As long as you’re patient there’s a chance to make a lot of profit from opening or buying a self storage property.
The self storage industry generates about $39.5 billion per year. There are an estimated 49,000 properties worldwide and, in total, about 1.9 billion square feet of rentable self storage space. There are roughly 5.9 square feet per person per space, and, while each self storage space ranges in cost, the average monthly cost for one is about $89.
You might be starting out in the industry and feel like there’s much you don’t know about successfully running a self storage business. If that’s the case, we have you covered. We’re going to go over essential knowledge, tips for success, and mistakes to avoid so you can get started on the right foot.
We spoke to Ryan Lorenzini, owner of The Claremont Companies LLC, and Todd Plastino, the owner of Plastino Interests Inc., to share the experiences of two seasoned self storage veterans.
Your managers, whether they’re onsite or remote, play an integral part in your business’ success.
One of the most important aspects of successfully running your business is hiring the right personnel.
Plastino said one of the best things a self storage operator can do is pick a good site manager to run their property. He emphasized that a good candidate should be serious about the job and remain professional.
You, as the owner hiring them, should stress that they’re managing a multi-million dollar asset so it shouldn’t be treated as a “kick-back job” and should be taken seriously, Plastino added.
Understanding the investment side of opening, or purchasing, a pre-existing property is an important aspect of getting into the self storage industry.
Once you’ve secured the capital, the operational side becomes the critical part in accurately assessing your self storage investment.
And, one of the first steps in understanding the operational side of the business is understanding the market you’re entering.
You should know your market inside and out and always pay attention to buyers’ demands in your market, noted Lorenzini.
For example, Plastino said you wouldn’t build a three-story facility if the demand in the market is for single-story. It’s always the smarter decision to follow market demand.
“The road is paved with many broken dreams, and you can avoid the nightmare by letting the market lead,” Plastino said.
You don’t want to manipulate numbers in order to justify any part of your acquisition or development. You don’t want to pick your unit mix in order to make your proforma look better or justify your project.
Then, once you’ve built, or purchased, the property that meets your market’s demand, you’ll want to make sure that you maintain a balance of rent price and occupancy rate to succeed. And it’s up to you to be proactive with rent hikes when occupancy rates are high, Lorenzini said.
Plastino has been in the self storage industry since 1998 and says it’s changed a lot over time and he, alongside the industry, has had to adapt to meet the needs of his customers. As new technology emerged, the transition for the self storage industry has been bumpier than many would have liked.
Onsite, there have been advancements in lock, gate, and security technology. From a digital perspective, new property management products have entered the industry and online rentals have become a more important necessity.
Marketing a self storage business used to primarily involve print advertising, but these days building a website that’s SEO optimized and placing ads on search engines are the way to go.
“I wish I had known that many SEO and pay-per-click management providers don't actually provide the level of service and support that they promise. It wasn't until Tenant did an in-depth analysis of my sites that I found out that my current SEO and pay-per-click management company wasn't fulfilling their contractual obligations” Plastino said.
He encourages new operators to pick their vendor partners carefully to ensure they get the level of service that they truly want.
It takes time to learn the ins and outs of the business, so don’t be afraid to look for help from a third-party manager, he said. One of the best things to keep in mind is to stay patient and know that operating a self storage property isn’t as easy as it may seem.
“Meet as many people in the industry as you can. Attend the national and state association conferences to learn as much as possible. Seek out experienced owners and operators in order to learn as much as possible, and also to consider partnership opportunities,” Lorenzini said.
It’s also good to know which resources are available and which ones are the best for your property. Plastino turned to services from Storelocal and Tenant, which provide their own services and technology so you don’t have to worry about paying for overpriced or outdated products.