Who to show and lease self storage units for OOS investor?

10 Replies

I know you can outsource much of the operations (online payments, answering phone, SEO) to management companies who specialize in self storage operations (https://www.storageunitsoftware.com/call-answering)...

But how do folks recommend handling onsite physical tasks (ie: offline tenant rentals, showing units, stuck doors)? Is that a service that can be provided by your typical property management company? 

I realize an employee could do this, but I'd prefer to outsource to an organization vs. hiring. From those with first hand experience, do you always hire (an) employee(s)? Or have you leveraged a property management company? 

Wondering if there has been a mix of the two or if it almost always involves W2 hires.

Thanks!

A self storage management company can take care of all those responsibilities you mention. Last week I turned over the management of two of my facilities to a storage management company which assumed my employees.

They take care of everything including paying all bills, renting units both online and onsite, cleaning and maintenance, etc. for a 6 percent management fee. 

This allows me to focus on accusations and new development. This only makes sense though if you have a facility with $13,000 a month in gross potential income.

I just purchased a storage facility that was managed by a residential property manager and I can tell you they ran it into the ground. The property is currently at 25% occupancy, the security gate was taken offline, and renters were basically squatters since rents weren’t being paid.

I guess my point is to stick to professionals that understand the niche. When I asked them why it was in the current state, they replied “well we only make $5/unit so it’s just not worth our time”.

A professional PM company would have been up front with you from the beginning, instead of running down your business. If they act that way with you, I can't image how they treat housing unit customers.

Originally posted by @Keith Weigand :

A professional PM company would have been up front with you from the beginning, instead of running down your business. If they act that way with you, I can't image how they treat housing unit customers.

 100% agree!

Originally posted by @Mark Byrge :

I just purchased a storage facility that was managed by a residential property manager and I can tell you they ran it into the ground. The property is currently at 25% occupancy, the security gate was taken offline, and renters were basically squatters since rents weren’t being paid.

I guess my point is to stick to professionals that understand the niche. When I asked them why it was in the current state, they replied “well we only make $5/unit so it’s just not worth our time”.

 Was your upside strategy in this acquisition replacing the unprofessional management company with a self storage management company, a residential or a commercial management company?

Originally posted by @Thomas Good :

A self storage management company can take care of all those responsibilities you mention. Last week I turned over the management of two of my facilities to a storage management company which assumed my employees.

They take care of everything including paying all bills, renting units both online and onsite, cleaning and maintenance, etc. for a 6 percent management fee. 

This allows me to focus on accusations and new development. This only makes sense though if you have a facility with $13,000 a month in gross potential income.

 Clearly you're not buying facilities with less than 80 units or so. How does your $13k gross translate into number of units, approximately? 150+?

I have 6 storage facilities ranging from 42 to 468 storage units. I probably have about a 60% climate to 40% non-climate unit ratio across the facilities. Of the two largest facilities that I turned over to the storage management company, the first I had built from the ground up and the second was an old wholesale furniture showroom conversion to climate control storage.

Three of the remaining facilities (195 units total) are managed out of my main office and are no more than 1 mile from the office. Two were purchases and the other was a conversion to climate control. The conversion was actually 12,000 square feet of warehouse space in the back of my office building. Those together throw off about $16,000 in gross income a month. I plan to add another 250 units with these 3 facilities and then turn it over to the storage management company. The management company can perform a better job with better tools than a small company like ours. It also gives you the freedom to pursue other interests including finding additional deals because you don't have to deal with the day to day management.

The last facility (117 units) is 45 minutes from office. It also has a car wash and other commercial properties. I have an onsite person who collects rents but we handle the bookkeeping back at the main office. 

If you have just a standalone 80 unit building and doing all of your marketing, renting of units, etc online, then I would find someone local to clean out the units and keep an eye on the buildings. If you have closer to 150 units and can move a trailer or double wide onto the property, you could give free rent to a person or family in exchange for doing the onsite things for you. 

If you consider running everything remotely and have 150 or more units at multiple locations, you could go with the model used by Storage Express out of Bloomington IN. They have close to 100 facilities in the Midwest with no onsite management. They use call centers, onsite kiosks, online rental software, and live phone support to rent units. They have maintenance people who travel around to each of the facilities to clean units and check on the facility.

I personally would not consider hiring a property management company to oversee and a run a storage facility. The businesses are too much different in my opinion.  

@Jeremiah T. I'm closing on a small storage facility in November. As with all things real estate MANAGEMENT comes first. I buy everything out of state and always have management IN PLACE before I offer. In the case of these units I asked the lady in town who collects the rent currently to manage for me. She is contract labor. sweeps out the units and will rent them for me. Total cost is $200 a month plus 20 dollars to sweep out a unit if needed. She will also get late fees (same as most PM's). Another man will plow snow spray weeds and perform auctions if needed. He gets an hourly wage as a contractor. A lawyer will handle evictions to start. Later on we will handle evictions in house. Books will be kept by my book keeper. No employees. Everybody is contract labor. RR

Originally posted by @Jeremiah T. :
Originally posted by @Mark Byrge:

I just purchased a storage facility that was managed by a residential property manager and I can tell you they ran it into the ground. The property is currently at 25% occupancy, the security gate was taken offline, and renters were basically squatters since rents weren’t being paid.

I guess my point is to stick to professionals that understand the niche. When I asked them why it was in the current state, they replied “well we only make $5/unit so it’s just not worth our time”.

 Was your upside strategy in this acquisition replacing the unprofessional management company with a self storage management company, a residential or a commercial management company?

 My plan is to put some improvements in place and run it remotely for the most part. I have upgraded the gating system to include keypad entry rather than RFID cards, have started integrating an online web portal for renting units as well as being able to do it over the phone. I have added video cameras onsite for security and being able to monitor the property from a distance, and then I have found a local handyman that is interested in learning the business to do the weekly maintenance, cleanouts, etc. 

Once the property is stabilized, I will reevaluate it at that time to see what my long term plan is. I have enough room on the property for expansion if and when the need arises which will further allow the potential for adding part-time and maybe full time onsite manager. It really depends on how the above experiment goes. The property is in a college town and I think I can market it in a way that the online capabilities will work. 85% of the people who call my other facilities seem to already know what they want without seeing the units, so even being able to rent them over the phone with electronic signing or even getting it scheduled and having the local guy meetup with the client should work for the majority.

The downsides are not having the ability to upsell or having a storefront in place for complimentary products and offerings, UHaul rentals, EBay sales, etc. is something that having an onsite presence in place can offer.

Just my $.02

Hello,

Wondering how to get started investing in self-storage units. I'm an experienced investor with residential rental properties and small apartment units. Really looking to liquidate these properties and do a 1031 Exchange into some self-storage units. I know absolutely nothing about how to look for location, competition, value, condition, P & L statements, growth, price, etc.

Would appreciate very much any pointers, tips, etc. re how to get started.

Many thx in advance.

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