What to pay for underperforming asset like self storage

[Steven Garfield]

How do you determine what to offer for an underperforming asset such as self storage? Do you pay based on a cap of what the property is currently generating or based on what it could generate after you put your efforts into turning it around? From what I have seen many buyers are willing to do the latter, perhaps because they are hard to find in the current market. I am looking at a small 50 unit with no room to expand, no outside parking, with a cap based on asking price of about 6%. The property is in good shape but there is little opportunity to raise revenue other than raising rents which do look to be below market in some cases.