Consistent rental rate increases are a necessary and vital part of running a successful self storage business. Therefore, how do you make the price change as smooth as possible for both your business and your tenants?
Consistent rental rate increases are a necessary and vital part of running a successful self storage business. Be it due to an increase in taxes, inflation, population increases or real estate demand increasing, prices inevitably rise. Fortunately, your tenants probably understand this concept. Therefore, how do you make the price change as smooth as possible for both your business and your tenants?
It’s important to keep in mind that every self storage facility is different, and there is no one size fits all solution for everyone’s needs. The key is to evaluate how you want to run your business and how your decisions will affect the relationships you have with your customers.
From there, you can customize an approach to fit your business model. This may vary a little bit, but here are a few good industry guidelines:
- Create a yearly price increase schedule for your self storage facility. You can raise rent with a flat percentage for everyone instead of calculating different dollar amounts.
- Carefully consider the timing of the price increases. A certain period of the year or particular seasos may result in less customer attrition than others.
- Whether you decide to raise your self storage rates every year or every 18 months, make sure you stay consistent. When people know what to expect and aren’t caught off guard, the entire process goes much smoother.
Remember that the way you implement changes and how you communicate price increases makes all the difference.
The secret is conveying your message in an honest, clear way that helps the renter understand why the prices are increasing and what they can expect next. Here are a few factors to keep in mind:
- Before you announce a price increase to your current tenants, make sure your website is updated. It’s important that your site reflects your updated rates, so new renters aren’t getting a better deal than tenants that have been with you for years.
- Give special consideration to your long-term and seasonal renters. If they’ve been loyal to your business and you value having them, think about offering a small discount as a thank you gift.
- Price increases and complaints go hand in hand. It’s a normal part of the self storage business that everyone navigates from time to time. The truth is, most of the people who complain won’t move out; they just want their voice to be heard.
A few weeks before you implement a price increase for your self storage business, send each of your tenants a letter explaining the change. There’s no need to go too deep into the details, but giving a general reason can help.
The easiest explanation is to tie the price increase to property investment. When tenants can see tangible improvements to the property or surrounding structure, they’ll be more likely to be understanding of the change.
One of the best places to start is with your management team. You can support them by talking to them in advance and offering them coaching about dealing with difficult conversations, upset tenants, or other questions that might pop up along the way.
It’s not uncommon for tenants to suggest that they move out and find a better deal. Make sure your managers are comfortable addressing this by providing them with stats about the competition.
When managers are armed with this information, they’re better able to empathize with your tenants while providing a clear and calm explanation about why your facility is the better choice (even if it means paying a little more each month).
Related Article: Ancillary Profit Centres in Self Storage
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Frequently asked questions
How do I add value to my self storage property?
To add value to your self storage property, you can take the following measures:
- Assess the property for improvements.
- Enhance security measures to make tenants feel safe.
- Consider making your facility eco-friendly to attract environmentally conscious customers.
- Understand your customers’ needs and provide services that meet them.
- Create a strong brand to differentiate yourself from competitors.
How do you evaluate a self storage market?
To evaluate a self storage market, you need to look at a few key factors.
- First, consider the demand in the area. Is there a need for storage units?
- Next, examine the competition. Are there already many storage facilities nearby? Also, think about the location and accessibility of the market. Is it convenient for potential customers?
- Lastly, analyse the pricing and rental rates in the market. All these factors can help you determine the potential success of investing in a self storage business.
What is the future of self storage industry?
The future of the self storage industry looks promising. It’s a big and growing market, with a value of $54 billion in 2021. Experts predict that by 2027, it will reach $83.6 billion. The demand for self storage is increasing, and the number of empty units is decreasing. People are using self storage to store their belongings, creating a strong market for the industry. So, it’s safe to say that the self storage industry has a bright future ahead.
Is a storage business a good investment?
Yes, investing in a storage business can be a good choice. A self storage facility has the potential to earn around $350,000 to $800,000 per year on average. Many people need extra space to store their belongings, and the demand for storage units is often high. However, it’s important to consider factors like location, competition, and operating costs before making a decision.
How does storage make money?
Storage facilities make money in the following ways:
- By renting out storage units to people and companies who want additional room for storing their goods.
- By selling locks, cardboard boxes, packing tape, insurance, and other storage-related goods and services.