Storage Diligence
Storage 101
A plain-language, ten-part series on how the self storage business works, written for people new to the US industry: first-time buyers, investors arriving from other asset classes, lenders and brokers.
The articles are written to be read in order, since each one builds on the vocabulary and ideas of the last, but every part also stands on its own. The series uses Texas as its main working example and other Sunbelt states for contrast.
- 01How Self Storage Works as a Business
Where the revenue comes from, what it costs to run a facility, why tenants stay far longer than a month-to-month lease implies, and who owns the roughly 50,000 facilities in the United States.
- 02Self Storage Terminology Every Newcomer Should Know
Net rentable square feet, the four kinds of occupancy, street rate versus in-place rate, ECRIs, facility generations and classes, and supply per capita, defined in plain language.
- 03The US Self Storage Market Explained
The size of the market, who owns it, the 2016 to 2023 building boom and the Sunbelt oversupply that followed, Texas as a storage market, and why national data cannot underwrite a local deal.
- 04How Self Storage Facilities Are Valued
Net operating income line by line, cap rates with a worked example, normalizing a seller’s numbers, price per square foot as a sanity check, and the traps that inflate a valuation.
- 05Reading a Rent Roll and Unit Mix
What each column means, how to compute physical and economic occupancy, what tenure and paid-through dates reveal, whether the unit mix fits the trade area, and the red flags to catch before closing.
- 06Development vs. Conversion vs. Acquisition
The three ways into the business compared on cost, timeline and risk, with yield on cost versus going-in cap rate, the development spread, and a Texas view of land and zoning.
- 07Lease-Up: How Long It Takes and What It Costs
Absorption math, break-even occupancy, operating and interest reserves, the pricing dilemma, how lenders underwrite a building that is still filling, and how to read a facility offered on pro forma.
- 08Operations 101: Staffed, Remote and Hybrid Management
What an operator does every day, the three staffing models, the technology stack, third-party management versus self-management, and the monthly numbers an owner should watch.
- 09Financing a Self Storage Facility in the US
Loan-to-value, debt service coverage and debt yield with a worked example, then banks, SBA, CMBS, life companies, bridge debt, construction loans, recourse and seller financing.
- 10State-by-State Basics: Lien Law, Zoning, Insurance and Taxes
Texas Property Code Chapter 59 as the worked lien example, tenant insurance licensing, zoning and municipal restrictions, property tax reassessment and the annual protest, and sales tax on storage rent.
Storage Diligence 