frequently asked questions (FAQ)

At Executive Self Storage we are often asked questions by existing self-storage owners, individuals thinking about investing in the industry, developers, lenders, other store managers and other interested parties. Here is just a sample of one's that are asked often.

Q. I have heard that self-storage is a good investment. Is this true?

A. This depends on the location, the market and the ability for new competitors to enter the market. This also depends on how much you pay for a facility or how much it will cost you to develop a facility. Because the self-storage industry has grown significantly over the past decade, there are greater risks and much more competition.

Q. What should my expense to revenue ratio be? I have attended seminars and understand that in this industry, generally it is not over 35%. Is this true?

A. This is the most abused theory in the industry. While it is true that many facilities operate within this parameter, you need to consider several factors. For example, lets say you have a facility that generates $30,000.00 per month in revenue, is 50,000 square feet, and you operate in a high property tax district (Arizona for example). Lets say your expenses may exceed 12,000 per month, or an average of 40% of your revenue. Does this mean you are not operating correctly? Of course not. Each facility should be evaluated on how it performs relative to the investment. Now lets say you have another facility in a neighboring county that is the same size, generates the same income, but the property taxes are significantly lower. Lets say this facility operates at $10,000 per month or 33% of revenue. Obviously, the profit margin is greater but this does not mean the first property is a poor investment, it simply means that you have different obstacles to overcome in order to get the same margins. We do not assign a target expense to revenue ratio to our stores; rather we look at the overall business performance.

Q. How much should I pay my managers?

A. Your managers are the most important assets you have. Our industry has paid managers on a lower scale than other similar industries but recently many operators have seen the value of compensating mangers properly. If you want top professional managers, plan to pay them accordingly. This is also a market specific question, as the cost of living in say California is significantly higher than in say, Kentucky. This will play a key part in your compensation. Also, consider the size and type of housing provided (if applicable), benefits, vacation etc.

Q. Is it true that I should own a self-storage facility because there is not much work to making them run profitably and they do not cost much to build?

A. Nothing could be further than the truth. While it is true that most facilities operate with less than 4 employees, you have continual competition, you have to be knowledgeable about maintenance, accounting, legal issues, security, customer service and an abundance of industry specific items. Land costs have escalated over the past decade and so has the cost of development and construction. Be prepared to pay top dollar for your new facility.

Q. Are delinquent accounts a big problem for your facilities? What should my percentage of delinquents be?

A. Unfortunately in our industry we do have customers who for one reason or another do not pay their rent on time and become delinquent. We also have some whom we end up having to auction as a result of their actions. Delinquent accounts can be minimized by persistent, firm (not rude) follow-up by your management team. At Executive, we follow all applicable state and local laws with respect to collections and we train our management teams on how to collect them. We attempt to maintain less than a 4% delinquent rent rate for our stores.

Q. Should we offer discounts if we are having difficulty renting our spaces?

A. Each store has to be aware of its immediate competition and what they are doing and they need to be aware of what customers will react to. We encourage our stores to use time (1/2 month free with One full months payment for example) rather than price ($10.00 off a 5 x 10 for example) as a rent incentative where applicable. Since our stores generally are one of the best in the market, we feel that our ability to sell customers on our service, location, security etc will allow us to not have to offer discounts as an ongoing promotion.

Q. Should I include the managers in my budgeting process?

A. Yes. Managers can be very helpful in projecting rent fluxuations, delinquencies and other revenue generating areas. Managers should also be aware of the controllable expenses (supplies, maintenance, services etc) and can be helpful giving you ideas of how to save money without sacrificing service.

Q. Why should I use your management company to operate my store?

A. Executive Self Storage has been managing facilities for over 14 years. We are experienced, knowledgeable, and professional and have the ability to manage your property the way it should be operated. We are professionals who have been trained, continually update our training and are up on the latest trends, techniques and the industry in general. We have become one of the best-rated companies in the industry because we deliver what we promise.