Hi everyone. This is jim ross with self storage show. Uh, is gonna be a fun one. Got a great guest with me today. I'm not really. That's that's a long one.
Got sean delaney here with me. Senior vice president, investments with delaney stuff storage group, part of marcus and millichap. I got it all down.
How's it going, shaw? Good. Jim, how are you? Good. Thanks for taking time and being part of this.
Yeah. Thanks for having me. Yeah, e. I was kind of time before I do a lot of operations and management marketing for all the sights and all that. Over the years, I always tell people a lot about, you know, building value in your properties and how you can do it. But I saw you. I think your article linked in or something like that.
I was talking about building value for properties as far as, like, the brokers perspective. Sure. All right, we gotta talk about that.
So before we get into that, just kind of let us tell us a little about yourself. Your group, what you got going on, then? We'll kind of get in the rest of everything else.
Yeah, so so were the delaney self storage group were you know, we worked with marcus and millichap were based in chicago. I started working with markus back in 2000 and three. Always been focused on self storage and just slowly growing the team over the years. So we've got myself and four other gentlemen eso we really don't consider ourselves brokers. We consider ourselves advisers.
Eso i'm sure we'll touch on that in a little while. But, you know, we work primarily in the midwest. We've done some work in other parts of the country, but, you know, we spend our days trying to help and advise and add value thio self storage owners.
That's great. That's it's again. It's so many times i'm talking with owners and, you know, we're just talking about, you know, a lot of times lead from contacting me. They kind of have an exit plan.
They know what they want. They want to sell it eventually. That kind of thing we start talking about, okay, where you at? How do you want to get there when we start kind of building that plan and building, building value and everything.
It's amazing some of the things that you could just do and implement just the crazy effect that can have on the value of a property. So i'd love to get your perspective on that kind of stuff.
Yeah, that's that's, you know, we're not on the operation side, so we're not experts on the day to day operations. But we evaluate hundreds of properties a year, you know, from the institutional size properties down to the you know, the smaller, you know, 20,000 square foot, 25,000 square foot kind of quote unquote mom and pop site so way have, ah, pretty good understanding of you know what the revenue side looks like and certainly on the expense side.
So, you know, we do the same thing. We look at an owner's p and l and, uh, you know, try and help them. If there's an expense issue, you know, primarily we see you know, insurance that's out of whack. Or we just talked to an owner yesterday and I looked at his numbers and what he was paying on this merchant credit cards.
And from the numbers I saw, he was paying, like 7. 5%. Oh, you know, if we could get him down more into what the what the market is that will save him on an annual basis. 2 to $3000 a year, you know, and on a smaller site that will add 50 $75,000 to his value.
And that's just one expense line. Break that down from a real quick for people that are listening to this. I'm watching this again. Those little things like you just talked about a couple grand a month that you can possibly saving.
Okay, then you say, now that's that's building value of 75 grand. How does that work? Where's that value come from?
Well, so some of that is obviously depending on when his exit is right now what he was paying around his merchant credit card fees versus if he was paying. You know what kind of the market rate, I think is probably in the 2% you know, 1. 752% range.
That would save him annually a couple $1000 or more that he, you know, just drops to the bottom line drops to his n l I s o that makes his cash flow better. Uh, that was just one line item. So he's not ready to sell today.
But at some point in the future, you know that increased? No. I is going to add value assuming cap rates stay where there had if cap rates move if the market moves, obviously, values adjust.
But again, that's just one line item. So we typically see on some of the smaller sites the mom and pop operators, maybe a little less sophisticated. Don't pay attention to their expenses.
You know, that's where we can help add value pretty quickly, you know, because they could change their insurance. They can change, you know, merchant credit card processors.
So we can add value even if they're not selling right now, we can add, you know, cash flow to their bottom line.
Yeah, exactly. And that xyz funny. You kind of get that mindset of value. Not just here's a dollar terry amount. You know what? I'm you know, saving or what i'm making more each month. But putting that hypothetical cap right on it, I know what fluctuates kind depending on where you're at in areas.
But just having that value mindset, it's a huge difference. You know, that's I talked orders all the time. I like my owners, and sometimes they're cheapskates.
That's just how it goes. Sometimes way go through their p and l's and and just have those kind of conversations, too, right?
What's this? And what's that? We start kind of just asking the right questions when you're kind of going through your european els and your it's amazing how much you could start saving.
It's not just about penny pinching. It's about, you know, expenses. Make sure that your where you can get the right same service for the less money.
Great, uh, kind of on the flip side, as far as like bringing in more and getting more revenue. What have you guys seen on this faras getting that going?
Yeah, so I mean, if if an owner wants us to evaluate, you know their property and and provide them, you know, price, you know, evaluation.
We look a you know, obviously we look at their their p and l's and what their revenue is, but then, you know, we dive into the market.
Maybe they don't keep track of the rates of the competitors. So you know, we dive in and try and get an understanding of where street rates are at, try and get an understanding of what the other properties air actually achieving.
You know, not just what their website says, but what they're actually achieving. And then we can, um, provide them a little more insight into the market and how they stack up against the competition.
And then a lot of cases, you know, some of the smaller owners that we deal with, they don't pay attention to that.
They haven't raised rates. You know, it's not uncommon for us to hear, and owners say I haven't raised rates in five years, so make sure break out, you know, so depending on, you know, and some of the some of the owners we deal with, they've got a full time job.
The storage site is not a hobby, but it's just an investment, and they're not paying attention to it on a daily basis, so we can add value, you know, right there, they can implement some rate increases. They've got tenants that have been in there for five years, and you know, there 10 15 20% below market.
So that's an immediate, you know, boost to their in a lie. Yeah, and again, like I said, it z not just having that.
Okay, now we're getting more better street rates for raising from our current customers. That's great. So we slept on that, you know, like operating that value.
That's that's insane. I look at it sometimes. I just had this conversation with somebody not too long ago. I was. I do like it's 30 minute consultation type of deals.
We sat down like about 30 minutes. I realized it was about two grand a month. They were leaving on the table, and this was just it was just this was this revenue we weren't looking at. Anything else is revenue.
And we slept like a seven cat right on and look at it like, well, there's 400 grand. Wait, what kind of reverse engineering? How it works. And was like, you could see, you know, the kind of going crazy and like, yeah, that's that's the power of talking about every every dollar to the n y adds value.
It z insane. What it can happen. I'm curious. Not if you can answer this or not, but as far as like when the owner wants to sell their property, uh huh. For when they're making these changes like we're talking about, we're cutting expenses and looking at the credit card fees and the ravens, their rates, that kind of thing.
Does it have to be implemented and kind of have a history for like the time before that could be taken? Account of saying like this is the true generation of revenue right now there's there's a lot of there's many instances where, you know, like in the market today, where I think we still have a lot of runway left.
You know, if owner can implement better expenses, if they could make those adjustments and then obviously, you know, increase their street rates, you know, move up some of their attendant rates.
Um, hold it for six months because I don't think the market's gonna move, you know, in the next six months or nine months, I think we still have a lot of runway left.
Um, it also depends on what you know. They want to do. What's their motivation if they're not in a hurry to sell you know, hold it. Don't leave money on the table if we still have runway.
So it's really you know, but in many instances, we advised our owner potential client. Now is not the right time to sell hold. It implements, um, changes.
You know, make those adjustments grow, urinal i, and you'll put more money in your pocket, you know, 69 and 12 months down the road.
Yeah, exactly. And sometimes you don't have to have that short term perspective, have that long term perspective, and then make those changes now more money in your pocket immediately. So, yeah, why not do that?
That's so that that's kind of a double edged sword to, because if they implement all those changes and they get their their current, you know, attendance up to st rates and they push their street rates up to market and they make expense adjustments, you know?
Now when the next guy comes along, what's left? How much meat left on the bone? Is there any value add, you know, how do they make money?
So it z sometimes a double edged sword. It's a it's a fine line. Yeah, I actually think about it. That way. I'm so usedto being on the owner's side and try to get them as much money as possible. And I didn't really think about it from the buyer's perspective, that's true.
Uh, I gotta think about that one. Interesting. So anyway, as far as for for you guys in your group, yeah. How are you?
Like people reaching out to you and they say, okay, I wanna so kind of walk me through a little bit of that, how it works when they work with your company. Yeah, we've had certainly had more inbound phone calls. People wondering, you know, what's my property worth? Should I consider selling now?
You know, obviously, you know, storages weather this storm very well. Probably better than some expected, you know, going into the health crisis and then the financial crisis and people were worried from the onset.
Um, and I don't think any of those issues really came to fruition as faras delinquencies and move outs and lack of moveon. So, you know, it's whether the storm really well, you know, people are taking notice, certainly from the buyer side and sellers, you know, an owner they're experiencing, you know, very good operations and strong analyze. And there's lots of capital flowing into the market, and that is still historically pretty cheap. So that was a good time to be in the market if you're a seller. So, yeah, we're doing more evaluations today, probably than we ever have getting more inbound phone calls with people wanting to know what their properties worth rather than you know, us proactively calling.
I think if we can help with any you know, any issues or what their plans are yeah, I was curious about that. I've heard that from a few people going, this is you would ask us this nine months ago. It had been like a little little wary, little scary. But, oh, gosh, we're end of the year right now and it's like they're looking back like this is the best year we've had its if, like, you know, from liking operations and managing sites and and, you know, looking at their p and l's all the time. It's the best year we ever had, and I would have lost that that 10 times over. You know, the beginning of the year. I was just like I was a nervous wreck.
It just shows you the power of this investment. It's just stay standing or it's always going up. It's it's crazy. I don't know what else can really.
I have no more hits we can take to see if it's gonna have a negative effect of this. I don't know. It's pretty resilient. It's amazing.
Very resilient. Eso yeah, I mean again, people are listening to this. You can always try toe have as much value education is possible, but I want people to take away of when is this time you pull the pnm honestly, just sat down and looked at the line items and just been and ask yourself those questions. You know, what can we do to maximize? What can we do? Toe? I'd be more efficient, right? And this is a whole another conversation. But there's so much more technology that's out there right now, and there's a lot of systems in place that will help people with that dramatically.
You know, you see, some people have been around mama pops. I mean, I love my mom, pop, that's that's my bread and butter.
But sometimes it's like a time work. You look at their stuff. It's like the same thing that they had 15 years ago, made any changes or actually gone through and looked at their looked at the revenue. And, you know, you're talking about that one guy hasn't had a rate increase in, like, five years.
It happens e every kind of sick or head because we're in it every single day. Like, what are you doing? Just, you know, take a look at it.
We saw the we saw a to property portfolio in illinois. I won't say the city that was doing but the owner at the time when we sold it, his, uh, mantra, if you will, was I will never raise your rates.
Yeah, yeah, there's ah, yeah, there's way deal with the gamut of, you know, the operators like that who just wanna run a unit and, you know, kind of set it and forget it. Not worry about revenue management can work with the sophisticated people who are implementing, you know, very strategic revenue management systems.
Oh, it's always that might come back for that because I hear that all the time. My come back is always well you've got in this business and your obviously a great businessman. You got in the storage business, right? Oh, yeah. That's great business. My, what do you have against money?
What kind of makes it bad for a second like, well, what do you have against money? And i'll do that quick breakdown of just a little bit of value.
How much value can be brought in from from revenue increases. And sometimes it's just a matter of they're my customers. They're my customers.
I'm not gonna be like those other guys, you know? It's like us versus them kind of a thing. And I kind of part of it. I kind of get sometimes, you know, it's it's their customers and all of that they want to take care of them. But the same time this is a business.
And there's there's so much tools at our disposal of what we could dio to kind of turn different levels, something to really optimize the revenue for our facilities. So, hoping to have this kind of conversation, I just want to spur people, you know, as I was listening to some i'm watching these thieves sessions off.
Yeah, just sit down. You don't go through it and sometimes on if you guys do this. But if they could just maybe call, maybe, you know, bouncing ideas off to you guys and and talk it through with. Sometimes you could start seeing some of the value that they're being on the table, you know, because it z talking to somebody else is so much better than just kind of being in your own bubble, trying to solve your own problems.
Yeah, people we have, we have owners call us all the time asking about expense issues, expense questions, you know, they call and they call me and say, you know, can I raise my rent? 5%. Can I raise my rent? 10%. And i'm gonna lose that many customers. And what happens if I dio eso?
That's ah, you know, that's a concern. So you know, the majority of the evaluations you know that we do on an annual basis don't necessarily turn into a listing for us to sell its more of, ah value that we provide to the owner.
Some people, we do it twice a year, you know, we put him on like a strategic analysis, and they want to see what what their sights worth, you know, a couple of times a year, maybe, you know, maybe more, depending on what's going on in the market. But just a snapshot of, you know, what's the property worth?
It could be a partnership issue. Could be a divorce. Could be whatever. Just another update on what the property is worth.
So, you know, that's just what we do. And again, it's more of an advisory capacity than it is. You know, a broker with my broker had on calling somebody saying, do you wanna sell?
How can we add value to your world? Now? I love that. That's a great distinction, you know, you know, advisory, that that's perfect.
So let's end on that so people don't want to get more information. And if this is sparks, um, interesting. And as far as i'm realizing, it's time to kind of nothing else kind of see where the rat right now having that kind of benchmark, it's seeing whether their value of their property is have a consultation, see where you want to get to kind of build that plan. So that's fantastic.
I've been listening to this. Wanna move, move forward. How do they get a hold of you. My office number 6305702267 email is sean dot delaney at marcus millichap dot com. They can find us on facebook and linkedin delaney storage group.
Perfect. I'll make sure for everyone is listening to this on all the video channels and that will make sure we have all the links, everything as well. So they can easily get hold of you and then take the next step.
Yeah, that be great. All right. Thanks so much for taking the time, shaun. Take care. Thanks, jim.
Jim chats with Sean Delaney. Sean is a Senior Vice President Investments and Senior Director, National Self Storage Group in the firm's Chicago Oak Brook office. As a Senior Vice President Investments, he exclusively represents buyers and sellers of self-storage properties throughout the country. Sean has more than 16 years of experience in the self-storage industry and has closed real estate transactions valued over $828 million during his career.
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