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High mortgage debt (~$19.8K/month) is the primary cause of negative cash flow despite decent NOI.Property taxes and interest expenses are substantial fixed burdens.Management fees: Consider renegotiating or switching to self-management to save ~$2,300/month.Marketing spend: Reduce paid ads (like SpareFoot) if occupancy remains healthy; focus on free channels.Utilities & maintenance: Cut non-essential repairs, negotiate lower trash/snow removal costs, install LED/motion sensors.Credit card fees: Encourage ACH payments or charge card fees where legal to reduce ~$700–800/month expense.Insurance & property tax: Shop insurance and explore appealing property tax assessment post-sale.Gradually increase rents where possible—5% increase could yield ~$1,200+/month.Enforce late fees and add admin fees for move-ins.Maximize ancillary income: tenant insurance, retail sales (locks, boxes).Target full occupancy during peak seasons and avoid unnecessary concessions.Explore refinancing or loan restructuring (e.g., longer term or interest-only) to reduce monthly debt service.
Balanced market: many small operators but not severely overbuilt.Midland has ~8–10 facilities; mostly local, traditional drive-up types.Market occupancy strong: Arnold Self Storage was 96% full at time of listing.Rental rates: ~$60/month for 10×10 drive-up units—lower than national averages.High demand remains for affordable, easy-access storage.Competition limits pricing power, so occupancy is more critical than aggressive rent hikes.Supply mostly consists of drive-up units; pricing remains tight.Climate-controlled units are scarce—Arnold has a competitive edge here and can charge higher rents.No major new facilities under development nearby (as of last sale)—limiting new direct competition.Market stable but competitive; success depends on operations and pricing discipline, not market growth.
Management and Staffing Fees: The property pays a management fee of ~$2,300 per month (around 9% of revenue). If possible, renegotiating this fee or switching to a lower-cost management solution could save a significant amount annually. In an extreme case, an owner-operator approach (self-management) could eliminate this expense entirely, immediately improving cash flow by $2,300/month. Similarly, “boots on the ground” staffing costs were paid in some months (several hundred dollars) – ensure that any on-site labor is truly necessary and not duplicative with the management services.Marketing and Advertising: In late 2024 the facility spent heavily on marketing (e.g. website development and online ads). SpareFoot listing fees and web marketing alone were running in the mid-hundreds per month (e.g. ~$1,000 combined for December 2024). Now that occupancy has improved (up from ~66% in Jan 2025 to ~88% by mid-2025), you might scale back paid advertising to maintenance levels. For instance, if you are paying for SpareFoot/PPC ads to drive occupancy, consider tapering that spend once you stabilize above, say, 85% occupancy. Reducing marketing spend by a few hundred dollars monthly (while monitoring occupancy) can help cash flow. Focus on free/low-cost marketing (Google Business profile, local outreach) instead of expensive pay-per-click if units are mostly occupied.Credit Card Fees and Bank Charges: The financials show credit-card processing fees around $700–800 per month. This is a necessary cost of convenience for tenants, but you could explore ways to reduce it. Options include encouraging ACH payments (often lower fees), offering small discounts for cash/check or ACH autopay, or passing on a convenience fee for credit card use (if legally permissible). Even a 10–20% reduction in processing fees would save ~$1,000+ per year. Also review any other bank fees – e.g. a one-time bank charge of $142 in Dec 2024 was noted – and ensure there are no unnecessary account fees.Utilities and Maintenance: Utilities run around $500–$1,100/month, with spikes in waste disposal costs (e.g. $648 in one month) and seasonal expenses (snow removal, etc.). To save costs: negotiate with the trash removal provider for a cheaper rate or less frequent pickup if the dumpster isn’t always full. Ensure lights are LED and on timers/motion sensors to cut the electric bill. For repairs & maintenance, the facility spent over $2,000 in some winter months on landscaping/snow and maintenance supplies. See if any maintenance can be deferred or done cheaper (but avoid compromising security or curb appeal). For example, if you have a snow removal contract at a flat rate, you might bid it out or pay per push to potentially lower the average cost.Insurance and Property Tax: The facility’s property insurance is about $780/month (roughly $9,360/year). It’s wise to shop the insurance policy around at renewal – even a 10% premium reduction would save nearly $1K/year. Similarly, property taxes are a large fixed expense (the facility is assessed at $769,600 and paying roughly $38K/year in taxes, i.e. ~$3,200/month). Investigate if the assessed value is fair – if the recent purchase price or current market value is lower, an appeal to the local tax assessor could potentially reduce the tax bill (Midland’s millage rates could be yielding that $38K – if over-assessed, contesting it might shave this down). While these two items are harder to change, any savings would directly improve cash flow.Interest and Debt Structure: Since the mortgage costs are the main drag on cash flow, explore if there’s any relief possible here. For example, could you refinance either loan at a lower interest rate or extend the amortization period to reduce monthly payments? Even a temporary interest-only period or modification could help (noting that one loan is SBA – any prepayment or refi would need careful consideration of fees). The interest rates implied by the financials are relatively high (the notes show about $15,000/month in interest combined on the two loans), so if market rates or loan terms have improved since origination, refinancing might lower that. Of course, any refinance should be weighed against costs, but given that financing is the difference between negative and positive cash flow, this is a key area. Example: if monthly debt service could be cut by even 15%, that’s nearly $3,000/month saved, which would have turned several recent months cash-flow positive.Revenue Enhancement: In addition to cutting costs, boosting revenue will help cover fixed expenses. The facility is already implementing tenant insurance (around $600–$900/month in income from insurance commissions) – ensure as many tenants as possible carry the insurance so you get those fees. Also consider selling locks, boxes, or moving supplies at the office to generate a bit of retail income (the listing noted opportunity for merchandise sales). Most importantly, gradually increase rental rates where market conditions allow. The investment listing for Arnold Self Storage highlighted that many units were below market rates. If occupancy is back in the 85–90% range, test modest rent hikes on renewing tenants or new move-ins. Even an average rent increase of 5% – if the market supports it – would add roughly $1,200+ to monthly income (given ~$25K monthly rent roll), which goes straight to cash flow. Be mindful of competition when raising rates (see market analysis below), but don’t shy away from bringing long-term tenants closer to market rates, especially for drive-up units that are in demand.
Existing Supply of Drive-Up Facilities: There are several self-storage facilities serving Midland, mostly offering drive-up access units. Arnold Self Storage itself has 166 drive-up units (and an additional 104 climate-controlled units). In addition, local competitors include All Seasons Storage Center (1795 E. Airport Rd) – a brand new facility that opened recently, featuring both climate-controlled and easy drive-up units. Another is Affordable Storage of Midland (located between Sanford and Midland on Saginaw Rd), which offers convenient drive-up units in a fenced, well-lit lot. Bakus Self Storage (6812 N. Saginaw Rd) is yet another Midland facility – it has traditional drive-up units and recently expanded by adding new buildings including climate-controlled units. There are also a few other smaller facilities noted in the area (e.g. “South of Town Storage” and “Premier Plus Storage” mentioned on local forums/Yelp, likely offering basic drive-up units). Importantly, no major self-storage REITs (Public Storage, Extra Space, etc.) have facilities in Midland itself – the nearest large operators are in Saginaw or Bay City (~15–20+ miles away). This means the Midland market is primarily served by local and regional operators, and drive-up units remain a key product type.Recent and Planned Additions: While Midland isn’t overrun with storage, there has been new supply coming online in the last few years. As mentioned, All Seasons Storage is a new state-of-the-art facility (opened in 2023) that introduced more climate-controlled space to the market. Bakus Self Storage’s expansion added additional drive-up capacity (and some climate units) in late 2022/2023. In addition, a unique project was approved in 2020 for a facility on Waldo Avenue targeting large drive-up units for boats/RVs and contractors – essentially oversized storage bays where businesses can park trucks and equipment. This indicates an attempt to tap into unmet demand from commercial users for drive-up storage of larger items. The important takeaway is that the supply of drive-up storage in Midland has been growing through these new projects. However, the recent investment listing for Arnold Self Storage noted “no known developments within a 5-mile radius” of the property. In other words, while new facilities exist in the Midland area, none are immediately adjacent to Arnold’s location on N. Eastman Rd. The closest new competitor (All Seasons) is roughly 5–6 miles away on the other side of town. This somewhat limits direct competition for Arnold’s drive-up units, though any added capacity in the general market can still influence pricing and occupancy.Occupancy and Demand Trends: Demand for self-storage in Midland appears to be steady, albeit with some seasonal and competitive pressures. Under its previous ownership, Arnold Self Storage was reported to be 95.9% physically occupied around early 2022 – essentially full. This suggests that at that time, the local demand was strong enough to fill nearly all units (especially drive-ups) when rents were at their then-current levels. After the new ownership/management took over, occupancy dipped – the property was 82% occupied at the time it was listed for sale again (approximately 2024). During 2025, occupancy at Arnold fluctuated, rising from around 66% up to the mid-80s by summer (likely due to aggressive marketing and perhaps rental concessions) before stabilizing around 80–82% by fall (which might reflect normal seasonal move-outs or rent increases causing some churn). An 80%+ occupancy rate is still reasonably healthy and indicates that there is solid demand in the area for storage, particularly drive-up units at the right price. Competing facilities also show strong occupancy: many local operators boast high fill rates anecdotally, and no facility is advertising being mostly empty. It’s worth noting that Michigan’s overall self-storage utilization is modestly below national averages (Michigan has about 4.38 square feet of storage per person vs 5.4 sq ft nationally), implying that the state isn’t oversaturated. In Midland’s case, one estimate (using the ~46,000 sq ft at Arnold plus other facilities) suggests roughly 1–2 square feet of storage per capita in the immediate trade area, which is quite low. This low supply per capita historically contributed to high occupancies. Now that a bit of new supply has been added, occupancies have normalized to the 80s percent range instead of the mid-90s – but this is still a decent equilibrium, and it indicates demand is keeping up with most of the supply as long as rates are competitive.Drive-Up Unit Demand: Drive-up (non-climate) units remain in high demand because many customers in Midland simply need a basic garage-like space for furniture, tools, seasonal items, etc. They tend to be cheaper than climate-controlled units and very convenient (just back your truck up). The fact that new facilities like All Seasons and Bakus included drive-up units (and not only climate) signals that local developers see continued demand for this product. Drive-up units likely comprise the majority of occupied units across Midland’s facilities. Seasonality plays a role: demand often peaks in summer (when people move, college students store stuff, etc.) and softens in winter. We saw Arnold’s drive-up occupancy peak mid-year and then dip slightly – that pattern is common in the upper Midwest due to winter slowdowns. It means in colder months, you may need to be more aggressive with promotions to keep drive-up units filled, whereas in spring/summer demand naturally upticks. Also, customer preferences in Midland may favor drive-up for certain uses (e.g. contractors love drive-up units for easy daily access to equipment). The specialized Waldo Ave project underscores that even larger format drive-up spaces (for boats/RVs and business storage) have a market here.Competition and Rates: With multiple facilities in town, customers have choices, primarily among independent operators. As of now, rental rates in Midland are relatively affordable compared to national averages. For example, Arnold Self Storage has advertised units like 5×10s around the $60–$70/month range (often with move-in specials). Competitors have similar pricing – some even lower for small units (one Saginaw facility, 15–20 miles away, lists 5×5’s as low as $22, though that’s a climate-controlled promo rate in a more competitive city). In Midland itself, drive-up 10×10 units generally rent in the ballpark of ~$75–$100/month (depending on exact location and condition). Because of the recent uptick in supply, operators might be hesitant to push rates too high for drive-ups. The market likely requires competitive pricing to maintain high occupancy. On the flip side, the limited availability of climate-controlled options in the area means facilities that do offer climate units (like Arnold, All Seasons, Bakus) can charge a premium for those. Many customers, however, will opt for the cheaper drive-up unit if their storage needs don’t absolutely require climate control. Thus, drive-up units should continue to attract the bulk of renters on price sensitivity, as long as there isn’t a drastic oversupply.
Supply and Demand Arnold
🔹 Financial Overview & Recommendations
Key Challenges:
Cost-Saving Opportunities:
Revenue Growth Tactics:
Structural Improvements:
🔹 Midland, MI Self-Storage Market Summary
Supply & Demand Snapshot:
Drive-Up Unit Trends:
Opportunities:
Financial Performance and Cash Flow Improvement
Current Cash Flow Situation: Arnold Self Storage has been operating with positive net operating income (NOI) but still ending up with negative cash flow after paying debt service. For example, in early 2025 the facility generated roughly $13–15K in monthly NOI but had about $19K in combined mortgage payments, leading to net losses of several thousand dollars per month. The primary reason is the high debt service burden – two loans (a bank loan and an SBA loan) together cost about $19.8K per month (including interest). This outpaces the facility’s income, so even though operations are profitable, cash flow is negative.
Key Areas to Review for Savings: Based on the financial statements, here are potential areas to pull back costs or boost income in order to achieve positive cash flow:
By combining several of the moves above – trimming discretionary marketing, controlling maintenance/utilities, possibly cutting management costs, and nudging up revenues – you can chip away at the ~$5K–6K monthly shortfall. It may not be one silver bullet but a series of smaller optimizations that, together, bring the monthly cash flow into the positive. For example, a scenario of $3K cost reductions (via management fee negotiation and marketing cuts) plus $3K extra revenue (from fuller occupancy and small rate increases) would essentially break even on a ~$6K deficit. Continual monitoring is key: track the effects of each change on occupancy and tenant satisfaction, and adjust as needed.
Self-Storage Supply and Demand in Midland, MI (Drive-Up Focus)
Market Overview: The property is located at 3577 N Eastman Rd in Midland, MI. This is a mid-sized market – the population within a 10-mile radius is about 72,700 residents with a healthy average household income around $97K. Self-storage demand is driven by local residents (for personal storage during moves, downsizing, etc.) and businesses (for inventory, files, contracting equipment, etc.). In Midland, a lot of the existing storage supply consists of traditional drive-up units (non-climate-controlled), which have been the standard offering historically. Climate-controlled space has been relatively limited in the area, although that is beginning to change with new developments. Here’s a look at supply and demand factors for drive-up self storage in the Midland market:
Outlook: Overall, the supply and demand for drive-up self-storage in Midland appear to be near equilibrium, with a slight lean toward oversupply recently due to new facilities opening. Occupancies in the low 80% range indicate the market absorbed the new units but with some pressure on pricing/occupancy compared to the 95%+ days. The good news for an owner is that demand drivers in Midland are stable – the population is fairly steady (Midland isn’t rapidly shrinking or anything) and composed of homeowners and businesses that use storage. Also, the high local incomes and home ownership rates mean people have the means and need to store belongings during life events. Going forward, you should keep an eye on any new projects: the Marcus & Millichap listing noted no new construction within 5 miles, but it’s wise to monitor city planning meetings or news for any upcoming storage developments. If no major new facilities come in the immediate area, the existing supply should lease up over time. In fact, as the new facilities (like All Seasons) fill their units, the overall market occupancy should rise again, potentially tightening and allowing for rent increases down the road.
Drive-Up Focus Conclusion: In Midland’s self-storage market, drive-up units remain a core offering and generally see healthy demand, but recent supply growth has introduced more competition. Customers can choose from multiple facilities offering drive-ups, so maintaining competitive rental rates and excellent service (clean, secure premises) will be key to keeping units filled. The facility’s location on N. Eastman Rd is advantageous (adjacent to a busy area with ~5,200 vehicles/day passing by) – use that visibility to capture drive-by renters (good signage, curb appeal). Given the current environment, aim to maximize occupancy of your drive-up units through the spring/summer, even if it means using promotions, so that you’re capturing dollars that would otherwise go to a competitor. The demand is out there – the fact that Arnold was nearly full before and the overall per-capita supply is not excessive shows that with the right management and pricing, you can achieve high occupancy again. In summary, Midland’s supply of drive-up self-storage has grown but is not drastically overbuilt, and demand from both residential and commercial renters for these convenient ground-level units should continue to support the facility’s leasing efforts as you work toward positive cash flow
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