In the recent SBOA Self-Storage Unlocked: The Potential View for 2022, one of the topics was on steps that should be taken to prepare a property for sale. After some discussion, the participants came to a few conclusions:
- Clean up any deferred maintenance
- Raise the rent
- Get the books in order
These steps usually have to be done in this order. First, you want to make your property looks great and functions as well as possible. This could mean cleaning up the landscaping, restoring the unit doors and buildings, repairing driveways, and restoring or repairing signage. While some of these maintenance tasks can be large and costly, the ability to raise the rents; step number two, will pay for these items.
Once you have completed the deferred maintenance items, you can justifiably raise the rent on all units. Brian Leonard with I Need Storage shares his experience with raising the rents after an Everbrite door restoration. “It’s a pretty easy decision. As an owner I want to maximize the rentable area I have. To do that, it helps to make the facility look good. So what I do, is when I improve my facilities with Everbrite, I asked my managers to go up on the rent on each unit $4 a month, over eighteen months that $72 dollars. That itself pays more than I paid for the Everbrite expense. At the end of 18 months I’ve established a new baseline for a price level. It’s a great way to raise prices because the customer sees value in the owner improving the property, and when they see value they understand that there’s a cost associated with value.”
Once your rents are increased your top line looks much more attractive to potential buyers. Usually these deferred maintenance costs are one-time expenses that are not recurring on your Profit and Loss. However the increased rent will continue long after those expenses are incurred. Which leads us to our last point.
Cleaning up your books! Once you have raised your rents for a few months, your top line revenue is better, now it is time to focus on tightening up expenses. This includes giving notice to late payers, cleaning up accounts receivable, and auctioning off units that are severely delinquent. Most facilities these days have a waiting list of customers who are willing to pay current rates. There is no need to retain customers who refuse to pay on time every month. Setting up first of the month autopay for your customers can not only save you time and money, but will make sure your monthly revenue is reliable. And late payers are highly visible and easy to follow up with. These are the things potential buyers want to see when evaluating your storage property’s feasibility.
Calling your service providers to negotiate monthly charges can further reduce ongoing expenses. Often times these expenses creep upward without us really noticing and often times it takes only a phone call or two to request a rate negotiation. Even temporary rate decreases on monthly expenses will show in your favor when a potential buyer is looking into your books.
While these steps may take 6-12 months to complete and show some positive results, the time and expense will be worth it when potential buyer is evaluating the purchase of your business. Following these steps will not only increase the value of your investment, they also will make the sale process faster and easier.
Written By: Jackie Belau, Everbrite Coatings
To learn more, visit with Jackie at booth number 209 at the upcoming SSA Spring Conference in Orlando or click here to learn more about Everbrite.