Self-storage rental metrics, looking for suggestions / help
I have experience in multi-family properties, but have never really looked at self storage in the past. I have one local to me that may have some opportunity to acquire, but not overly familiar with the various metrics and what I need to make sure and consider. Does anyone have some general underwriting metrics or even an underwriting spreadsheet they would be willing to share? I’m trying to make sure I value the property accurately to be competitive.
[{"id": "hiyi7uq", "text": "Price should be based on NOI as you would operate it. Basically, use the current income statement as a base, then modify as needed. Don\u2019t use pro-formas or future potential NOI\u2019s. Depending how well managed the facility is, you may want to factor in a rent increase and/or increased occupancy. Also, look at the physical vs economic occupancy. It may indicate collection issues or concessions offered to rent units. DM me if you have questions.", "replies": [{"id": "hiyimzy", "text": "I get what you are saying, I\u2019m just fighting if there are any \u201crule of thumb\u201d that I should use, what is standard expense and what isn\u2019t. I have been deep enough to in multi family I get overall concept, just making sure I\u2019m in the right direction with what assumptions I should use for self storage. Like how many units before I really need payroll on site? What methods do people utilize to automate and how much does some of this cost if it isn\u2019t currently existing? I\u2019m all about streamlining things, and can always use labor from apartments and PM if needed.", "replies": [{"id": "hiz4opg", "text": "https://twitter.com/sweatystartup\n\nCheck out his past tweets, he shares good information on self storage.\n\nHope something works out for you.\n\nFYI, the recent earnings report of self storage companies have been good and future is also looking bright.", "replies": [], "depth": 3}, {"id": "hizt2cj", "text": "Relevant https://www.insideselfstorage.com/management-and-operation/self-storage-metrics-checkup-10-facility-performance-checklists-owners/gallery?slide=1  \n\nI have a buddy who is a commercial lender vp; on the side he builds, leases out, and sells the storage businesses.  I'm not sure if he includes the RE or not.  He's been doing it a pretty long time....I have no answers for you.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "hizkt4a", "text": "A common problem I see in this asset class is that novices don't realize that a self storage is TWO businesses that should be valued separately.  There is the real estate and the self storage business.  \n\nAre you buying real estate to lease to a self storage business or are you buying real estate and a self storage business?", "replies": [], "depth": 1}, {"id": "hj12sns", "text": "Roberk Kiyosaki: \"don't by a storage center next to open land. Someone might build one there and take your business\"\n\nThat's all I got. Good luck!", "replies": [], "depth": 1}, {"id": "hj1ito6", "text": "What are market rates? Are you on spare foot?\n\nTo echo others. It\u2019s a business. No management companies like MF.", "replies": [{"id": "hj1jxai", "text": "I have data for comparable rents, square foot and conditions. I\u2019m probably making it more difficult than I should, but also know that you don\u2019t know what you don\u2019t know, and want to make sure I\u2019m not missing something I should consider. I\u2019m not concerned about the management aspect, and self manage the MF that is owned currently.", "replies": [{"id": "hj1kx8v", "text": "Whats your exit? Develop additional buildings? raise rents/occupancy?  \nI think you're covered then if you can execute management/advertising. go for it!", "replies": [{"id": "hj1lben", "text": "I\u2019m looking at a long term hold as I have with my MF properties. Obviously I want to buy it right, improve efficiency, add some units on the additional land space that would be included, and increase my value. I take the approach of acquisition, improve, refi in 5 years or less, get capital returned, and have some cash flow with no money in the deal. If I can\u2019t acquire for the right price I\u2019m not going to be a buyer.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "hjet4a9", "text": "They\u2019re easy once you get software and website set up it practically runs itself", "replies": [], "depth": 1}]