Estimated Costs to Build Self Storage Facility

[Kyle Bryant]

My family owns about 3 acres in a semi-rural part of Montgomery County, Texas. We recently found out that the new "Aggie Super Highway" from Houston to College Station will have frontage on our property. So we have been considering building a self storage facility on the lot in anticipation of the future growth. Aside from market considerations, I have a few questions:

-How many rentable square feet can I reasonably fit onto 3 acres? About how many units?

-What is the estimated cost to build a decent facility in that part of Texas (cost per s.f. or similar)?

-What is a reasonable profit margin per unit per month (or something similar) to expect for self storage units? 

Keep in mind we already own the land, but there's nothing on it. We'd be starting from scratch, and we would want to use a management company. This would be for stable cashflow. I know self storage is all the rage right now, but I haven't seen much on new construction of storage. Thanks in advance for any guidance!

[Michael Wagner]

Here's couple quick responses:

How many rentable square feet can I reasonably fit onto 3 acres? About how many units?  Approximately 15K square feet per acre, so 45K total on the 3 acre plot.  Number of units will of course depend on what unit mix you go with but in most markets an appropriate unit mix will result in somewhere between 80 and 120 square foot per unit.

-What is the estimated cost to build a decent facility in that part of Texas (cost per s.f. or similar)?  Roughly $30-35 per square foot all in (exclusive of land).  This would include site prep, fence, basic electric, cameras and a simple office along with the buildings. 

-What is a reasonable profit margin per unit per month (or something similar) to expect for self storage units? This one is tougher to answer as it will be so market dependent. That said, here's a couple rules of thumb that might help. You'll need to check out the competition in the area and see what they are charging per square foot per month. Do the math to get to a GROSS potential rent. Lets say your 45K facility can be supported by demand in the area and will generate $30K in revenue at full capacity. That's $360K in max revenue. Roughly 1/3 of that will go to operating expenses so you will have an NOI of $240K left over to pay your debt service and line your pockets:) Hope that helps some.

You might find some value in this little blog that I post here on BP:

https://www.biggerpockets.com/member-blogs/3915-all-things-self-storage