Section 9: Management

Section 9 • Management

he self-storage industry offers a range of management strategies, allowing property owners to tailor their approach based on their goals, resources, and desired level of involvement. Whether you choose to self-manage, hire a third-party company for remote management, or engage a third party with on-site management, understanding the nuances of each option is critical to making the right decision for your property. For new owners entering the industry, these choices can feel overwhelming. Knowing what type of management aligns best with your site’s unique needs and your personal goals is essential for long-term success.

For entrepreneurial owners who thrive on active involvement, self-management provides a hands-on approach to running their facilities. This allows owners to control daily operations, interact directly with customers, and oversee financial decisions. However, even highly engaged owners often face challenges such as understanding state laws, keeping operational costs in check, and ensuring compliance with industry regulations. Professional third-party management can alleviate these burdens by leveraging expertise and resources to fill gaps, optimize performance, and support growth.

Choosing between remote or on-site third-party management depends largely on the property’s needs and your level of involvement. Remote management often leverages advanced technology to monitor operations, track finances, and provide customer support without a constant physical presence. This approach can be cost-effective and efficient for owners watching every dollar. On-site management, however, provides a more hands-on approach, with dedicated personnel to manage day-to-day tasks, maintain the property, and ensure consistent customer service. This is particularly beneficial for larger or more complex facilities.

For new owners, it’s common to focus heavily on cutting costs in the beginning. While this is crucial, it’s equally important to prioritize filling your property in a timely manner, keeping expenses under control, following state laws, and obtaining as much professional and accurate education as possible. A slow lease-up phase or missteps in operational management can lead to long-term financial strain, overshadowing any short-term savings.

Third-party management companies often offer valuable services that go beyond operations, such as owner training programs and access to industry expertise. These resources empower owners to remain involved in the business while benefiting from professional guidance. Such training can help you understand your property’s financial performance, navigate operating software, and interpret reports, ensuring you make informed decisions.

This section will explore the key considerations for self-storage management, including the pros and cons of self-management, remote third-party management, and on-site management. It will also emphasize the importance of clear communication, robust training, comprehensive budgeting, and strategic supervision. Whether you’re new to the industry or looking to optimize your existing operations, understanding these options and their implications is crucial to building a thriving self-storage business.

Third-Party Management Offerings

Third-party management services provide a comprehensive suite of operational support designed to maximize efficiency, boost revenue, and improve overall performance. These services establish standard operating procedures and ensure consistent, professional management across the board. Key offerings include:

Delinquency Management – Streamlining the process of handling overdue accounts to reduce losses and maintain consistent cash flow.
Revenue Management – Implementing dynamic pricing models to optimize rental rates, monitor occupancy by unit type, and adjust rates based on tenant behavior and market trends. This includes regular rate increases, managing online rate strategies, and phasing out discounts to improve profitability.
Sales, Marketing, and Advertising – Crafting and executing targeted marketing strategies to attract new tenants and retain existing ones.
Websites and Technology – Collaborating with trusted partners to create intuitive websites, mobile platforms, and apps designed to improve customer convenience and engagement.
Financial Oversight – Managing profit and loss statements, cash flow analysis, debt servicing, bank reconciliations, and preparing comprehensive financial reports.
Bill Payment – Handling vendor payments and operational expenses efficiently.
Human Resources – Hiring, overseeing staffing, payroll, benefits administration, and personnel management.
Maintenance – Ensuring facilities remain clean, safe, and well-maintained, with proactive scheduling of repairs and upgrades.
IT Services and Technology Deployment – Implementing cutting-edge software and technology to streamline operations.
Education and Training – Providing ongoing training for staff to enhance their skills and ensure compliance with best practices.
Call Centers and Kiosks – Managing customer interactions and offering support through advanced customer service solutions.
Audits and Compliance – Regularly evaluating operations to ensure adherence to industry standards and internal policies.
Operating Software and Payment Processing – Managing the deployment of software and systems for efficient operations, including credit card processing.
Annual Budgeting and Performance Analysis – Preparing budgets, monitoring monthly results, planning for capital expenditures, and maintaining maintenance reserves.
Special Services – Supporting startups, facility rehabs, and disaster recovery efforts. These special services often involve additional agreements or fees.

Costs And Trends In Management Services

The cost of professional self-storage management has decreased over the years, thanks in large part to advancements in remote operations. These costs, typically calculated in dollars per square foot, encompass salaries for on-site personnel, bonuses, health care, tax contributions, and management fees, which average around 6 percent of gross income. While rising hourly wages and benefits have added to certain expenses, the efficiencies gained through remote operations have helped drive down overall costs. Consequently, the percentage of income allocated to management has decreased from the historical range of 19 percent to 21 percent to a more recent range of 18 percent to 19 percent.

This downward trend reflects the effectiveness of professional management companies in leveraging technology and streamlined processes to maximize income while controlling operational expenses. Owners benefit from a strategic approach that combines expertise, resources, and innovative oversight, ensuring both operational efficiency and profitability.

Preparing For The Future

As the self-storage industry becomes more sophisticated, the role of professional management will continue to grow in importance. Owners who invest in high-quality management services are better equipped to navigate challenges, capitalize on opportunities, and adapt to evolving market demands. From leveraging advanced technologies to implementing dynamic pricing and targeted marketing, third-party management companies provide a pathway to long-term success in this competitive landscape.

Whether self-managing or partnering with a third-party provider, owners must remain focused on operational excellence and strategic growth to thrive in the ever-changing world of self-storage.

Fee Management

Fee management in the self-storage industry encompasses professional management, accounting, and oversight services provided for an agreed-upon fee. These fees are generally structured as a percentage of the gross income or a minimum monthly dollar amount, whichever is higher. This model ensures operational consistency and financial transparency for owners and stakeholders.

Understanding The Fee Structure

Minimum Monthly Fees – For facilities in lease-up phases, when occupancy is building, or for smaller locations, management fees typically range between $2,500 to $3,000 per month.
Percentage-Based Fees – For single-store operations, management fees usually fall around 6 percent of the adjusted gross income per month. These fees are calculated and paid monthly in arrears. For instance, services rendered in January will be reflected in January’s financial statements, which are delivered in February. Payment typically occurs after month-end reconciliations, often around the 10th of the following month.
Multiple-Store Discounts – For clients managing multiple properties, discounts may apply. In such cases, management fees can drop to as low as 5 percent of gross income.
Start-Up Fees – Assimilating a new property requires significant upfront effort, including business setup, operating system configuration, accounting preparation (e.g., budgets and projections), and manager training. Start-up fees generally range between $5,000 and $10,000.

Chart 9.2 - Eight-Year Expenses (2016 - 2023)

Expense Management And Trends

A critical component of fee management is tracking and analyzing expenses to ensure profitability and operational efficiency. This involves evaluating costs not just on a per-square-foot basis but also as a percentage of income to identify trends and areas for optimization.

Advertising Costs – By transitioning from traditional print media to digital marketing channels, operators can reduce advertising expenses while maintaining a community-focused, high-touch marketing presence. Advertising spend is closely tied to digital strategies like pay-per-click (PPC) campaigns, which must be optimized for maximum return. While it’s challenging to compete with Real Estate Investment Trusts (REITs) online, focusing on targeted, smart spending is key.
Expense Trends at Universal Storage Group (USG) – Over the past four years, USG’s expenses as a percentage of income reflect careful cost management.
- 2020: 36.8 percent of income
- 2021: 33.3 percent of income
- 2022: 32.0 percent of income
- 2023: 32.78 percent of income

Advertising costs specifically accounted for 2.2 percent of income in 2023, showcasing the importance of lean, effective marketing strategies.

Strategic Cost Analysis

Fee management goes beyond simply tracking expenses; it involves strategic cost analysis to improve profitability and ensure sustainable operations. For example, evaluating expenses both per square foot and as a percentage of income allows operators to identify areas for cost reduction without sacrificing service quality, optimize marketing strategies by balancing digital and community outreach efforts, and make informed decisions about resource allocation, especially in competitive markets.

While REITs may dominate online visibility with larger budgets, independent operators can still thrive by leveraging local expertise, smart marketing, and efficient management practices.

Chart 9.3 - Six-Year Expenses as % of Actual Income (2018-2023)

The Reporting Process

Effective and timely reporting is a foundational aspect of professional self-storage management. A robust reporting process ensures that property owners have a clear and comprehensive understanding of their financial performance, enabling better decision-making and strategic planning.

Key Components Of The Reporting Process

Bill Payment and Financial Oversight – Management companies handle all store-related expenses, including tax contributions required by law and debt servicing or loan payments as directed by the property owner. Owners may opt to manage tax payments and debt servicing themselves, but they must provide all relevant documentation, including proof of payment and associated records, to the management company. This ensures accurate financial reporting, prevents discrepancies, and supports compliance with budgeting and reconciliation processes.
Monthly Financial Statements provide a comprehensive overview of a facility’s performance, typically including reconciled bank account statements, budget comparisons to evaluate how actual results align with projections, and year-over-year analyses to track performance trends and identify areas for improvement.
Annual Budget Preparation is a collaborative process essential for setting income targets, projecting revenue, and estimating monthly expenses categorized for easy tracking. This budget serves as a framework for comparison throughout the year, helping to identify variances and implement necessary adjustments to stay aligned with financial goals.

Timelines And Delivery Methods

Reporting timelines for self-storage management vary widely, typically falling into two main categories. Expedited reporting provides owners with insights into their financial performance within five days of the month’s end, while standard reporting, delivered by the 15th of the following month, allows time for thorough reconciliation and analysis. Reports are usually distributed via email, with the owner determining the recipient list to ensure all stakeholders have access to the necessary information. Once reports are received, owners have options for review. Experienced owners may opt for self-review followed by follow-up questions to their area manager, while most owners prefer scheduled review sessions. These sessions can be conducted in person, via Zoom or other video conferencing platforms, or over the phone, depending on the owner’s preference. The management team ensures flexibility and support, helping owners interpret the reports and gain the clarity needed to make informed decisions.

Customization For Owners

As a self-storage property owner, it’s important to ensure the reporting process aligns with your needs. While management companies typically provide standard reporting formats, you have the right to request adjustments or additional details, such as customized reports focusing on specific metrics or granular data to support strategic decisions like marketing effectiveness or expense breakdowns. Transparency is crucial, and owners should have unrestricted access to all financial data related to their properties in the format and frequency they prefer. This level of access empowers owners to stay in control of their investments and make confident, informed decisions based on accurate information.

Why Reporting Matters

A well-structured reporting process offers more than just numbers; it tells the story of your property’s performance. Detailed and timely reports enable you to monitor financial health by keeping track of income, expenses, and profitability; evaluate trends by identifying seasonal patterns and long-term changes; and improve decision-making through data-driven strategies for marketing, pricing, and operations. Additionally, a robust reporting process maintains accountability, ensuring your management company operates transparently and aligns with your goals. Beyond delivering financial statements, the reporting process provides clarity, confidence, and control for property owners. Partnering with a management company that prioritizes transparency and customizes reports to meet your needs ensures your self-storage investment is well-managed and positioned for success. Remember, it’s your money, and you have the right to full access to the data and insights that guide it.

Manager Hiring And Training

In the self-storage industry, the role of the on-site manager is critical. Managers not only handle day-to-day operations but also represent the property to customers, drive revenue, and maintain the facility’s reputation. To ensure the highest standards of performance, hiring and training practices must be robust, consistent, and aligned with the property owner’s goals.

A Structured, Thorough Process

Most management companies require on-site staff members to be employed by the management company rather than directly by the property owner. This approach ensures consistent hiring standards, training, and performance management across multiple properties. The hiring process includes several key elements. Comprehensive background checks covering criminal, credit, and driving history, as well as other verifications, are conducted with the prospective employee’s authorization, ensuring transparency and compliance. Managers’ salaries and benefits are integrated into the property’s annual operating budget and charged to the owner as property expenses. Standardized employment applications, which include necessary disclosures and authorizations, streamline the hiring process and reduce liability for both the management company and the property owner.

Chart 9.4 - Costs for Mangement (2018 - 2023)

Empowering Managers For Success

A well-trained manager is a cornerstone of successful self-storage operations, making training programs essential for equipping managers with the skills and knowledge they need to excel. These programs should be formalized, ongoing, and designed to foster professional growth while enhancing operational efficiency.

Structured Programs – Effective training begins with structured programs that include comprehensive onboarding and extend to ongoing professional development. For instance, Universal Storage Group (USG) utilizes a four-phase training program. Phases One and Two provide a two-week initiation covering operational basics. Phase Three focuses on marketing and social media training to build awareness and engagement; Phase Four trains managers in auction procedures to handle delinquency management effectively.

Ongoing education and recognition are also vital components of a successful training strategy. According to the 2024 LinkedIn Workplace Learning Report, 70 percent of workers believe learning improves their connection to the organization, 80 percent feel it enhances their sense of purpose, and 94 percent say they would stay longer with a company that invests in their careers. Training programs that include awards and recognition further boost morale and retention, fostering a more motivated and capable workforce.

Comprehensive skill development is another critical element of manager training. This includes training in sales techniques for both phone and in-person interactions, marketing strategies that leverage digital platforms and community engagement, and proficiency in reporting and administrative tasks to ensure accuracy and efficiency. Delinquency management is also a focus, with training on effective phone skills for recovering late payments professionally, empathetically, and persuasively. Additionally, managers are trained in technology and software use, including property management systems, and learn the importance of curb appeal and facility auditing to maintain compliance with operational standards.

To further enhance learning and team cohesion, many companies host annual training and recognition events. These events can range from two-day intensive sessions to multiday retreats providing opportunities for skill-building, motivation, and team bonding.

By prioritizing training as an ongoing, multifaceted process, self-storage companies can empower their managers to lead effectively, drive success, and build lasting connections within their teams and communities.

Benefits Of Comprehensive Training

Well-trained managers deliver measurable benefits to storage operations, creating a foundation for consistent and efficient management. One key advantage is standardized operations, which ensure uniformity across the management platform. This consistency allows staff to be easily interchanged or provide coverage during emergencies, illnesses, or vacations, minimizing disruptions to daily operations.

Another significant benefit is improved performance. Managers who are educated and motivated are better equipped to boost occupancy rates, effectively manage delinquencies, and enhance customer satisfaction. These improvements directly contribute to a healthier bottom line, reinforcing the value of investing in comprehensive training programs.

Additionally, training prepares managers for emergency situations by equipping them with the knowledge and tools to handle unexpected challenges. Advanced technologies, such as remote access tools, video doorbells, and cloud-based management systems, enhance their ability to respond quickly to emergencies or operate remotely when necessary, ensuring continuity and security in critical moments.

By focusing on these areas, self-storage operations can harness the full potential of well-trained managers to drive success and maintain resilience in a competitive industry.

Backup And Continuity

Unlike larger management platforms, small operators often lack backup options for manager absences. This can lead to operational disruptions during emergencies, illnesses, or vacations. By working with a management company that employs standardized training and cross-training practices, owners can avoid these pitfalls and ensure seamless continuity of operations.

Hiring and training practices are more than operational necessities; they are strategic investments in the success of a self-storage facility. A well-hired and properly trained manager can transform operations, creating a welcoming and efficient environment that attracts and retains customers. By prioritizing comprehensive training and leveraging modern tools, self-storage owners can build strong, resilient teams that drive long-term profitability.

Included And Extra

When partnering with a professional management company, it’s crucial to understand which services are typically included in the standard agreement and which may incur additional fees. While many services are standard, others may come at an extra cost depending on the company and the level of support provided. Here’s a breakdown of key services and their potential costs.

Billing and Invoicing – Email invoicing for customers is often included as a cost-effective and environmentally friendly solution. However, physical invoicing via traditional mail may come with additional fees, with the costs often passed on to the customer.
Auctions and Lien Sales – Most management companies handle auctions through online storage auction platforms; they have become the industry standard and are typically included in your management fees. However, any fees charged by the auction platform are typically billed back to the owner.
Marketing and Branding – Comprehensive marketing plans aimed at maximizing visibility and customer engagement are typically included. However, branding-related updates, such as customized signage, color schemes, or painting, may incur extra charges. If the management company operates sites under their own flagship brand, additional costs like licensing or franchise fees might also apply.
Pre-Opening and Development Support – Standard services include initial guidance on marketing plans, operational systems, and staff hiring for new sites, as well as “Coming Soon” banners with reservation capabilities and pre-leasing strategies. Additional involvement in site planning and design, such as unit mix optimization, office layout planning, QR code integration to reduce signage costs, custom five-year budgets, furniture procurement, and promotional materials, may result in extra fees.
Construction Oversight and Rehabilitation – During construction or renovation, low monthly minimum fees are often included to help offset initial expenses while maintaining professional oversight. More comprehensive oversight of construction projects or major rehabilitation work, ensuring projects remain on schedule and meet quality standards, may come at an additional cost.
Technology Integration – Assistance with integrating operational systems, such as access control and property management software, is typically included. However, custom configurations or additional technology solutions tailored to specific owner needs may involve extra charges.
Annual and Ongoing Operations – Services such as manager hiring, ongoing training programs, and standardized operations across all sites are usually included to ensure efficiency and consistency. Additional costs may apply for initial training programs for new managers, covering comprehensive onboarding and specialized training sessions. Enhanced services like annual retreats, specialized training events, or team recognition programs designed to motivate and retain staff may also incur extra fees.

By understanding the scope of included services and potential additional costs, self-storage owners can make informed decisions and align their expectations with their management company’s offerings.

The Value Of Professional Involvement

Engaging a management company early in the development process can bring tremendous value to self-storage owners, even if some services come at an additional cost. Early involvement, whether for new construction, major rehabs, or operational support, ensures that every detail is meticulously planned and executed. Experienced guidance often results in significant cost savings through better planning, fewer change orders, and more efficient site layouts, helping owners avoid thousands of dollars in unnecessary expenses. Additionally, having a management team involved from the outset facilitates a seamless launch. They can deliver a turnkey property that is fully operational and ready to lease-up quickly, with all marketing, systems, and staff in place.

Whether the services are included or require additional fees, professional management is a strategic investment in the success of your self-storage business. A clear understanding of what is provided allows owners and management companies to budget effectively and focus on the services that will bring the most value. By collaborating closely with an experienced management team, self-storage owners can achieve operational excellence, streamline processes, and maximize profitability.

Management Agreement Terms

When entering into a management agreement for your self-storage property, the length and flexibility of the contract are critical considerations. Management agreements are often compared to a marriage; they require trust, clear communication, and alignment on goals. Understanding the terms and options available can help you make the best decision for your property and long-term strategy.

Chart 9.7 - Monthly Collection Increase (Over 18 - 24 Months)

Standard Annual Agreements With Auto-Renewal

The most common management agreements in the self-storage industry are annual contracts that automatically renew, offering stability and continuity for both owners and management companies. These agreements enable both parties to focus on optimizing operations without the need for frequent renegotiations. However, as with any partnership, it is crucial to thoroughly review and discuss the terms before signing. Owners should ensure they understand key aspects such as the renewal process and any opt-out clauses, the termination policies and potential fees for early cancellation, and how the agreement aligns with their long-term goals and expectations. A clear understanding of these elements helps foster a successful and mutually beneficial partnership.

Shorter-Term And Specialty Contracts

While annual agreements are standard in the self-storage industry, shorter term and specialty contracts are available to address specific needs. These contracts typically come with higher monthly fees due to the unique demands and flexibility they offer, making them ideal for certain situations.

Start-Up Contracts are tailored for new self-storage developments, ensuring the management company oversees all aspects of opening the facility. This includes manager hiring and training, creating and implementing marketing and promotional plans, developing budgets, integrating operational systems such as access control and property management software, and pre-leasing strategies to build occupancy before opening day. These contracts typically cover the pre-opening phase and the first few months of operations, providing a seamless transition to steady operations.
Due Diligence Contracts are designed for prospective buyers evaluating the purchase of an existing facility. Management companies offering these short-term contracts conduct in-depth analyses of the facility’s financial performance and operational health, identify improvement opportunities or risks, and provide a comprehensive report to guide the buyer’s decision. Fees for these services generally range from $5,000 to $15,000, depending on the property’s size, age, and complexity.
Feasibility Studies are a crucial step for self-storage owners considering the development of a new facility. These studies provide a comprehensive evaluation of market demand, competition, and other key factors to determine whether a project is viable and financially sound. The cost of a feasibility study generally aligns with that of due diligence contracts, with pricing varying based on the scope of the project and the complexity of the target market. It’s important to understand the distinction between a feasibility study and a market study. While both provide valuable insights, feasibility studies offer a more detailed analysis of overall project viability, which is often required by banks and lenders as part of the financing process. For any owner exploring new opportunities, a thorough feasibility study can lay the groundwork for a successful and profitable development.
REO and Bank Management Contracts address the specific needs of managing facilities for banks or real estate owned (REO) properties. These contracts often involve higher fees due to the flexibility and unique operational requirements, focusing on maximizing value for lenders while maintaining operational stability.

To accommodate unique circumstances, many management companies offer tailored terms for custom agreements. These could include shorter initial terms with the option to extend after an evaluation period, contracts designed for significant renovations or expansions, or flexible agreements for owners uncertain about long-term management needs. These tailored options often come at a premium due to the added complexity or reduced contract length.

When considering management agreements, it’s crucial to thoroughly review your options, discuss terms with the management company, and ensure the agreement aligns with your specific goals. Whether you’re opening a new facility, acquiring an existing one, or managing a property under unique circumstances, the right management partner can significantly impact your success.

Supervising On-Site Operations

The frequency of on-site supervision should be tailored to the specific needs of each self-storage property to ensure optimal performance. For well-established, high-performing properties, monthly or even quarterly visits combined with remote supervision may suffice to maintain smooth operations. Conversely, new or underperforming properties, such as those in lease-up, undergoing rehabilitation, or facing operational challenges, often require more frequent oversight, such as weekly visits or additional touchpoints, to address their unique needs effectively. Owners seeking increased supervision should anticipate higher management fees to account for the additional time and resources required. However, tailoring the level of supervision ensures each property receives the support necessary to optimize performance and achieve operational goals.

Why On-Site Supervision Matters

On-site visits are a cornerstone of effective self-storage management, offering significant benefits for both property managers and owners. These visits provide hands-on training opportunities, address site-specific concerns, and establish a direct connection between on-site managers and the management team. They also provide peace of mind to owners by ensuring properties are well-maintained and aligned with operational objectives.

While monthly on-site visits are the industry standard for most management companies, advancements in remote supervision and customized oversight options have introduced greater flexibility. These innovations allow owners to adapt management strategies to meet the unique demands of their properties while balancing cost efficiency.

On-site visits typically include essential tasks such as auditing financial records, daily deposit logs, and operational reports to ensure accuracy and compliance. They also involve thorough site inspections to maintain curb appeal, identify maintenance issues, and assess the property’s overall condition. Monthly performance reviews are another critical aspect, focusing on analyzing income and expense reports to evaluate success and identify areas for improvement.

Other Supervision Options

While monthly on-site visits are the standard in self-storage management, other levels of supervision are available to suit the unique needs of a property and the preferences of the owner. These options provide varying degrees of oversight, balancing operational requirements with cost considerations.

Weekly supervision is ideal for owners who require more frequent oversight, such as during lease-up periods or for underperforming properties. Weekly visits involve detailed and consistent monitoring, offering a higher level of involvement to address challenges proactively. However, this option often comes with higher management fees to account for the increased time and travel expenses.
Quarterly supervision is a cost-effective alternative offered by some management companies. This option reduces on-site presence by scheduling inspections every three months, appealing to owners seeking to minimize expenses. However, the reduced frequency may result in slower response times to potential issues and fewer opportunities for hands-on training with managers, which can impact overall performance.
Daily oversight through technology provides a modern approach to maintaining control without frequent physical visits. Most management companies perform daily audits of income and deposits remotely, ensuring financial accuracy and security. Managers play a key role in this process by closing, balancing, and depositing funds daily to streamline accounting and reduce risks. Additionally, they use online tools and software to provide real-time reporting to the home office, ensuring continuous oversight and operational efficiency.

These flexible supervision options allow owners to choose the level of involvement that aligns with their property’s needs, operational goals, and budget, ensuring a tailored approach to effective management.

Striking the right balance between hands-on management and remote oversight is essential for ensuring self-storage properties operate efficiently and profitably. By understanding the benefits of tailored supervision and the available options, owners can align their operational goals with their budget, ensuring long-term success.

Innovations In Remote Supervision

Advances in technology have enabled management companies to provide effective supervision without the need for constant on-site presence. These innovations have transformed how oversight is conducted, streamlining operations and enhancing connectivity between on-site and home office teams.

Online manager training allows companies to conduct remote sessions where managers and home office staff interact face to face using existing store hardware, such as webcams and audio systems. This approach provides immediate feedback and support while significantly reducing travel costs.
Instant communication tools such as video conferencing, cloud-based property management software, and remote monitoring systems ensure that home office staff stay connected with on-site managers. These tools allow real-time issue resolution, improving efficiency and responsiveness to operational challenges.
Automated oversight takes monitoring to the next level with systems for access control, security cameras, and software notifications that track daily operations remotely. These systems can send alerts for unusual access activity, automate tracking of delinquent accounts, and issue payment reminders, ensuring smooth and secure operations without constant physical oversight.

These technological advancements not only reduce costs but also enhance the effectiveness and responsiveness of management practices, offering owners and managers the tools needed to maintain operational excellence.

Table 8.7 – Midwest (East North Central) Rental Rates

What Conditions Exist For Termination?

Entering into a management agreement is much like a partnership or marriage; it requires mutual commitment and trust. However, it’s equally important to understand the conditions under which the agreement can end. Preparing for a potential “divorce” ensures you are not caught off guard if the relationship doesn’t work out or circumstances change. By understanding key termination clauses and conditions, owners can protect their interests and ensure a smooth process if the need to part ways arises.

Notice requirements are a fundamental element of most agreements, with the standard being a 60-day notice for termination without cause by either party. Some contracts offer greater flexibility with a 30-day notice period. Confirming the notice requirements in your contract and understanding any associated conditions is essential for clarity and preparation.
Termination for cause is another critical provision included in many contracts. This allows for immediate termination in cases such as a breach of contract or gross mismanagement, typically giving the offending party an opportunity to resolve the issue before termination takes effect. Ensuring these terms are clearly defined and equitable is vital when reviewing the agreement.
Early termination penalties may also come into play, with some contracts requiring payment of at least 12 months of management fees, even if the termination occurs earlier. Owners must be aware of these potential financial obligations to make informed decisions.

Not all agreements allow for termination without cause; some require a justifiable reason, which can complicate ending the relationship if problems arise. Reviewing this clause carefully can help avoid unexpected challenges down the road.

Finally, access to software and data is a crucial consideration when transitioning to a new management company. Ensuring you are the licensed user of the software will facilitate a seamless conversion to a new system. Retaining ownership of your data and access to the platform is critical for maintaining operational continuity during the transition.

By thoroughly understanding these termination considerations, owners can better safeguard their interests and navigate transitions effectively. Proper preparation and clarity not only ensure a smoother process in the event of termination but also foster a stronger, more transparent relationship between owners and management companies.

Tips For Termination Terms

When reviewing termination terms in a management agreement, it’s important for owners to approach the process with attention to detail and strategic foresight. Start by thoroughly understanding your obligations. Carefully review the termination clauses, including notice periods, penalties, and conditions for termination with or without cause. This ensures you are fully aware of your responsibilities and potential financial impacts.

Protecting your data is another critical aspect. Ensure the agreement explicitly states that you retain ownership of all operational data and have full access to it upon termination.

Consider negotiating for flexibility where possible. Aim for shorter notice periods or reduced penalties to give yourself greater freedom should you need to switch management companies. Flexibility in termination terms can be especially valuable in maintaining control over your operations.

Protecting your data is another critical aspect. Ensure the agreement explicitly states that you retain ownership of all operational data and have full access to it upon termination. This provision safeguards against disruptions during the transition to a new management company, preserving the continuity of your operations.

Additionally, confirm the details of the time-to-cure provisions for cause-based termination. These terms should allow fair treatment for both parties by providing reasonable time for the offending party to address and resolve any issues before termination takes effect.

Understanding the conditions for termination is a vital component of any management agreement. By thoroughly reviewing and negotiating these terms upfront, owners can protect their interests and ensure a smooth transition if the partnership ends. Like any important relationship, clarity and preparation are essential to minimizing potential conflicts and safeguarding your self-storage investment.

Handling Disputes

Dispute resolution is an essential consideration when entering into a management agreement. Clear language about how disputes will be addressed, where the contract will be governed, and the boundaries of management’s decision-making authority is critical to ensure a smooth working relationship. Addressing these elements upfront minimizes misunderstandings and sets the foundation for a productive partnership.

When evaluating disputes and governance in management agreements, there are several key points to consider. First, dispute resolution clauses should be reviewed to ensure they include clear language about how disputes will be resolved. Common options include mediation, arbitration, or litigation. It is essential to understand where the contract is governed, as this specifies the jurisdiction and laws applicable in case of disputes. Additionally, preferred methods for resolution, such as mediation or arbitration, are often favored due to their efficiency and cost-effectiveness compared to court proceedings.

Second, spending limits and emergency situations must be clearly defined. Management contracts typically outline spending thresholds, specifying what management can spend without the owner’s direct approval. For example, routine expenses may have a predefined limit, such as $1,000. In contrast, emergency expenditures related to repairs or safety concerns might allow for greater flexibility to protect the property and its operations. Clear definitions of what constitutes an emergency and the associated spending caps are crucial for preventing future conflicts.

Lastly, the alignment with business goals is vital. A third-party management company should function as a true operating partner and an extension of the owner’s business. This relationship thrives when the management company has a clear understanding of the owner’s objectives and tailors its approach to achieve or exceed these goals. Owners should explicitly communicate their long-term plans, such as whether the property is intended to generate income or be sold after increasing its value. Exit strategies, such as plans to develop and sell the property within a specific timeframe (e.g., five years), should also be shared to ensure alignment between both parties.

The Power Of Clear Communication

The relationship between an owner and a management company thrives when expectations are explicitly defined and openly discussed. Being straightforward about your needs enables the management company to tailor their services to meet your specific goals. For instance, if your objective is to flip the property quickly, the management strategy will prioritize aggressive lease-up and short-term profitability. On the other hand, if you plan to hold the property long term, the focus may shift to stable operations, gradual improvements, and maximizing cash flow. Honest, upfront communication fosters a partnership where the management company can not only meet expectations but exceed them. While disputes and governance are inevitable in any partnership, preparing for these scenarios in advance ensures a smoother relationship. Clearly defined dispute resolution methods, spending limits, and a shared understanding of objectives help create a collaborative and productive environment. When the management company acts as an extension of your business and aligns with your vision, the results can be both rewarding and transformative.

Establishing An Agreed-Upon Flow Of Communication

Clear communication is essential for the successful operation of a self-storage business, especially when multiple parties (store managers, the management company, and the owner) are involved. Without an agreed-upon flow of communication, confusion can lead to inefficiencies, frustration, and even staff turnover. Establishing a well-defined communication structure ensures that everyone remains aligned, motivated, and focused on common goals. The most effective communication systems are simple, structured, and consistent. Owners should communicate their requests or directives directly to the management company, which acts as the intermediary. The management team then relays the necessary information or actions to store managers, ensuring clarity and avoiding conflicting messages. Similarly, store managers should channel their requests, concerns, or operational needs to the management team, which can consult with the owner if needed and provide clear resolutions. By serving as the central communication hub, the management company keeps everyone aligned, prevents confusion, and ensures store managers are not overwhelmed by conflicting directives. This streamlined flow of communication fosters efficiency and collaboration, allowing all parties to work cohesively toward the business’ success.

This approach works effectively for several reasons. First, it avoids manager overload by preventing store managers from feeling overwhelmed by directives from multiple “bosses,” which can lead to frustration or disengagement. A unified communication channel ensures that managers receive clear, actionable instructions from a single source—the management company. Second, it streamlines decision-making by filtering all decisions through the management company, which can assess feasibility, communicate effectively, and maintain alignment with operational goals. Lastly, it allows managers to stay focused on their primary responsibilities, such as operating the store and serving customers, without being distracted by conflicting requests or administrative confusion. This structure not only enhances operational efficiency but also contributes to a positive working environment for all involved.

Annual Approved Budgets And Goals

A well-prepared annual budget and clearly defined goals are essential for the smooth operation of a self-storage property. By setting targets for income, expenses, and leasing activities at the start of the year—and securing agreement among all parties—owners and management can avoid the pitfalls of constant revisions and maintain focus on execution.

The annual budget is a critical tool for the success of a self-storage business, providing clear targets and a structured approach to financial planning. It outlines agreed-upon objectives for revenue generation, operational costs, and leasing activity, serving as a roadmap for the year. By establishing these targets upfront, the budget eliminates the need for frequent adjustments throughout the year, ensuring focus and consistency.

At Universal Storage Group (USG), the budget preparation process is thorough and begins well in advance, with budgets typically ready by November for the upcoming year. This process involves several key steps to ensure accuracy and alignment. First, budgets are reviewed internally by the area manager, COO, and CEO to ensure they are comprehensive and realistic. Once finalized, the budgets are presented to owners and reviewed in detail. This collaborative approach ensures that owners fully understand and agree with every dollar allocated, fostering transparency and trust. USG avoids vague or undefined categories in its budgets; there are no “miscellaneous” or ambiguous line items. Every expense is clearly accounted for, reflecting a meticulous and professional approach.

An often overlooked but essential step in the budgeting process is sharing the budget with on-site managers. Managers play a pivotal role in controlling expenses, achieving revenue targets, and staying within budgetary limits. Without a clear understanding of the year’s goals, they cannot effectively contribute to the business’ success. Simply instructing managers to “do good this month” or “try hard this year” is insufficient. Providing managers with specific, measurable goals aligns them with the broader strategy and empowers them to perform effectively. A well-communicated budget ensures that everyone is working toward the same objectives, creating a unified and productive team.

Dealing With Contingencies

Having a comprehensive annual budget does not eliminate the possibility of unforeseen circumstances, as emergencies and exceptions are an inevitable part of any business. Planning for these situations is crucial to maintaining operational stability. Budgets should incorporate built-in flexibility, such as contingency funds or allowances, to handle unexpected expenses without disrupting daily operations. Additionally, setting predefined emergency authorization limits allows managers and the management company to respond swiftly to urgent issues. This approach minimizes delays in addressing critical needs while maintaining financial oversight and ensuring the business remains on track despite challenges.

Relying On Historical Data

Most budgets are grounded in detailed historical data, providing a reliable foundation for financial planning. By analyzing operating information from previous years, owners and management can predict seasonal fluctuations in revenue and expenses, allowing for more accurate financial forecasting. Historical data also helps identify trends in leasing activity and customer behavior, offering valuable insights for strategic decision-making. This analysis enables more effective resource allocation to address anticipated challenges, ensuring the business is well-prepared to meet its goals throughout the year.

Transparency With Managers

Managers are on the front lines of operations, and their daily decisions have a direct impact on income and expenses. Sharing the budget with them and explaining specific goals empowers them to take an active role in achieving financial success. With this knowledge, managers can monitor and manage controllable costs, such as utilities, office supplies, and marketing expenses, ensuring resources are used efficiently. They can also adjust leasing and sales efforts to align with revenue goals and gain a clear understanding of financial boundaries, allowing them to work smarter to stay within those limits. When managers understand the “why” behind budgetary decisions, they shift from being passive executors of tasks to active participants in driving the business toward its financial objectives.

The Power Of Unified Goals

When owners, management, and store managers align on budgets and goals, the entire team can work toward shared success. This collaborative approach fosters accountability, ensures transparency, and creates a clear path for measuring progress throughout the year.

Level Of Involvement

The level of involvement owners desire in the day-to-day operations of their self-storage properties can significantly impact the success of their partnership with a third-party management company. Striking the right balance between engagement and delegation is key to maximizing income and overall performance while allowing management to operate efficiently.

Collaboration For Success

Collaboration between owners and management companies is key to achieving extraordinary results. Reasonable owner involvement enhances the partnership, especially when both parties align on shared goals. Regular site visits are an excellent way for owners to observe operations firsthand, gaining insight into how the team interacts with customers and maintains the facility. These visits also provide opportunities to offer immediate feedback and guidance to managers, fostering a hands-on connection to daily operations.

Open communication is equally vital in ensuring collaboration. Owners should follow the agreed-upon flow of communication to share ideas, concerns, or objectives with the management company. This approach allows for the seamless relay of both positive observations and areas needing improvement, enabling the management team to craft clear action plans and work with on-site managers to implement necessary changes. A collaborative and communicative relationship ensures a smooth flow of information, resulting in measurable operational improvements and a more successful partnership.

Finding The Right Fit

The level of involvement you desire in daily operations plays a significant role in determining whether third-party management is the right choice for you. For hands-off owners, third-party management is an ideal solution. If you prefer to focus on your core business or other investments, entrusting a management company to handle the day-to-day details allows you to enjoy fewer operational problems and increased income while maintaining high-level oversight.

For collaborative owners, third-party management offers a natural partnership. This setup allows you to work closely with the management firm to achieve shared goals while they handle the operational workload, creating a productive and balanced relationship. On the other hand, if you are a micro-manager who prefers to oversee every detail personally, third-party management can be either a challenge or a blessing. While it provides relief from managing multiple operational fronts simultaneously, excessive micromanagement can strain the relationship. Being clear about your needs and expectations from the outset is essential in determining whether third-party management aligns with your approach and goals.

The Value Of A Consultant

Even if you’re hesitant about full management services, consider engaging a consultant to assess and enhance your property’s performance. Politician Andrew Thomas once said, “A consultant, to be worth their salt, must give honest judgments, not necessarily those which they think the client would like to hear.”

This honesty and objectivity can provide valuable insights, recommend actionable improvements, and give you an unbiased perspective on your operations. Consultants are especially beneficial for owners considering transitioning to third-party management or seeking ways to optimize existing systems. By partnering with a management firm, maintaining open communication, and aligning on goals, you can create a harmonious relationship that maximizes income and minimizes stress. Whether you’re looking for full-service management or simply seeking expert advice, the right level of involvement can lead to measurable improvements and a more successful operation.

The Importance Of References

Selecting the right management company for your self-storage business is a critical decision, and evaluating references plays a vital role in this process. Visiting properties managed by the company offers valuable insights into their capabilities. During these visits, pay close attention to the condition of the facilities, the professionalism of the staff, and the overall efficiency of operations. Well-maintained properties and competent staff are clear indicators of a management company’s impact and effectiveness.

Industry involvement is another key factor to consider. A management company that actively participates in state and national self-storage associations demonstrates a commitment to upholding industry standards and fostering professional development. Companies that contribute to the industry by writing articles, offering training, or speaking at national conventions show leadership and dedication to staying ahead of trends and technologies that can directly benefit your business.

Interviewing the company’s current clients provides firsthand insights into their performance and reliability. Speak with owners who operate facilities of similar size or scope and ask about key performance indicators, such as improvements in operations, cost reduction, increased income and occupancy rates, enhanced marketing efforts, and the consistency of reporting. Additionally, inquire about their experiences with communication, responsiveness, and problem-solving. These conversations can reveal how effectively the management company delivers on its promises and handles challenges.

Why These References Matter

References are essential because they provide critical insights into the management company’s capabilities and impact. A company that actively contributes to the self-storage community is more likely to stay informed about the latest trends, tools, and strategies, ensuring your business benefits from their expertise. Speaking with current clients sheds light on their operational excellence, offering a clearer picture of how well they manage challenges and fulfill commitments. Reliable references also help you assess the company’s ability to reduce operational costs and boost revenue, providing a clear understanding of the potential value they can bring to your business.

By thoroughly evaluating references, you can make a well-informed decision and choose a management company that aligns with your goals, demonstrates a proven track record, and delivers meaningful results for your self-storage business.

Understanding Sample Exhibits In Your Management Contract

When reviewing your management contract, pay close attention to the sample exhibits included, as they outline the types of reports and information you will receive. It is essential to understand and agree with the formats and frequency of these documents to ensure clarity and avoid confusion. Common exhibits often include monthly cash flow statements that detail income, expenses, and net cash flow; proformas and budgets that provide projections and comparisons to actual performance; and variance reports that highlight deviations from the budget. These reports should meet your needs and be attached to the contract for reference, offering a clear understanding of the financial reporting you can expect.

Customization options are another important consideration. If you require specialized formats or reports, it’s crucial to discuss these needs during the negotiation phase. While many self-storage operating systems offer a variety of standard reports, customizations may come with additional fees or increase start-up costs, so clarifying these details upfront is essential.

Lastly, evaluate the accessibility of data provided by the management company. Modern web-based operating systems typically allow owners to access real-time data and generate reports from anywhere, providing transparency and convenience. Confirm whether additional reports or custom data requests are included in the service or if they incur extra costs. By thoroughly reviewing and understanding the sample exhibits, you can ensure the financial tools and reporting align with your needs, fostering a smooth and productive working relationship with your management company.

Reporting Frequency

Reporting frequency is a key component of a management contract, ensuring owners remain informed about their property’s performance and operations. Most contracts establish a minimum frequency for financial reporting, typically on a monthly basis, to keep owners updated. These reports generally include a summary of income, expenses, variances, and management commentary, offering a comprehensive view of financial performance. Additionally, site visit reports are often included, providing evaluations conducted by management that highlight property conditions, operational issues, and any corrective actions taken.

Emergency procedures should also be clearly outlined in the contract, specifying situations that require immediate notification of the owner and detailing how these communications will occur. These protocols ensure that owners are promptly informed of critical issues affecting their property.

Sample exhibits are more than just attachments; they provide a snapshot of the information and support you can expect from your management company. Reviewing these documents thoroughly, discussing unique reporting needs, and ensuring transparency in access and frequency are essential steps in establishing a productive and collaborative partnership. Clear expectations around reporting will equip you with the insights needed to make informed decisions and keep your self-storage operations running smoothly.

Owner Training

Owner training is a valuable service offered by many management companies to help self-storage owners gain deeper insights into their property’s operations. By learning to effectively utilize operating software, interpret reports, and analyze key data, owners are better equipped to make informed decisions that drive the success of their business.

Owner training programs are designed to ensure property owners are well-prepared to engage actively in the management of their facilities. These programs often feature classes and workshops aimed at familiarizing owners with the tools and reports used in daily operations. Training sessions may cover essential topics such as navigating operating software, generating key reports, and identifying critical performance indicators that influence the property’s success. Additionally, owners often receive specialized reporting tailored to highlight specific aspects of their property’s performance. Training ensures that owners can interpret these reports effectively, using the insights to guide their decision-making and strategic planning.

Why Owner Training Matters

Owner training is essential for several reasons. It empowers owners to take an active role in their property’s success by equipping them with the knowledge needed for informed decision-making and effective strategy development. When owners understand the tools and reports provided by their management company they can identify opportunities, address challenges, and collaborate more effectively with their management team.

Moreover, training strengthens communication between owners and management companies. A shared understanding of reports and data fosters clearer alignment on goals and expectations, enhancing the partnership. Finally, owner training provides enhanced operational insights, enabling owners to spot trends and potential issues that could impact their bottom line. With this knowledge, owners can implement proactive solutions rather than reactive measures, safeguarding their property’s long-term success.

By investing in owner training, self-storage owners not only gain valuable skills but also establish a stronger, more collaborative relationship with their management team, ensuring the continued growth and profitability of their business.

Questions To Ask

When evaluating a management company, it’s essential to ask specific questions about owner training to ensure it aligns with your needs and expectations. Start by clarifying whether owner training is included in the contract or if it incurs additional fees. Understanding the scope of what is covered in these training sessions is equally important. Confirm that the training topics meet your requirements, such as learning to navigate software tools, interpret reports, and analyze key data.

Owner training is a vital resource for maximizing the value of your self-storage investment. By gaining a clear understanding of the tools, reports, and data that influence your operations, you’ll be better equipped to collaborate effectively with your management company and make well-informed decisions that drive success.

Additional Benefits

Partnering with a third-party management company offers self-storage owners a range of advantages that extend far beyond day-to-day operations. These firms bring access to key business relationships and discounts, allowing owners to benefit from bulk purchasing, vendor savings, and lower insurance rates. Their deep knowledge of software and technology ensures the deployment of cost-effective tools to streamline rent collection, enhance marketing through social media, and build a loyal customer base.

Third-party managers also provide expertise in legal requirements and regulations, helping owners navigate complex compliance issues while reducing liability. They often require customer storage insurance and implement robust standard operating procedures, further protecting owners from risks. Owners gain immediate access to national-level expertise, innovative sources of ancillary income, and a fresh, independent perspective to tackle critical business decisions.

With extensive experience in human resources, legal matters, and property insurance, these companies deliver value in areas that significantly impact profitability and operations. Owners should expect third-party managers to improve property performance through strategies that contribute directly to the bottom line. Beyond operational efficiency, the best management firms bring an owner’s mindset to the table, developing customized strategies aligned with the owner’s business goals. By leveraging these benefits, self-storage owners can achieve sustainable growth, reduced risk, and increased profitability.

Embracing Excellence

As the self-storage industry evolves, the growing adoption of third-party management services highlights a shift toward professional oversight and operational efficiency. Regardless of the management approach, one constant remains at the heart of success: delivering clean, dry, and secure storage spaces that meet customer expectations.

Achieving operational excellence requires daily attention to detail. Tracking calls, walk-ins, and conversion rates while responding promptly to web inquiries can significantly enhance customer acquisition and retention. Consistency through well-defined standard operating procedures ensures exceptional service and convenience, benefiting both owners and tenants.

Whether independently operated or managed by a professional firm, self-storage businesses that prioritize these principles will thrive. By combining customer-centric practices with a focus on operational efficiency, operators can create positive rental experiences, drive growth, and position their properties for long-term success.

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