Starting self storage Business

3 Replies

Hello! I am new to Self Storage investing and I am looking at a buying a few storage facilities. I will be taking loan from bank. When I figure all of my finances for each, none seem to cash flow. Is that normal for your first self storage facility until you gain capital and then reinvest into more? I need options and opinions on what to do. Thanks!

@Trevor Gray if you are just plugging in proformas then that’s probably the case.

And I’d add it would probably be the case for any asset class where you are plugging in top line numbers and not digging in further and/or learning more. Read all storage posts/books/podcasts/etc to learn more.

Originally posted by @Trevor Gray :

Hello! I am new to Self Storage investing and I am looking at a buying a few storage facilities. I will be taking loan from bank. When I figure all of my finances for each, none seem to cash flow. Is that normal for your first self storage facility until you gain capital and then reinvest into more? I need options and opinions on what to do. Thanks!

It depends on how you define cashflow and what size and type of property your looking at. CAP rates are at all time lows right now as are interest rates so spreads are thin especially on storage due to loan structures. If your after cashflow after debt service you will likely need to go interest only while you increase income so you can increase the value for a refi down the road but there are no guarantees rates will remain this low long term.

@Trevor Gray

If you are using as is rents with proforma expenses then thats common. I find alot of my deals market rents are not really market because nobody in area willing to raise rents so almost have to use your gut. If I see every facility 100 percent full with waitlist my assumption is rents can go up alot more than market.