Increasing the Value of Your Self Storage Property For Sale
Owning a self storage property can have a lot of perks and provide great income. Sometimes however, it's easy to get caught up in the status quo and leave things on autopilot. If you're considering selling your self storage property, you may be interested in learning how you can increase the value prior to selling? Below we'll talk through a few different strategies to consider if you want to increase the value of your self storage facility before selling.
Boost Current Rental Rates
This one may seem obvious, but many smaller operators cringe when the idea of raising rents is suggested. Many of these owners have long term customers with whom they've built relationships with over the years and sometimes even friendships. Raising the rent on these folks can seem daunting, however it's important to put it into perspective.
None of the rest of our costs in life have seemed to stay stagnated. Housing prices continue to go up year after year, utilities and taxes are on the rise, and many others. A big proponant of pushing price increases and perhaps an organization(s) to take a lesson from are the way the Department of Transportations in states all over the US raises toll prices. These prices continue to increase, often times in what feels like a drastic manor. While we're not suggesting huge price increases, it's important to see the parallels between self storage and the highway system. Drivers (and in this case your customers) are used to the service being provided and rely on them for convenience in their lives. While they understand there are alternatives, these alternatives can often be a pain and time consuming to pursue. As long as you apply some pressure on price while still being fair, most customers will continue business as usual.
It's important to keep in mind that valuation of storage facilities is typically very closely tied to the revenue that the property generates. If you're able to increase revenues by even 10%, it can have a big impact on the bottom line.
Managing the Unit Mix at Your Facility
This one isn't as obvious, but can also present opportunities for increased revenue. Every facility seems to have them - units that are perpetually difficult to rent whether due to the size or supply of them at your site. Looking at ways to reconfigure these can boost revenue by creating sizes more likely to be rented by potential customers. For example, if you're in a market that doesn't seem to use 5x10 units, or perhaps the renters of units that size are more often delinquent than others, you can work to creatively turn those units into 10x10s by removing the dividers. Now, it may not be possible to modify the doors in this situation, but you can potentially give a prospective 10x10 customer a slight discount if they don't need the larger door for their unit. There are many potential options based on the unique design and demands of your facility. Take a look at what options you might have to adapt and increase revenue.
Implement Value Based Pricing
Value based pricing is becoming popular as management software gives the industry more sophisticated pricing options. Basically, value based pricing breaks units down into a couple classifications such as "Standard", "Best Value", and "Premium" (i.e. good, better, and best). The units at your facility are then broken down into these three categories based on features and convenience. For example, the units closest to the entrance with easy drive up access would likely be in your "premium" category. Another example would be if you have inside access climate control units, your "Standard" for that category would include the units on the second floor that are furthest away from the entrance. Make sense? This gives the ability to "upsell" tenants based on if they value convenience and ease and in turn making the facility more money.
Hopefully these tips gave you some ideas on potential ways to increase revenue before selling your self storage facility. If you'd prefer to sell your facility "as-is" and skip the hassle of implementing rent increases or the like, give us a call! We buy self storage properties even if they have undermarket rents or high vacancy. Contact us to find out what we can do for you!