Deal analysis by Scott Meyers

1. Part 2 :
Deal Analysis
Self Storage Training Series

2. Self Storage Training Series
“Determining a Self
Storage Facility’s
Value, and Sizing up
the Market”
Deal Analysis

3. Valuation Resources

4. Deal Criteria Refresher
1. 9.5% Going in Cap Rate
2. $500,000 Minimum
3. 150 Units + Room for Expansion
4. Default Transactions – Short Sale
Opportunities with Strong upside
5. Development – Case By Case
6. Conversion Opportunities - Ditto

5. Self Storage Valuator

7. Capitalization Rate
Measures the relationship
between the income
generated by the property
(NOI) and the Asking/Sales
Price. *The Standard for
Determining Value in
Commercial Real Estate

8. Capitalization Rate
Cap rate = Net operating income
Asking/Sales Price
Capitalization rate = $80,526
$800,000
Capitalization rate = .10 or 10%
*10% Rate of Return

9. Interest Rate Sensitive
 When interest rates go down, cap
rates go down, when interest rates are
up, cap rates are up.
 I Buy at cap rates that are typically 2-
3% above market cap rates

11. Market Analysis – Site Tour
 Main Road with high traffic count?
 Residential/retail or Industrial?
 High Growth or Stabilized Market?
 Near hi-density housing/apartments?

12. Market Analysis
 Visit Economic Development & Chamber
(And their Website)
 Current Population and Historical Growth
or Decline
 Job Growth – Up, Down, Flat?

13. Market Description
1. Undersupplied: Demand > Supply
2. Oversupplied: Supply > Demand
3. Equilibrium: Supply = Demand

14. Supply Index
Step 1
Net Rentable
Square Footage = Square Footage
Population Per Person
Step 2
Square Footage
Per Person = Supply Index
7.5 – 7.8
*If above 100%, NRSF is above Nat’l Average

15. Ideal Market Demographics
 5,000 people within a 1 mile radius
 40,000 within 3 miles
 80,000 within 5 miles
 Median Income of $45,000 or More
 Traffic Count of 10,000+ cars/day
 25% of the Housing = Multi-Family

16. Competition
 Proximity – Next door or 5 miles away?
 Better location – Main street or off path?
 Curb Appeal – Good, bad, ugly, Unit mix
 Amenities – Retail, Trucks, Climate Control,
Surveillance, Business Center?
 Pricing Compared to Subject Property?
 Strong Competition, or Opportunity?

17. Self Storage Mini-Course
Stick with me through all 7
Making it to the top 1%