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One of the biggest questions we get asked is, “How much does full-service third-party management cost?” While there’s no hard-and-fast rule, there are a few factors to keep in mind, including:
Most management companies divide their fees into two categories:
Generally, the percentage of gross revenue can be anywhere from 5-10%, while tenant insurance percentages are much higher. For example, Extra Space takes 6% of gross revenue, before tenant insurance, and then takes 100% of the tenant insurance revenue as part of their standard fee.
Other management companies may charge a fixed fee, while others, like Crescendo Self Storage Management, structure a customized proposal based on the property and engagement details, and find a proposal that is reasonable for both parties. Contact us to get a customized quote for your facility.
The biggest factor affecting the cost of third-party management is the size and gross revenue of the storage facility.
The smaller the facility, the higher the fee will be as a percentage of revenue. On the other hand, the larger the facility, the more room there is for the management fee to be negotiated.
This may sound backwards, but the work to manage a storage facility doesn’t drop dramatically for a small facility with a small revenue stream.
In most cases, the cost to train staff, maintain the facility, improve technology, and implement high-quality management practices, largely stays the same despite facility size.
When it comes to managing a self-storage facility, no matter its size, there are financial tasks like producing reports and handling daily accounting. Even for small facilities, many operational procedures are necessary.
If your storage facility earns less than $50,000 in monthly revenue, you may need to find ways to fairly compensate the management team. One option is to include performance-based compensation in your agreement to motivate and reward the team. On the other hand, if your facility generates more revenue, management companies may be open to negotiating a lower fee than the industry standard. Managing a larger facility doesn’t necessarily cost significantly more in proportion to the increased revenue it brings in, so there may be room to reduce the standard fee.
Aside from an increased burden of customer service, the cost and effort to manage a large modern facility is not much more than the cost to manage an average-sized one. Since the cost and effort to manage a larger facility doesn’t usually grow in equal proportion to the growth in revenue produced by a large facility, there could be room for you to negotiate a reduction to the standard fee.
Another factor that affects the cost of third-party management is the complexity of your operation and the scope of your requirements.
If your facility makes $60,000 in rental truck revenue, management becomes more complex. Staffing needs alone make it more intricate than managing a larger facility without this additional revenue stream. We take such complexities into account when proposing third-party management services. Similarly, if you have numerous capital improvement projects beyond regular maintenance, we factor that into our proposal too.
We can assure that Crescendo Self Storage Management’s pricing is in line with other professional management platforms. You can find the many services that are typically included in our standard third-party management relationships in the link provided
It would be our pleasure to provide you with a proposal for third-party management services. Please call or email our team and share the details of exactly what you’re looking for. In the meantime, here’s a look at what it’s like to work with us.