Looking at purchasing 160 Storage Units.

[Justin Thiesse]

I am looking at a 160 unit storage unit complex. What should be the cap rate be? I figured 10% What are the occupancy rates should I figure? I used 85% but not sure how much turn over there is in storage units. I currently own apartments and I am a little scared of chasing 160 Rents that range from $70 to $200 a month. Any advice or thoughts would be appreciated. I do believe these units to be in a great location. Not behind a current business or in the middle of nowhere like most.

[Scott Meyers]

Hello Justin!

Good for you on being interested in Self Storage. I, too, was into residential real estate, specifically apartment units 10+ years ago, but then got into Self Storage investing and haven’t looked back. Why? Because the pricing model is very similar to apartments though a bit more profitable, and you do not have the hassle of toilets, tenants, or trash!

Regarding your specific questions and advice, here it is: Past 12 months Financials, then a 3 year rear view look, followed by a current market analysis within a 3 mile radius of Each Facility to determine the supply index and demand factors. Any Growth in these markets? Room to Expand?

And of course, the price must be in line with market cap rates for these smaller facilities. That cap rate depends on a few variables: where is the local market, what is the Class & condition of the facility, exact location within that market, & so forth. A stable occupancy, some say is 80% and others say 90%, so basically 85% is the best figure to use. 

Also, If you have any desire down the road to assign the deal, or do a JV, please message me privately.

@ Jay, John, Tyion, Gino, Jonathan, & Kris - thank you very much for the recommendation & kind words. Yes, my business model is to teach people the business, invest with them, & eventually mastermind. The best way forward is to constantly give value and do so with integrity. I’m honored to read your words.

To your Success,

Scott