When looking at a self-storage investment, many people focus on the big numbers. They look at purchase price, expected returns, market data, and cap rates. These are all important, but they only show part of the picture. What often gets overlooked is just as important: how the facility will be run. Without this operational insight,…
This article written by StorageTrader co-founder Alese Johnston is published in Modern Storage Media.
Internal Rate of Return (IRR) is a financial metric used widely in evaluating real estate investments, including self-storage opportunities. It represents the effective compounded return rate that can make the net present value (NPV) of all cash flows from a particular investment equal to zero. This metric covers the expected life of the investment –…
The real estate capital stack represents the hierarchy of capital invested into a real estate deal and provides a framework to understand the risk and reward associated with each type of capital. Comprising various layers, the capital stack organizes funding sources from the least risky (and therefore the lowest returning) to the highest-risk forms of…
Operating a self-storage facility may appear straightforward, as it involves relatively few complexities. However, achieving success in this business requires fundamental business knowledge and an eagerness to understand the nuances of this particular asset class. Although failures in the self-storage sector are rare, they do occur. Investors and bankers, who provide the capital necessary for…
In real estate, the term “cap rate” is thrown around a lot. But what exactly is a cap rate? And how does it apply to self-storage facilities? Self-storage facilities are becoming increasingly popular to invest in across the United States. This is due, in part, to the high cap rates that investors can earn on…
If you’re considering starting a self-storage facility, it’s important to have a solid business plan in place. A business plan is a comprehensive document that outlines your business goals, target market, marketing strategy, financial projections, and more. In this blog post, we’ll guide you through the process of writing a business plan for a self-storage…
Self-storage facilities have become increasingly popular in recent years due to the growing demand for affordable and secure storage solutions. If you are taking investment for the acquisition of a self-storage facility, you’ll need to put together a use of funds statement to help you plan and budget for the acquisition. Investors like to see…
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