How Much Is a Self-Storage Facility Worth?

How self-storage facilities are priced

Build NOI from the rent roll, not the P&L. Start with gross potential rent at current street rates, subtract actual economic vacancy (physical vacancy plus concessions and delinquency), add ancillary income you can verify — late fees, tenant insurance commission, retail, truck rental — then subtract every real operating expense: property tax at the reassessed post-sale basis, insurance at a current quote, utilities, repairs, marketing, and a market-rate management fee of roughly 5%–6% of revenue even if the seller manages it themselves. That last adjustment is the one sellers leave out, and it is often the difference between the asking price and a fundable one.

For the underlying mechanics — what counts as an add-back, how SDE differs from EBITDA, and how working capital is handled at close — see how to value a business.

What moves the multiple

• Economic occupancy, not physical — A facility that is 92% full because half the tenants are on a first-month-free promotion is not a 92% facility. Pull twelve months of the rent roll and compute collected rent against gross potential.
• Rate history and pull-through — Whether existing customer rate increases actually stick without a spike in move-outs. A facility that has never raised rates has upside; a facility that raised them last quarter has already used it.
• Competitive supply within three miles — Storage demand is hyper-local and new supply is fast to build. A permitted competitor inside the catchment is a direct, quantifiable hit to future NOI and should move the cap rate up.
• Unit mix and climate control — Climate-controlled square footage commands higher rates and lower turnover in most markets. A mix weighted to large drive-up units in a market that wants 10x10s is a rate problem you cannot fix cheaply.
• Deferred capital and site condition — Roofs, doors, paving, gate and access-control software, and fencing. These do not show up in NOI but they come straight off what you should pay.
• Expansion or lease-up upside — Excess land with zoning, or a facility in genuine lease-up, is worth paying for — but underwrite it as your return, not the seller's.

What pulls the price down

These are the findings that most often reprice a storage deal between the letter of intent and the closing table. Each one is a reason to bid at a higher cap rate, or to hold back part of the price until the issue is resolved.

• A pro forma priced on street rates the facility has never actually achieved.
• Property tax modelled at the seller's assessed basis rather than the post-sale reassessment.
• No management fee in the expense stack because the seller runs it themselves.
• Concessions and delinquency buried so physical occupancy overstates economic occupancy.
• A permitted or under-construction competitor within the three-mile catchment.
• Deferred roof, paving, or gate-system work the seller has never obtained a quote for.

Worked example: a $210,000 NOI facility

A 340-unit facility is listed at $3.0M on a stated NOI of $210,000 — an implied 7.0% cap. Rebuild the NOI: property tax reassesses on sale and adds about $14,000, there is no management fee in the seller's numbers so add roughly $11,000 at 5% of revenue, and twelve months of rent roll show economic occupancy at 84% against the 91% physical figure in the marketing package, costing about another $12,000. Real NOI is closer to $173,000.

At the same 7.0% cap that is $2.47M, not $3.0M. Then decide whether 7.0% is even the right rate for a class-B asset with a competitor permitted two miles away — at 8.0% it is $2.16M, and $95,000 of deferred paving comes off that. Run this on every storage listing you screen: rebuild NOI from the rent roll with a full expense stack, then apply a cap rate you can defend with local comparable sales rather than the one the listing implies.

Before you rely on any of this

Market ranges orient a first conversation; they do not price a deal. Once you are past the initial screen, get the last three years of tax returns, reconcile them to the P&L, and have an accountant or a certified appraiser confirm the normalized earnings. Working through our due diligence checklist before you sign a letter of intent is the cheapest money you will spend on the transaction.

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