First Out of State Self Storage deal - What to lookout for ?

[Bharath Mun]

I am currently considering an Self Storage facility deal. This will be my first property into Commercial space and that too out of state. 

I understand Storage facility is more like a business than just owning SFH rentals with property management. My first goal would be to automate a majority of the processes such as lock codes, online portal to schedule visits, tours & payments, submit questions. I am also looking for one or two local contractors who can visit the facility often either to show around for potential tenants OR to quickly take care of any maintenance issues.

Mostly I have been reading about owners managing Storage facilities in person but I would like to hear from Out of State owners. 

• What cap rate and other attributes would you mainly look at in the deal to decide if it's worth considering ?
• What are the mistakes/pitfalls I should be cautious about and keep a close eye on ?
• What kind of maintenance issues have you experienced?
• How important is it to have an on-site management (it would be around 150 units facility, if that matters, with a few temperature controlled units) ?
• What kind of systems and teams have you built to make it as passive as possible so you can focus on next investments ?
• Called about 7 regular property management companies but they have no experience managing Storage facilities. Do you have a PM or formed a team ground up?

Thank you. This is exciting and yet intimidating. So I want to make sure I could avoid any stupid mistakes that would cost me heavy down the line.

[Taylor L.]

It's not about the cap rate, it's about the overall business plan and what returns you expect based on that business plan. Regular PMs don't handle these properties. Most smaller facilities will hire someone to go around ad clean up a bit once a week or so, not necessarily a qualified contractor but someone reliable who can take a few hours' work per week.