Day 33: Setting Rents and Rate Strategy for Boat and RV Storage

Howdy folks, and welcome to day 33 of the Boat and RV 100 series. I'm Joe Downs with Storage Muggles, and today I'm showing you what operators inside this community actually do when they set and adjust rents, because most operators in this vertical are leaving real NOI behind every year without knowing it. Here's what I see consistently. Operators who bought a facility from a mom-and-pop owner inherit rates that haven't moved in 3 to 5 years, which is the opportunity. They know the rates are low. They're afraid to raise them because they don't want to lose tenants, so they leave money on the table indefinitely. The framework we use internally, and that's available to members at storagemoguls.ai, takes the guesswork out of that decision completely. Members of our community are becoming storage moguls, not someday, right now. And the way we define that word matters. A mogul is a sophisticated operator of real estate, someone who's mastered the full arc from sourcing a deal to running one well. We don't just buy storage; we acquire and we optimize. That's not a tagline; it's a discipline, and it tends to be worth tens of thousands of dollars per deal once you understand the difference. We're real people, husband and wife teams, neighbors, brother-in-law teams, everyday people just like you and I, just like I used to be actually. That's who's in our community talking deals, and we're actively evaluating deals between four hundred thousand and two million. The size you can finance and the kind you can actually close. I don't pick that range arbitrarily. There's a reason behind it. And if you want everything in this series backed by a community doing the same work, go to storagemuggles.ai, register. We are live in about 2 weeks. You can start free and advance at your own pace. Now let's get into today's episode. Rate strategy in boat and RV has 3 layers of complexity that self-storage doesn't, and they change the approach entirely. First is the space type mix. A facility with open-air, covered, and enclosed spaces has 3 different product tiers with 3 different market rates. Blending them into a single average rent hides the value of the premium spaces and prevents you from capturing the rate differential the market will bear For covered and enclosed storage. Price each type as its own product. Second is the seasonal demand curve. The tenant moving in during the fall rush is motivated by the boat coming off the water and a complete absence of home storage options. They are price insensitive. They need a space and your facility has one. The tenant renewing in spring has options. They could leave, try a competitor, or move their vehicle somewhere else for the season. Fall is your pricing power moment. Spring is your retention moment. The same rate increase lands differently depending on which season you implement it in. Third is the retention math. We built this on day 18. At 100 spaces, a rate increase that causes 3 tenants to leave costs you $525 per month if your average rent is $175. Plus the vacancy event. The releasing cost and the occupancy hit. So run both numbers before every rate action, not just the revenue upside. You got to look at the churn downside as well. Before you set or adjust rates, you need to know what the market charges. A 5-facility survey takes 2 hours and gives you the pricing intelligence that most operators skip entirely. Call competing facilities, introduce yourself as a potential tenant or prospective buyer. Researching the market. Ask what they charge per space by type— open air, covered, enclosed. Ask if they have availability. If they mention a waiting list, note it. That's evidence of supply constraint in the market. Visit in person if possible. Seeing the product behind the price matters. A competing facility charging $180 per month for covered storage in poor condition is different from one charging $195 for the same category but with better amenities. The price alone doesn't tell you where you stand competitively. The price plus the product does. Ask your dealer contacts. Dealers hear tenant conversations constantly. They know which facilities have reputations for being priced fairly and which ones tenants grumble about. The qualitative intelligence supplements the rate data. Survey quarterly as well. Rates move, particularly in high-demand markets during the fall season. A survey from 18 months ago is not market data. It's history. Build the quarterly survey into your operating calendar the same way you build in the fallout reach— 2 hours, 4 times per year— and you'll always know where you stand. And you have 4 general space types. Price each one independently. The covered enclosed spaces earn a real premium over open air, and operators who price them as blended average are giving away margin on every premium space they rent. Open air gravel is your highest volume, most competitive type. Market rate sets the floor here. This is where you'll see the most competitive pressure from other facilities and the most price sensitivity from tenants. Don't underprice it, but understand that pricing it significantly above market drives tenants to competitors. Covered carport storage commands a 30 to 50% premium over open air in most markets. UV protection and weather coverage are real tangible benefits that boat and RV tenants will pay for. Particularly for the high-value vehicles. If your covered spaces are priced between— priced within $20 of your open-air spaces, you're undercharging. Enclosed garage-style storage is your highest margin product. Limited supply, highest demand, and often the most price-inelastic segment of your tenant base. If your enclosed spaces have a waiting list, your rates are too low. Raise them until the waiting list shrinks to a manageable queue. Oversized and Class A RV spaces? Price by size, not just by category. A 45-foot pull-through space serves a different vehicle than a 30-foot standard space. The tenant with a $350,000 Class A motorhome has very few storage options. Price the scarcity, not just the space. The seasonal demand curve creates 2 distinct pricing windows, and most operators treat them the same way. And they shouldn't. August is your announcement window. If you're implementing rate adjustments for the fall move-in season, communicate them in August. 30-day notice is the standard. Existing tenants receive the new rate with their September renewal. New move-in tenants pay the new rate from day one. Fall is your pricing power window. New tenants moving in during September and October are motivated by necessity. Their boat is coming off the water and they need a space. They are significantly less price sensitive than tenants shopping in April. New move-in rates during the fall rush can often be set a full market rate or slightly above without meaningful resistance. Winter is a stability window. Your tenants are committed for the season. There's no reason to introduce a rate increase in December or January. It creates friction at a moment when the relationship should be stable and positive. Hold rates through the winter. Spring is your retention window. Tenants coming off their winter storage are evaluating whether to move their vehicle to the water for the season, and some will. For the ones who stay year-round or return in the fall, spring is when you invest in the relationship. A long-tenure retention pricing approach, modest discounts for tenants with 3+ years, keeps your stable base intact and signals the loyalty is rewarded. Or that loyalty is rewarded. Their loyalty is rewarded. Summer vacancies should be filled at current market rate, not discounted. A tenant who moves in during the summer knows the market and is typically making a decision based on availability. Don't discount to fill a space that will command full rate in the fall. Before every rate increase, run both numbers, not just the revenue math, also the churn math. Look at the revenue upside. $15 increase across 80 spaces. That's $1,200 a month, $14,400 a year. At a 7 cap, that's $205,000 in added asset value. That's real money worth pursuing. But factor the churn costs. If 3 tenants leave over the increase, you lost $525 per month at $175 at a $175 average, plus the occupancy drop, the re-leasing time, and the probability that the next tenant comes in at a lower rate during a non-fall period. So the increase may net out significantly less than $1,200 per month if churn is meaningful. The increase works when the revenue gain clearly exceeds the model churn cost. You have a waiting list that absorbs any vacancies at the new rate, and you're delivering it in the fall with 30-day notice. All 3 conditions together mean the math is strongly in favor of executing. Definitely wait when there's no waiting list to absorb vacancies if tenants leave. You're in the spring retention window, or the relationship isn't established enough to absorb the change without friction. Any of these scenarios— in any of these scenarios, the same increase at a better time produces a better outcome. The rate increase communication is a relationship management decision as much as operational one. So get the approach right. Personally addressed, not a form letter. Dear So-and-so is not enough. The tone needs to feel personal. For long-term tenants, especially the community, especially the communication from the new owner on a rate increase is a moment when the relationship either deepens or frays. So write it like you mean it. 30-day advance notice. That's the standard. It respects the tenant's planning horizon and signals that you're being professional as an operator, not one who surprises people with billing changes. In most states, 30 days is probably also the legal requirement for lease modifications. Provide some brief context for the change. Something like you don't owe a lengthy or you don't owe a lengthy explanation, but a sentence helps. Something like this adjustment aligns our rates with the current market for covered storage in this area. That sentence frames the increase as market-driven and not as being arbitrary. It's harder to argue with that than just silence. Use dollar framing as well, not percentage. Tell tenants their new monthly rate, not the percentage increase. So an example is your rate will be $195 effective October 1st is more digestible than rates are increasing 8.3%. The absolute number is what they can budget for. Make a personal call to long-tenured tenants. Your 5 longest-tenured tenants get a— should get a phone call before the letter arrives. You want to call and say something like, Wanted to reach out personally before you got the letter. I wanted to make sure this feels fair and that you're planning to stay with us. That call retains the tenant that a letter would likely lose. Rate strategy is not— rate strategy is an NOI strategy, and NOI strategy is valuation strategy. Every dollar of annual NOI you capture through correct pricing adds roughly $14 to $18 in asset value. At a prevailing cap rate in this vertical. The operators who leave money on the table by underpricing are not just losing income, they're compressing the value of the asset they worked hard to acquire. Remember to survey the market quarterly by space type. Know where you stand before you set any rate. 2 hours, 4 times a year. That's all it takes. And time it right. Fall is your pricing power window. Spring is your retention window. Winter is your stability window. The same rate increase executed in September produces a different outcome than the same increase executed in March. Run both numbers, revenue upside and churn downside. Every time an increase that generates $1,200 per month but costs you $800 per month in churn and re-leasing is a $400 per month improvement, not $1,200. So know your net. All right. Next up, day 34. Tenant retention, the operating standard that keeps your spaces full. The system and habits that turn first-year tenants into long-tenured anchors. All right. Like this video if the $205,000 in asset value from a $15 rate increase across 80 spaces hits a little differently than you expected. That's the leverage in getting pricing right. Subscribe by ringing the bell so you don't miss day 34. Retention is the other side of the rate strategy coin, and the operators who do both well, compound their NOI and their asset value year over year, and share this with your network. I'm doing the hard work for you. You just need to share it, reap the benefits of sharing later when you least expect it. And remember, rate strategy is one of the highest leverage tools available to an operator in this vertical, and most operators underuse it. The quarterly market survey only takes 2 hours. The fall rate implementation takes one letter. The NOI and valuation impact compounds every year. StorageMoguls.ai has the rate analysis template and the community to pressure test your numbers before you send the letter. It's free to join. Tools are there when you need them. Section 4 is building the operating playbook. Rate strategy today, retention tomorrow. By the end of Section 4, you'll have the complete framework for running a boat and RV facility that performs the way you underwrote it. So join Storage Moguls, price correctly, retain well, build real value. See you tomorrow.