All Forum Posts by: Bobby Loeffler

I am an owner of two storage properties in California. As with most any other real estate venture, location is key. Based on general surveys, roughly 1/3 of your tenants come in from drive-by visibility, another 1/3 come from advertising (YP and Internet), and the last 1/3 come in from referrals from existing clients and nearby competitors which are full.

Debt is readily available for these assets, and SBA financing is also available (as of 10/2010). They tend to perform best in solid B markets. Retail-type locations are best as they are typically highly visible. Converted warehouse buildings can also do quite well if located in densely populated areas. Cash on cash returns are generally in the 10-12% range.

I've been a self-storage broker for over 14 years - specializing primarily in California and Nevada. Cap rates generally range from 7% to 9.5% in this current market. There is a clear bifurcation in Cap rates between infill, stabilized assets (7%) to properties that are located in tertiary markets or those assets that are still in a lease-up (<70% physical occupancy).

There has been a great shift away from YP advertising as owners are moving more towards SEO programs and the Internet for advertising. Also, many clients are going to a 1-man office staff that is supplemented with a kiosk.

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