Self-storage businesses are excellent investments when managed well. An owner must take certain steps to ensure the business’s success. One potential opportunity is to find an underperforming property that can be carefully restructured to maximize income. How does one know if an underperforming property is a good investment? Let’s look at the conditions of an underperforming property that signal it is a good investment.
Untapped Income
Supplemental income in self-storage is a great benefit to an underperforming business. Suppose the current owner has not offered “extra” items like a truck rental, retail sales, storage supplies, retail sales, or tenant insurance. A new owner can take over and create new streams of income quickly. The key to offering new incentives for future clients is in how they are presented to current clients and future clients through free marketing sources like the Internet.
Free Marketing Sources – Email, Facebook, Instagram, NextDoor
The first step to improving an underperforming business is to revamp the website. An updated website is essential to a self-storage business’s success. Clients seek quick, simple, and easy online transactions. While most people still love to meet business owners and make friendly connections, they prefer online transactions. Here are the steps to take immediately to build an online presence.
- Update the website using a platform that interfaces with self-storage software easily and quickly.
- Offer online reservations so that future clients can see instantly what’s available and pricing options.
- Create a Facebook business page, and Instagram account, and set up a Google Business Profile.
- Use other sharing sites like NextDoor or Yelp as needed.
- Use search engine optimization (SEO) to move up the ranks of search engine results so that future clients find the business on the first page of results.
Necessary Update
Making changes to the physical appearance of a property often signals to people passing by that new management is taking over. It certainly gains attention when a small business is repainting the exterior of the self-storage and the latest colors are striking and attract attention. Minimal upgrades can dramatically improve the appearance of a building, and some repairs may be necessary to protect the investment. If an underperforming property hasn’t adopted some of the new technology like smart locks, perimeter fencing, and gated access, these are two investments that are worth considering as they provide a greater sense of security to clients. Additionally, repairs should be made to keep the property in good condition.
Low Occupancy
Self-storage revenue is not maximized if the occupancy rate is low. To improve the occupancy rate, it’s important to make website changes, deploy new marketing strategies, and offer retail options that attract new tenants. Updates to the property will also help lower the vacancy rate and raise the net operating income.
Examine Financials
When a self-storage property underperforms, it’s important to determine the reason. It’s often the case that the business owner is not spending money on things that bring a return. It might also be that the owner isn’t spending any money and is content with performance. Some important things to consider include:
- Are all the necessary fees being collected?
- Are rates in line with current market demands?
- Are there discounts being given?
- Is rent being collected on time?
Conducting a thorough review of the financials will provide a picture of the property’s potential.
Assistance is Available
Coastal Storage is an Argus Self-Storage Network Affiliate, serving Florida (excluding the panhandle) and Georgia. Call Coastal Storage today at 904-591-0140 to work with a team of experts focused on self-storage. We can’t wait to meet you!