Self Storage advice/pit falls to avoid

[Jeremy Hunsberger]

I am doing research into the self storage niche of real estate investing. I am wondering what are some key markers to look for in a self storage deal that makes it a good deal? What are some key pit falls to avoid in doing the initial due diligence and offering process? Thanks for your time and help! 

[Michael Wagner]

HI Jeremy,  Have you checkout my little blog here on BP "All Things Self Storage"?  IT is a good entry level primer on storage.

When looking at facilities I try to find something that is underperforming and/or has room to expand.  This is where the real equity explosion comes in.  Of course, if it is an underperforming facility, you need to be able to identify why it is not performing to its potential and also ascertain whether or not you can fix whatever it is that is causing this.

As with any real estate, make sure you look at the assessed value that current taxes are based on.  If you go in and pay double what its assessed (which may be appropriate if the income justifies it) you need to know that your taxes will also double in the expense column.  One way to get around this (in some municipalities) is to but the real estate for the assessed value and anything above that price would be attributed to the "business, customer list, seller's good faith, phone numbers, leases, websites, equipment etc."  

Happy to answer other questions for you as you dig in.

Mike