I know, I know, the title might seem ironic, but it’s true. Despite ALL the income that is available for owners of self storage facilities, I don’t see enough of them making real money.
Why is that?
Well, in my experience, the biggest challenge most of them have is they are looking at the entire facility the wrong way.
They view their self storage facility as a business, not an asset.
What does that mean? Simple, they see their storage units as simply providing a space for people to store their items and nothing more … and that’s a critical error.
How do you fix this? Well, for starters, you have to approach every facility as an investment.
An asset that produces revenue AND then, you refine that asset to produce more.
More customers, more sales, more added value for your long-term customers; more money.
…And that’s exactly the reason my team and I at Self Storage Investing have been so successful – we ALWAYS look at the all the ways we can add value to any facility. Now, that might be in the obvious – installing fences, cameras, better lighting, or even a self-service kiosk or it could be adding to our bottom line as owners; billboards, cell phone towers, vending, truck rentals, or moving supplies.
In the end, what any owner needs to do is to rethink their strategy on how they expect to make money and drive net Operating Income, and that is far more complicated (and in some ways, far simpler) than just raising rents.
…But it can’t happen until the owner decides they own and operate an asset, not just a self storage facility. In reality, this shift is the most critical and largest anyone can ever make, because it’s the one that moves you from a “manager” mentality to that of an investor.
Now, as simple as that seems, it usually doesn’t happen overnight. It can happen incrementally – a little at a time. Think in terms of moving the needle in any operation a little each month but NOT in a strictly operational sense.
Perhaps this month, you’ll work on – and perfect – a system that gets all the rent collected AND DEPOSITED on time and automatically follows up on anyone who has not paid by the 5th (Not an easy thing to do, but think about how much time is wasted each month chasing payments). If you spent 15 hours each month trying to collect late payments and your system cut that down to 3-4, now you have more than an “extra” day to work on your business, not just “in” it.
Next month, with this extra time, you can focus on occupancy. The truth is, you don’t want to be 100% occupied because that can stymie your marketing (and might be a strong indicator your rents are too low). Now, you’ll focus on understanding your local market and addressing average rents and what competition is doing locally. With this information in hand, you might be able to bring rents in line with the market. The focus, of course, is on NOI, not simply “running a business.”
It’s a critical way to shift your thinking and an absolutely necessary one if you want to create real wealth. The owners who refuse to grow are the ones who aren’t happy with their bank accounts. Let’s change that in 2020!