How to Buy A Self Storage Facility
Use this cheat sheet to completely define your BUY BOX for self storage.
*** Not sure if threads are still ding as well as they used to, so this will be a long form format as I brain dump.
What does buy box even MEAN??
Your "buy box" means identifying the specific criteria that make a an investment WORTHY. In this case, a storage facility.
So, what’s the criteria??
Glad you asked—
Size: This can be either the net rentable square footage or the number of units. Having this in mind will help you filter what you find almost immediately. If it doesn’t fit that range, it’s an easy pass. Personally I like 20k-40k NRSF as a good sweet spot, but I’m always down for something bigger OR smaller if everything pencils
Location: This is where you need to do your research. Find out population density, demographics, competition, household incomes, growth rates, etc to really have a clear picture on where you want to search.
You can use some pretty cool tools like StorTrack or Radius + to figure most of this out.
Just for reference— Shoot for about 8 square feet of storage per capita within a 5-mile radius.
Financial performance: This is where you’ll be looking at metrics like occupancy rates, rental income, expenses, net operating income (NOI), and the potential ROI.
Ultimately this is all part of your underwriting, but the back of napkin approach on this with some quick numbers you might be able to grab over the phone would be: NOI multiplied by 10 (10 cap) for a ROUGH estimate of potential property value.
Value Add: This is big! Here is where the rubber really meets the road.
You want to get good at seeing where you might be able to add value (increase the bottom line) to the facility. Things like: raising rents, improving operations, expanding, etc.
This is even as simple as doing two things:
- Putting a Google business page up
- Answering the dang phones
If you’ve read til the end, here’s my buy box so you can see what it might look like to create yours.
- 20k-40k NRSF
- Market with at least 10k people no more than 30k
- Growth .2%-2%
- No new storage being built
- Mom and pop owned
- No marketing, limited online presence
- Stagnate rates
- Actively involved in operations
If you got some value out of this, you might enjoy the book I’m writing.
I’ll be looking for beta readers and people with opinions willing to share them. 😎
I’ll release updates and early excerpts here ⬇
