By John Barry
If you plan to sell your self-storage facility in the next year or two, there a plenty of things you can and should do to maximize your ultimate sales proceeds. Some require additional capital expenditures, while others just require a little time and effort. Just fresh paint can add tremendous showing value to a home, simple improvements can make a big difference at your self-storage operation. Let’s talk about what you can do to increase the value of your facility before you go to market.
1. Raise Rents
Carefully review your management reports, specifically the rent roll, to determine the rent variance, the difference between your standard rental rate per unit and the actual rent being paid by customers. Don’t let customers get a bargain rate any longer. Try to increase those customers up to the standard rent, and you should make thousands of dollars more per month and, of course, annually.
Since the average customer stay is about 10 months, try increasing the rent after six, then annually thereafter. If you miss the six-month opportunity and the customer stays for 10 months, you never get the opportunity or the benefit. Do this at least a year in advance of selling. If you do it right before you go to market, buyers will not give you the dollars you deserve, since the new income is not part of your trailing 12 months of revenue.
Result: An additional $3,000 per month at a 10 percent cap rate equals $360,000 in property value.
2. Reduce Delinquencies
Late fees are great if customers ultimately pay, however, I would rather have the rent when it is due. Your manager should be diligent about making collections calls. This may be the worst part of his job, but it can pay off more than you think.
Try to maintain the delinquency rate below