The Basics of Managing Your Facility

When you first started your journey in self storage real estate investing, you were probably thinking about the increasing demand, inexpensive construction costs, or high profit margin.  

You were probably less focused on the work you’d have to dedicate to managing your facility. 

Even though self-storage management is considered low to medium compared to other commercial properties, there is still quite a lot of upkeep associated with storage facilities in any given month. Just like any rental property, there’s rent to collect, tenants to accommodate, and general business management skills needed.  

In this article, we break down exactly what is involved in managing a self-storage facility and three management options to consider as you get your business off the ground. 

What’s Involved in Managing a Self-Storage Facility? 

So, what does it take to keep a self-storage facility operating smoothly? Here are some key responsibilities: 

Security 

Storage facility owners need to take certain precautions to discourage theft and reassure renters, including arranging, hiring, or installing security within the facility. Although you can’t guarantee the complete safety of your renters’ stored belongings (and you should certainly have them acknowledge this fact legally in your rental agreement), you can and should provide the best secure storage that you can without breaking the bank, especially after access hours. Practically speaking, this means one of two options: 1) hiring security personal and managing their schedules and pay, or 2) installing technology like smart locks, security cameras, alarm systems, or mobile entry and managing the monthly upkeep, maintenance, and monitoring of these devices. Smart technology might be cheaper than paying actual persons providing security, but consider that the location and storage space may be more secure with consistent monitoring of the building and the items your renters store.

Maintenance 

You won’t need to worry about hiring plumbers for the faucet leak or replacing broken appliances for self-storage units, but that doesn’t mean they won’t need regular maintenance. Monthly maintenance for a self-storage owner or manager during turnover means for each unit: 

• Wiping down interior walls and clearing debris 
• Inspecting doors and walls for damage 
• Checking insulation for any tears or splits 
• Removing pests 
• Treating any environmental contaminants, like mold or mildew 
• Cleaning climate-control units 
• Inspecting and lubricating roll-up door mechanisms 

Don’t forget about common areas and shared spaces within your storage facility. This includes regularly cleaning and maintaining: 

• Interior hallways (for indoor-access facilities) 
• Driveways and parking lots 
• Security gates, fences, and locks 
• Dumpster areas 
• Electrical work and climate control capabilities 
• General landscaping  

Marketing/Advertising 

No business can be successful without customers, and marketing is what primarily drives customers to your business. Without a solid marketing strategy and regular advertisements, you probably won’t achieve the revenue you’d hoped for. Read our articles on marketing and advertising your self-storage units to learn how to best manage this aspect of your business. 

Leasing 

Leasing is a fundamental component of every rental business. And because the self-storage industry is one with high turnover, you must be prepared to write, track, sign, and manage hundreds of leases with different tenants and various units each month.  

Rent Collection 

Just like any rental business, the heart of your operations is rent collection. For landlords who use online payments, the rent collection process is largely automated—however, you’ll still have to manage and monitor transactions, ensure receipts and records are made properly, and apply late fees as necessary. 

Facility Finances and Accounting 

Finance and general accounting are also part of your job as a self-storage facility owner-manager. Not only does this mean tracking monthly operating expenses, insurance costs, revenue, and profits, but it also involves analyzing and evaluating these metrics to stay informed about the overall financial health of your investment. If you don’t outsource these tasks to a CPA, you’ll need to stay on top of your business accounting and tax documentation yourself.  

Employee/Contractor Hiring 

Does your facility have maintenance staff, security personnel, accountants, legal professionals, managers, or other employees? If so, managing your staff (and their salaries, benefits, daily tasks, and performances) is another responsibility. 

Renewals, Terminations, Turnover, and Evictions 

Storage facility owners plan for high turnover in their units. Most self-storage unit leases are month-to-month, as many customers are only seeking short-term or temporary storage. For owners and managers, this means staying on top of renewals, lease terminations, turnover, and, in rare cases, self-storage evictions. You’ll need to carefully track the status of each customer’s lease, send renewal/termination notices in advance, monitor move-out for outgoing renters, and assist with move-in questions for new ones. 

Option #1: Manage Your Facility on Your Own 

Now that you have an idea of the general tasks involved in managing a self-storage facility, let’s discuss a few different options for fulfilling them. The first is to manage your facility on your own, with the help of employees or contractors. You will manage renters and leases by hand, updating documentation manually, and keep careful financial records by hand as well.  

Managing your facility “on your own” doesn’t mean you can’t hire help. You could have an accountant do your taxes, a maintenance company handle turnover upkeep, on-site personnel for security, or leasing agents to meet with customers and sign leases. 

Pros 

• No management fees. The biggest perk of managing your facility on your own is that you won’t have to shuttle away a large percentage of your revenue each month to a management company. 
• Hands-on approach. You’ll be on-site and involved in the day-to-day operations of your business. 

Cons 

• Broad expertise required. You have to be a jack-of-all-trades as a landlord. Management, marketing, advertising, leasing, maintenance, customer relations, employee management, and accounting, all fall within your responsibilities, but you’re only human. You may need more help than you anticipated. 
• Must be on-site. This option isn’t going to work remotely, so it may be challenging to keep a traditional W2 job at the same time. 
• Employee salaries and management. If you’re going to hire employees to do the managing, you still have to manage the employees. What you save in outside management costs you may find yourself losing in employee compensation. 

Option #2: Hire a Self-Storage Management Company 

Another option is to hire a third-party self-storage management company. This company will assign your facility one or more property managers to take over the daily operational tasks outlined in your contract with them. 

Outsourcing management to a third party frees you from the day-to-day stressors of management and helps you scale your small business as it grows into a large, thriving one. Self storage management companies also give you access to that company’s many years of knowledge, expertise, and resources. You won’t have to waste your time learning new skills or trying out a marketing or leasing technique you’ve never used before and aren’t sure is going to work. Instead, you can rest assured knowing that you’re putting your investment in the hands of skilled, reliable experts.  

Pros 

• Little day-to-day management. If you have a day job, family duties, another business, or you own multiple properties, third-party management is the way to go. It can help you juggle your various responsibilities and commitments.  
• Expert advice. Management companies have more experience in management than you do—and they can put their expertise to work in your facility to create real results. 

Cons 

• High management fees. Management company fees can cost more than 6% of your gross monthly revenue. It isn’t as expensive as management for a typical commercial property, but it is still a significant subtraction from your profits. And the more your business grows, the more you’ll have to pay. 
• Hands-off approach. Management companies give you the freedom to not be very involved in your business. And while this can often be a plus, you might find yourself distanced from your investment and less aware about daily happenings.  

Option #3: Use Property Management Software 

Self storage unit software is the best way to minimize costs of management while maximizing gains and benefits. Internal tasks can all be managed on the same online platform, including rent collection, lease signing, financial reporting, and maintenance management. Software can also automate many of these recurring tasks so that you have more time to focus on the aspects of your business that need personal attention. You can use an Innago account to manage your self-storage facility just as you’d manage traditional commercial or residential properties. 

Pros 

• Low cost or free. Here at Innago, our software is free to use for all landlords and self-storage facility owners. 
• Streamlined approach. Software is a one-stop-shop for all the documents, messages, data, and details related to your rental units. 
• Remote management. Property management software allows you to manage your facility fully remotely and save on office expenses if you choose to do so. Combined with outdoor-access units and kiosk or mobile entry, software features like online rent collection and digital e-signatures make no-contact leasing a real possibility. 
• Convenience. You don’t have to leave your couch to sign leases, manage tenants, and review your company finances. 

Cons 

• Expensive technology (for full remote). If you’re hoping to manage your facility fully remotely so that customers can come and go as they please, you’ll likely need to purchase self-service kiosks, security camera surveillance, smart locks, and other technology for your storage units. These devices can be expensive to install and maintain.  

Conclusion 

Managing a self-storage facility is no easy task, even if it’s less work overall than traditional leased properties. However, by taking advantage of the tools and resources available and choosing a management option that makes sense for your business, you can join countless other investors in profiting from this lucrative industry.