March 2, 2022
I recently attended a luncheon in Austin hosted 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 3 part blog series we 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. Previously, we discussed Third Party Management. The topic we will review today is Owner Managed properties.
There are a number of good reasons to manage your facility yourself. One of those is that you have full control over the property and all decisions being made. There is nothing that is decided without your input. It is your asset and no one is going to care for it like you do. The down side is that this can consume a lot of your time and energy in dealing with the day to day tasks even if you hire a manager to work at your facility.
A second reason to manage your own facility is to develop relationships with the community. Communities appreciate “local” companies and will give business to them sometimes just for that reason. Owners that enjoy mingling and getting to know their tenants will enjoy this aspect of owner management. The downside to this is many times this type of relationship moves from business to friendship which makes it difficult for the owner to adhere to the lease agreement or raise rates when the market calls for it. The “friends and family” discount can hurt the facility’s bottom line as well as potential market value.
A third reason to owner manage a facility is to avoid the Third Party management fee. This can save a facility from losing 5-6% of gross revenue annually. This amount of savings helps to increase cash flow as well as market value. The owner needs to be vigilant though and ensure they are running their facility like a business and not a charity. As mentioned above, the “friends and family” discount when applied too often can hurt the facility. A prudent owner will stay on top of market rates, monitor expenses and increase ancillary income in order to maximize their NOI and valuation.
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