Ask Scott: 42-Unit Storage Facility

“Hey Scott-

Here is the skinny on what we have in front of us. There is a 42-unit self storage facility listed on MLS with average rent of $65/unit; Built in 1998; located in TX. This is a mom-and-pop operation. The area is blue-collar and 3mi off a busy interstate. Annual expenses about $5-$6k. Asking $280k, implies a 10cap with 17% coc. Does this seem like a too small of a facility? Is there an average size for storage facility that’s needed to run optimally?”

Hi!

Unfortunately, almost all the answers to your questions are going to be in the form of “it depends”.  Now, I’m not trying to be evasive or difficult, but Self Storage runs the gamut of options, with the common denominator being you (the owner) and rented space for people to store their treasures (and even this can be household items, boats, RV’s, commercial, etc.)

To be the most helpful, there are three questions that we typically ask others (and ourselves, too) when they’re contemplating buying a Facility:

1) Why are you excited about this deal?  What’s the “value-add”?

2) How are you going to make money?

3) How is it going to be managed?

If you can answer those three and the deal still seems appealing then you should seriously consider moving forward.  You can temper that emotion of moving forward by – “is this the best use of my time & money?”.

Best of luck!

Scott

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