01/21/2021
THE BENEFITS AND DRAWBACKS OF OWNING AND OPERATING SELF STORAGE FACILITIES...
Up until now, I have been writing my daily posts about the wonderful income tax benefits that you get if you build a self-storage facility through us at SELF STORAGE CONSULTING & CONSTRUCTION, LLC or the wonderful Net Operating Income that the facilities yield its owners. We can work with you and your professional team to get you back most, if not all, of the income taxes that you paid in the last 5 years and help you save income taxes going into future years. I have written about where to build your self-storage facility as it pertains to where in the United States you should build it and what you look for in neighborhoods where you are considering building them.
I did write one article that showed, for income tax purposes, that self-storage facilities are businesses but that was for the purpose of classifying the Net Operating Loss created by the huge Bonus Depreciation as an active loss or a passive loss. The two are treated very differently for income tax purposes.
But, owning and operating a self-storage facility, or a number of them as many people do, is a business with its benefits and drawbacks just like any other business. It is true that in any business where you rent out space, whether it is an apartment or a self-storage unit, you have to stay on top of your tenants to make sure that the rent is paid. In residential real estate, apartment buildings, as in self-storage units, each municipality or city has it's own rules as to your remedy if the rent is not paid. There is routine maintenance that must be performed to keep the facility working properly such as making sure that the rolling garage doors securing the units are all kept in working order and that the air conditioning for temperature-controlled units is properly maintained. And then, there is just routine cleaning to keep your facility looking good to appeal to prospective customers.
But when you compare owning and operating self-storage facilities to just about any other business it's one of the easiest businesses to run and one of the most economical. Self-storage facilities do not require purchasing and maintaining the right levels of inventories like other businesses have to. The only exception to this rule is if you sell boxes, locks, and supplies to your customers, which you should, and then maintaining your inventory is not like a manufacturing operation or a retail store. It's easy and the inventory is not expensive!!!
You have to make the decision at the beginning as to how many hours you want to devote to managing the facility or if you will be hiring full or part-time managers. You have to decide whether you are going to be open to your customers during set hours in the day, like 8 AM to 8 PM, or if you are going to stay open 24/7. If you have set hours you might just need two part-time managers who cover the facility during the day or, if you are always open to your customers, we can build an apartment for you on the property for your resident managers to live to accommodate their needs.
And, finally, there are computer programs out there specifically designed to help you manage your facility, keep track of rents, classify expenses and give you management reports at the touch of a key on your computer keyboard.
So, all and all, owning and operating self-storage facilities is one of the easiest businesses to run. You have to make management decisions before you begin operating the facility but not too many of them are critical and you will learn as time goes by and there are web pages for the self-storage industry where people ask questions based on situations that occur to them and the other members of the page are always very helpful in answering your questions and there are associations of self-storage facility owners that you can join as well.
My name is Paul Levine and you can call me at (818) 298 - 4000 7 days a week after 10 AM Pacific Time or you can send an email to me at "[email protected]".