What I Look for When I Buy a Self-Storage Facility

Self-storage is different from the other stuff I buy. With flex or industrial you’re looking at tenants, lease terms, cap rates. Pretty standard commercial underwriting. Storage is its own animal.

I’ve looked at a lot of storage facilities across the Carolinas, and every deal starts the same way. I pull up the rent roll and start looking at two things: occupancy and rate per square foot. That’s it at first. Everything else comes later.

Here’s what trips people up though. A facility running at 95% occupancy sounds amazing. But if the rates are $0.65/SF and the market is at $1.10, you’re leaving a ton of money on the table. I see this constantly with mom and pop operators who haven’t touched their rates in years. They’re proud of being full. And they should be. But being full at 60% of market rent isn’t the flex they think it is.

Climate controlled versus drive-up matters more than people realize. Climate controlled units rent for 40-60% more per square foot. A facility that’s 80% drive-up and 20% climate is worth significantly less than one that’s flipped the other way. Same total square footage. Totally different income.

The physical stuff I check

Door condition. Replacing roll-up doors across a whole facility gets expensive fast. Like $800-1,200 per door depending on size. A 200-unit facility with shot doors? That’s $160K-240K easy.

Roof and drainage. Water damage kills storage facilities. One leak and you’ve got insurance claims, angry tenants, lost revenue. I look hard at this.

Security and lighting. Tenants care about this more than anything. Cameras, gate access, good lighting. If it’s missing I’m pricing it in.

Paving. Same as industrial. $4-6/SF to redo a parking lot and drive aisles.

The management upside

The thing about storage that makes it attractive as a buyer is the management upside. A lot of these facilities are run by the owner or a part-time person. No revenue management software. No online presence. No dynamic pricing. I come in, plug in modern management, and rates go up 15-25% within the first year. That’s real.

But here’s the thing. I’m not paying the seller for that upside. That’s my value-add. I’m paying based on what the facility is doing right now. Today’s income, today’s rates, today’s occupancy. If you’ve already maximized everything, great, the price reflects that. If you haven’t, that gap is where I make my return.

Location is huge

You want population density and rooftops within a 3-5 mile radius. Charlotte’s storage market is strong because there’s constant population growth and people moving in who need somewhere to put their stuff. Same story in Greenville with all the growth along the I-85 corridor.

What I don’t love: facilities way out in rural areas with 150 units and no room to expand. The numbers rarely work on those. Not enough demand to push rates and not enough scale to justify professional management.

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