start with Self storage

[William Murden]

Good evening, I have been thinking about self storage. I have identified one that looks good for a first timer... It is 130+ units with a kiosk. It is 7 hours away. I can visit twice a month or so. My schedule allows for this right now. Does anybody have advice or anyway could point me in the right direction? I am looking out of my area because all of the storage facilities around my area are all class A and asking way to much.

[Kris Benson]

William,  

I think the first thing you should do is review the market supply and demand information.  I would want to look at the population in a 1, 3, and 5 mile radius from your project site.  Our underwriting model typically references the demand equilibrium at 7 square feet per person.  So if there are 100,000 people living in a 5 mile radius of your site the self storage demand should be about 700,000 net rentable square feet.  Then look at how much square footage the comps in that same area have available and it should give you a good starting point on if the project is in a good market.

Typically I have seen the 1 mile radius is usually oversupplied and the 3 and 5 miles radius should be fairly under supplied.  This would indicate your project would have sufficient demand to keep it full.  In my opinion that is a good place to start your underwriting and due diligence.

I would really dig into the market first and if you are comfortable then begin your due diligence on underwriting the project itself.  

What are the returns you are targeting?