Section 6 • Management
and setting optimal prices and occupancy rates requires train- ing and experience. Often, owners reach out for help from a management company when they feel they lack the knowledge to continue running the self-storage business in a successful, ef- ficient manner. Owners should carefully research their management
company options. It’s important to know which firms are the largest players in the market and whether your store fits in with the properties they typically serve. Asking questions may reveal whether there is a specific category of store they work with best, such as urban properties or single-store businesses. Most man- agement companies operate under various store names, while others operate all sites under their own brands and logos. This can result in additional licensing or franchise fees. The transition process normally starts with a full-scale evalu-
ation of the self-storage facility. A management agreement is signed and a new business plan is developed. The management company can then identify the self-storage business’s strengths and weaknesses and then create a prioritized timeline to ad- dress the needs at the facility.
Management Fees Third-party fee management is just what it says: management, accounting and oversight services for an agreed upon fee or minimum monthly amount, whichever is greater. Minimum fees range from $2,500 to $3,500 per month for stores in lease-up while income is building or for a smaller site. Management fees will generally fall in the 6 to 7 percent range for a single store lo- cation with most being 6.5 percent. This fee is calculated on the adjusted gross income per month and is paid monthly, typically in arrears. This means that services rendered in January will ap- pear on the January statements (delivered to clients in February) and will be paid once the month ending has occurred and been reconciled, likely around the 10th of February in this example. Multiple store discounts are sometimes given to a single cli-
ent and can be as low as 4 percent of gross income. Startup fees are between $3,000 and $10,000 to assimilate a new property and set up the company’s guidelines, including the business setup for the operating system and accounting setup including budgets and projections.
Reporting Process All the bills for the stores, including tax contributions and debt servicing as directed by the owners, are paid by the manage- ment company. They also prepare the monthly financial state- ments, including reconciled bank account statements and com- parison to budgeted targets. Many also include a comparison of each month to the prior year’s performance. Preparing the annual budget is important to all parties as it will include all expenses and income targets by month for easy tracking and comparison. There is a wide variety for the report- ing timeline to owners, with some reporting within five days of month ending to, in most cases, reporting around the 15th of the month. Some management companies offer online access to owners’ reports and financials. It is also standard procedure
78 Self-Storage Almanac 2015
that the postage for bill paying is an expense paid by the owner or property.
Manager Hiring And Training Management companies are willing to work with existing staff members. In those instances, employees are screened and given background checks along with personality profiles. Those who pass the selection process and are willing to work with the man- agement company will be asked to stay on. Otherwise, a new team of professionals will be brought in to work at the property. Managers’ salaries and benefits are included in the annual bud- gets and are charged to the owner as property expenses. A formal, new managers training program and ongoing
training systems should be in place with an awards or recogni- tion program. These expenses are paid by property owners as are supervisors’ or other management company staff’s travel expenses. Salaries for “home office staff” are paid by the man- agement company, not the owner. Manager training generally includes sales techniques both
on the phone and onsite, marketing, reporting, delinquency management, curb appeal, auditing, administrative, and tech- nology training. Many companies hold annual training and awards functions at which all store employees are brought to- gether for intensive training and motivation. These can vary in format from two-day meetings to annual retreats. The result is a more motivated and better educated manager who can pro- duce a better bottom line result, and the operations are stan- dardized across the management platform making it easy for managers to interchange or fill in for one another when needed.
New Facilities Opening a new facility is a common driver for owners to seek the services of a third-party manager. Typically, the management companies are then involved in the new store design with the level of involvement ranging from minimal to extensive design work. There may be additional fees for these planning services. The best outcome is for management to be involved from the day the ground is purchased. There is much activity to be handled while the facility is be- ing built, and this involvement allows the management team to open a new site with all details prepared and ready to go. These include marketing plans and programs; website development; manager hiring and training; updated comparable survey; in- tegration of all operating systems (including access control and operating software); and getting promotional items ready for pre-leasing at least one month before opening. Experienced management professionals should have input
on the office and store layout; unit mix; site plan; ancillary sales; lease-up projections; detailed five-year budgets; furniture and fixtures planning; and signage—both main ID signs and the on- site signage needed to direct and inform customers. Marketing plans are prepared and enacted by the management company. Management input on these details allows for a well thought
out site that will lease up quickly. The low monthly minimums charged by management companies during construction can
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