By Marc Goodin
Most investors start where they should: the numbers. They review rents, absorption, supply, expenses, taxes, site costs, and projected returns. Those inputs are essential, but they also create a dangerous illusion. They make a deal feel more certain than it really is.
The reason is simple. A pro forma assumes the project gets built on time, on budget, and with the unit mix and density originally planned. It assumes the entitlement process goes smoothly, consultants do their jobs well, the contractor executes properly, and operations begin with a real plan for marketing, pricing, and lease-up. If any of those assumptions break, the original numbers stop meaning much.
That is why smart self-storage due diligence must go beyond the spreadsheet. The real question is not only whether the deal works in theory. The real question is whether the team can execute in reality.
Costly construction delays
Every month you open late, you lose over $50,000 in revenue.
If your construction contract does not require the office building to be built first, it will take 1-2 extra months to open.
The time it takes to address/approve a change order will set back construction by double that time. So, if it takes 2 weeks to prepare and sign a change order, it will delay the project by 4 weeks.
If you don’t have a generic Letter of Intent reviewed by your attorney before you find land, add 2 – 4 weeks to the development time frame.
If you don’t have a pro on board who can do a quick back-of-the-napkin layout sketch, add another month to the development time frame.
If you wait to start the boundary and topo survey until after the contract is signed, rather than when the Letter of Intent is signed, it will delay construction at least one month.
The largest time delay and budget crasher is not having the right team on board before you look for land.
Costly operation time delays
If you don’t start training your manager at least 2 months before you open, you will lose 30% plus of your rentals. That could be a loss of 27 units rented. The math: 27 missed rentals x $160/unit x 14-month stay = $160,000 loss.
If you don’t start your guerrilla marketing 6 months (vs 1 month) before you open, you will lose 40 plus rentals ($90,000 Lose)
If you don’t call a prospect back in 5 minutes, they are calling the facility down the road.
If you miss out on one rental a week due to slow responses to missed calls, slow or no follow-ups in one year, you lose 52 weeks x 1 rental missed x 14-month stay x $160/month rent = $116,480. Loss
If a prospect visits your facility, they will typically rent a unit in the next 3 days. If you don’t call them back the next day, you will lose rentals.
If you tell prospects you will find out and get back to them, you will lose rentals. You need to have the answers.
If you didn’t take the time to prepare rental scripts, you will lose out on 20% of your rentals. Don’t forget the scripts on how to overcome the top 7 objections.
If you didn’t take the time to memorize the rental scripts, you will lose 20% of your rentals. Don’t forget to memorize your sales product scripts.
In self-storage, losses often come from preventable execution mistakes rather than from dramatic market collapse. These are not rare black swan events. They are common outcomes when owners rely on inexperienced consultants, hire the wrong contractor, or try to manage a complex project without a strong lead on their side.
Execution can be the difference between 100 units in 2 months vs 100 units in 6 months.
As CEO of Storage Authority Franchising, Marc Goodin shares his passion, expertise, and unconventional wisdom with busy professionals to help them develop their own self-storage while they continue their careers. He owns 3 self-storage facilities that he designed, built, and manages. He can be reached at marc@StorageAuthority.com or directly at 860-830-6764 to answer your franchising, development, marketing, sales, and operations questions. His best-selling self-storage books are available at Amazon.
Marc Goodin
860-860-6764