrible website, or a slow website or lots of mistakes, your renters are going to keep looking. Take the time to make sure that your website is correct and that it easy to access.

If you don’t know what to do with your online marketing, look at what the competition is doing and do it better. Make your website as friendly as possible because if it isn’t friendly, your renters are going to go to the next self-storage facility.

5. Bad Employees: Sadly, there is always a bad apple in any industry including self-storage. There is a chance that if you don’t do your research on your prospective employees, you could end up with a bad manager. This is the last thing that you want to have happen. A bad manager doesn’t know how to find renters, or market your property or pull the reports that you need.

If you have a bad manager, you may end up with low occupancy rates. There is too much talent out there to settle for someone who isn’t going to help you grow your self-storage facility. If you are not satisfied with the results you are getting, find a new manager. You cannot expect different results when you are doing the same things over and over again. If you need to make a change to improve your self-storage facility, today is a great day to start.

Self-storage is a business. You need to treat it like a business. Make sure that when you buy a property you know your numbers inside and out. Make sure that you have good managers. You want to make money. When you avoid these simple pitfalls, you can find great opportunities and make them into great investments. As always, happy investing.