Self storage due diligence

[Tony Ngo]

I am looking at a self storage in Houston Texas.  I am from Portland, OR.  I have a few questions for those familiar with Houston and commercial space.  

What is the average market cap in Houston for investment properties, specifically self storage? 

Is there any property manager that will take on self storage management that you can recommend and what is the going rate?

The self storage is located in the Northwest Far Submarket, is that a growing market?  The storage space is currently 50% vacant and the seller is saying that it has not been well managed or advertised.  

Thanks!

[Michael Wagner]

Originally posted by @Tony Ngo:

I am looking at a self storage in Houston Texas.  I am from Portland, OR.  I have a few questions for those familiar with Houston and commercial space.  

What is the average market cap in Houston for investment properties, specifically self storage? 

Is there any property manager that will take on self storage management that you can recommend and what is the going rate?

The self storage is located in the Northwest Far Submarket, is that a growing market?  The storage space is currently 50% vacant and the seller is saying that it has not been well managed or advertised.  

Thanks!

 Your best bet for management will likely depend on the size of the facility and the total gross revenue.  Smaller to medium sized facilities can easily be managed remotely without onsite staff.  Medium to larger facilities often need some office hours to stay competitive.  Of course this too depends on the market and who your competition is.  I choose to run all my facilities remotely with little to no office hours.  Doing so allows me to pass those savings onto the customer.  I operate primarily in secondary and tertiary markets though.  This likely wouldn't work in a primary market with Class A competition.  The "Big Boys" like Extra Space and Cube Smart offer 3rd party management services which i believe run in the 6-8% range (don't quote me as this isn't an area that I have any first hand experience in).  Your payroll costs are in addition to that percentage.  If you'd like to share a little more about the facility, I might be able to give you a bit more valuable feedback!

Mike