Short answer: Mark watches four numbers at every facility he owns: physical occupancy, economic occupancy, delinquency ratio, and actual NOI compared with budget NOI. Together they show whether units are filling, whether tenants are paying close to street rate, whether rent is actually being collected, and whether the property is on track.
In more detail #
Mark’s view is that an owner should know these four numbers almost off the top of their head, whether or not there is a manager in place. Each one answers a different question:
- Physical occupancy: how much of the facility is rented. This is the main focus during lease-up.
- Economic occupancy: how much rent you collect compared with what you would collect if every unit were rented at street rate. This becomes the main focus as the facility approaches stabilization.
- Delinquency ratio: everything owed to you divided by your monthly gross potential income. It tells you whether collections and auctions are working.
- Actual NOI vs budget NOI: the monthly check that tells you early if the year is drifting off plan, so you have time to adjust.
Why NOI and not income or expenses on their own? Because a facility’s value is based on net operating income (income minus operating expenses). Expenses such as insurance and property taxes move around a lot, so Mark keeps his eye on the NOI target and adjusts revenue and expense strategies to reach it.
When managers know the owner is watching these numbers, they watch them too.
Related answers #
- What is the difference between physical and economic occupancy in self-storage?
- What is a self-storage delinquency ratio and how do you calculate it?
- Why should self-storage owners compare actual NOI with budget NOI every month?
Source: Mark’s post The Four Metrics Every Self-Storage Operator Should Track Monthly
