This document provides an overview of key concepts for evaluating self-storage facility investments, including: 1. Common deal criteria like minimum cap rates, unit counts, and opportunities for expansion or conversion. 2. How capitalization rates measure the relationship between a property's income and value and are used to determine value. 3. How interest rates and market conditions can impact capitalization rates. 4. Factors to consider in market analysis like demographics, growth rates, and supply and demand conditions.

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

2. Valuation Resources

3. 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

4. Self Storage Valuator

6. 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

7. 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

8. 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

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

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

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

13. 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

14. 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

15. 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?

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