If you have a multi-family or self-storage portfolio and are pushing 100% occupancy, you’re leaving tens of thousands of dollars a month in cash flow on the table. And millions if you were to ever sell or refinance. I feel very strongly that the top mistake that entrepreneurs make is not properly managing revenue. It takes risk, analysis, and guts to effectively manage revenue, but the best operators do it.
In any town in America, there are hundreds of properties with sub-market rent. For one reason or anything, the owners are not charging enough rent, and that spells an opportunity for us. I aim to push rents up until I’m at 85-93% occupancy, and that can raise property valuation by 20-40%.
This can be harder to implement if you have a small portfolio. But when you reach scale, there’s a huge advantage to it. You can start taking a data-driven approach to revenue management when you’re not worried about losing a few tenants. Your goal is to maximize revenue.
Our wheelhouse is to find markets where nobody has done the work to find true market rent, and then we do that work. We have a facility in Georgia where every local business was charging $60/month for a 10×10 unit, but everybody in town was full. Those that weren’t full were horrendous operators that weren’t answering their phones or generating leads. We’re now charging $139 for 10×10 units and increased our year 1 revenue by 60%. At a scale of a $1M acquisition, this can really multiply your property valuation.
We have a similar property in upstate NY, where every person in town fills up in April at the start of the busy season by charging $138 for a 10×10. That means come May, our company is the only one in town with a vacancy! We rented a 10×10 for $288 because we were the only ones doing the work to find true market rent.
If you are out of units, you are simply not charging enough money. If you’re booked out too far, you’re not charging enough money. Entrepreneurs need to find a way to charge the right amount. Effective rent management is incredibly valuable at scale. Oftentimes even if you wait you’ll have to raise the rent later on.
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