A small self storage facility can be a profitable investment option when it is managed well. If your property (or future property) is between 5,000 – 15,000 square feet, 100 units or less and generating $50,000-$60,000 in gross annual revenue, it may be beneficial to explore management options outside of a traditional full-time employee.
Listed below are six alternative methods to successfully manage smaller facilities, while simultaneously increasing cash flow potential:
1. Manage the property as a satellite location to an existing facility. Assuming you already own a facility in that market, you can use the same manager and resources for the smaller unit.
2. Fully automate the facility. Install automatic gates, cameras and storage software that can track and accept all electronic methods of payment. Additionally, maintaining a website that allows future tenants to see unit availability, apply, sign rental agreements and pay electronically makes the process that much smoother.
3. Purchase a self-service kiosk. Self-service kiosks allow existing tenants to make payments and allow new tenants to complete rental agreements, pay deposits and receive locks all through the kiosk. Although there is an upfront fee ($15,000+) the investment is worth the long-term savings (compared to a management salary of $35,000/year and up).
4. Use a tenant-manager. In this scenario, the storage owner would find a trustworthy long-term tenant, clear them through a background check and barter with them for their services, which could include waiving storage rent, an on-site apartment allowance and/or a small stipend to manage the facility.
5. Partner with a neighboring business. If there’s a gas station or convenience store next to your facility, you and the neighboring business could sign a partnership agreement allowing them to show units, sign leases and, in some cases, collect rent and deposits. Again, this is where automation and electronic payments can help eliminate the possibility of theft.
6. Hire a local real estate office that performs property management services. With this option, tenants can pay their bills, sign leases and receive keys and gate codes through the agency. They will typically charge a four to eight percent fee for partial and full-service property management.
In conclusion, don’t rule out smaller facilities as a viable investment option.
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