February 22, 2022
I recently attended a luncheon in Austin put on by the Texas Self Storage Association that discussed the various ways you can manage your storage facility. There was a panel of 3 owners each managing their facilities in a different way. For this blog I wanted review one of the three options presented by that panel so you might have the facts to decide which might be best for you. The 3 options discussed were: Third Party Management, Owner Managed, or Remote Managed. The one we will review today is Third Party Management.
Third Party Management – For facility owners who do not have the time or desire to handle the day to day issues of a typical storage facility, hiring a Third Party Manager might be an option for you consider. Typically, the management company will charge 5-6% of gross revenue. Some third party management companies are beginning to charge flat rate fees instead of percentages for smaller facilities with gross revenue below $300K.
Additionally, there may be other charges such as call center, technology fees or they may take a cut of the protection plans or tenant insurance they sell. However, for the most part the fees will be very similar for each. It is important that you understand what your all in cost will be.
A good management company is going to give you a proposal or budget outlining how they plan to improve your facility. This proposal will help you see the return on cost for hiring them. An experienced third party manager will more than pay for themselves. They will figure out ways to add ancillary income, increase rental income and reduce unnecessary expenses which in turn will increase your cash flow and property value.
Finally, there are economies of scale benefits that exist if the management company manages other properties in your area. They may be able to share marketing expenses or have buying power for insurance, or some maintenance and repair contracts.
For the individuals who do not desire to be involved in the management of their facility on a day to day basis, this might be a great option for you to consider.
« Previous Next »