Posted 11 months ago

How to Add Value to a Storage Facility

A storage facility, like other commercial assets, is valued on its income. Thus, to add value to a storage facility, you must increase the income. Here are several strategies to increase a storage facility’s income.

  • Raise rents

    If a facility was run by a mom and pop operator, it is unlikely that rents were at market rate. So long as your immediate radius – both its rates and supply/demand – can support a rent raise, you likely will not lose many customers by raising rents to market. After all, if they moved to a different facility, the rent would not be much different.

    Consider raising rents every 6-12 months as well. It is usually best to raise rents in the winter when customers are less willing and likely to move.

    • Administration/setup fees

      One time “convenience” fees for new customers can go a long way when added to a facility’s income and spread to a cap rate. This fee will help cover the expenses for cleaning and turning the unit, and ensuring a good experience is delivered to the customer.

      • Tenant insurance

        Mandate that your customers have tenant insurance, and offer tenant insurance through your property management carrier. You, as an owner, will get a small percentage per customer, and the customer will have insured his/her belongings. It is a true win-win.

        • Sell locks, boxes, and packing tape

          If your facility has an office, consider selling locks, boxes, packing tape, and other moving related items. Even if your facility does not have an office, you can consider locking every unit with your own smart, encrypted lock, and then offering the customer the option of buying that same lock. You can even rent that lock to increase your monthly income stream!

          • Boat and RV parking and/or Billboards and Signage

            If you have unused land, consider monetizing it. If you are zoned for outdoor parking, take advantage of it. Or, try to rent your land for a billboard or signage to create additional passive income.

            • Build out

              Perhaps the most drastic way to increase the facility’s value is by building additional storage buildings. Build out costs can range from $30-$50/square foot depending on your buildings, and can add a dramatic amount of income to your facility. Of course, do your due diligence on, among other things, whether the area can support hundreds of square feet of new self storage.

              Let’s hear what other ways are you adding values to your storage facility?