Does anyone has experience with purchasing self-storage facilities?

October 11, 2023

by a searcher in Miami, FL, USA

I'm exploring the self-storage industry and considering purchasing a facility. What are the key factors I should consider before making a decision?

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Reply by a searcher
from Wake Forest University in Charlotte, NC, USA

Market supply (particularly oncoming developments or barrier to entry), market rates in relation to the achieved rates of the target facility, occupancy of competitors/trade area, needed capex upon takeover, has the facility performed because of management or in spite of it (could they be doing more like a website etc) - the list goes on, but the short answer imo is to find a facility that is historically well occupied with outdated mgmt practices, non-delinquent tenants, room to push rates to closer to market, and no identified developments in the pipeline. Just like any purchase (RE or small business), there are a million things to consider but we have had great success with the mom & pop buys where there is clearly demand for storage and a lack of supply - but rates and/or the local is not an attractant for future development.

Reply by a searcher
from University of Virginia in Charlottesville, VA, USA

I'm in the mobile storage business (i.e. pods). Never done a self storage deal but looked at a few. My biggest advice is look at it through a real estate investment lens as much as an operating co lens. Cap rates can be very low, especially for class A facilities, because there is institutional money going after these acquisitions. But if you can find a good deal or have a line on a good piece of property that can be developed, that can be a great way to make money. Whether you buy or build, my main advice is focus on maximizing the cash on cash returns while keeping the risk as low as possible. Feel free to DM if you want to talk more

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