Self-storage facilities these days are often small, mom and pop operations that have not modernized with the times. This makes value-add deals very attractive, wherein low-performing properties are bought for pennies on the dollar compared to their potential worth, and then they are spruced up to maximize rents and eventually ROI.
Sometimes, adding value is as simple as streamlining the rental process. Many facilities still employ expensive management structures, having someone on-site at all times to hand out keys and take payments. By using modern payment kiosks, this cost can be avoided entirely. Similarly, tenancy rates are often very low at these mom and pop operations due to a lack of marketing. By setting up a website and running a comprehensive marketing campaign, you can expect to raise tenancy to around 85% for a huge value-add.
Finally, value can be added by building more units. This can involve making better use of existing space on the property: lowering the amount of space used for parking or turning some common spaces into more units. However, it is also common to buy adjacent land to build totally new units on, expanding the scale of the business and dramatically increasing its value.
Finally, in areas that require high-end self-storage, the addition of climate control and other amenities can be a great way to get more money per square foot in competitive markets.
