How to analyze a Storage Facility

[Wala Habiby]

Good evening everyone, 

Trying to learn more about storage facility ownership and management. I am considering a small complex with less than 70 storage units probably to start off with. 
Few questions:
1) Anything I should be aware off specific for storage complexes other than the normal commercial property issues? 
2) Any software or excel sheet anyone can share with me to help me analysis a deal?

Anything anyone can add would be helpful as I have 16 residential properties and partnership in a shopping center but this side of the business is brand-new to me. 

Thank you everyone. 

[RJ Ewing]

@Wala Habiby I would strongly consider looking for a larger property. The challenge with something that small is that your fixed costs are not much different from a 200+ unit facility, but your gross income is soo much less. We typically won't touch anything less then 20k SF and prefer 30k+ SF. If we really want to get into a market, we might go down to 15k SF but we would also be looking for room to expand.

Do you plan on managing the facility remotely or with an on-site manager? A 70 unit facility most likely won't be able to support a on-site manager.

We run our facilities remotely and utilize a local caretaker for on the ground tasks.

When it comes to running numbers, my back of the napkin math looks like this:

Projected gross income (I'm usually looking at a $/SF number between the 10x10 and 10x15 sized units of nearby competition)
x 90% occupancy
- 35% expenses

= stabilized NOI

Obviously, this is a gross simplification, but is typically where I start.

If you do get into storage, you'll find that it is a great business to be in. But remember, it is much more of a active business then NNN.