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You can get a decent 3 bedroom apartment for $750 around here.

I agree with what Jessie said about the risk factor.

I've often heard "You eat better with office buildings, but you sleep better with apartments."

Depending on the economy, the office and industrial income will vary. People always need a place to sleep, though.

I've never done storage units myself, but I don't see why it would be different than other property management.

Sometimes we bribe tenants in our monthy tenant letter. $100 or so if they refer someone to us that ends up renting.

Here are a few online do-it-yourself resources.

* Better Homes and Gardens Home Improvement Encyclopedia - http://www.bhg.com/bhg/category.jhtml?catref=cat10002
* Jim

I don't think the question was about the investment as much as the analysis process.

When I run a projection like this, I like to make it kind of a "what to expect in the first year" scenario.

I also include projected tax benefits, equity buildup (amount of principle paid) and somtime include some estimation of appreciation.

So, using your numbers (and a couple of my own assumptions), this is what I get:

Your Assumptions:
Purchase Price $250,000.00
Down Payment $50,000.00
Loan Term 30 years
Loan Rate 7.80%
Yearly Income $33,495.00
Yearly Expenses $11,412.00

My assumptions:
Property Appreciation 3.00%
Buyer's Tax Bracket 30.00%
Depreciation-
Land 20.00%
Building 65.00% over 27.5 years
Personal Property 15.00% over 5 years

1st Year Benefits:

Cash Flow
$33,495.00 Income
- $11,412.00 Expenses
= $22,083.00 Net Operating Income

$1,439.74 Monthly Payment
* 12 Months
= $17,276.89 Debt Service

$22,083.00 Net Operating Income
- $17,276.89 Debt Service
= $4,806.11 Cash Flow

Tax Shelter

$22,083.00 Net Operating Income
- $5,909.09 Building Depreciation
- $7,500.00 Personal Property Depreciation
- $15,538.73 Interest Paid
$-6,864.82 Taxable Income / Loss

$-6,864.82 Taxable Income / Loss
* 30.00% Tax Bracket

$2,059.45 Total Tax Effect (You save this much in the first year on your taxes...)

Equity
In the first year's payemts, $1,738.16 of principle will be paid.

Appreciation
A property worth $250,000.00 whose value increases by 3.00% per yer will increase in value by $7,500.00 in the first year.

Total Benefit

Cash Flow + Shelter + Equity Increase + Appreciation = $16,103.71
32.21% return on down payment

If you don't like to include Appreciation, then you get
Cash Flow + Shelter + Equity Increase = $8,603.71
17.21% return on down payment

It's like any other real estate investment, you just need to look at it on a deal-by-deal basis.

Look at past operating numbers for the facility, or find out what you can about other self-storage facilities in the area. (or better yet, both)

If it looks like your probable income will cover all expenses and debt service, you probably have a winner. There's more to look at than just the cash flow, but it is a good place to start. If you know there will be a major negative cash flow, you'd better have a really good reason for getting into the property.

There's money in any kind of rental real estate, though.