Common seller tricks in self-storage
A facility can look full while in-place rents are stale, a few large units are on sweetheart deals, or maintenance has been delayed to dress up cash flow.
- Occupancy that counts unpaid, ‘comp,’ or employee units as paying.
- Street rates well above what tenants actually pay, used as if you can mark everyone up tomorrow.
- Deferred roof, gate, pavement, or camera work that will arrive as a check you write.
- Ancillary income (locks, insurance, late fees) that will not hold under a closer look or a tighter rule.
- Auction or lien practices that are sloppy and legally risky.
Which numbers to verify
You want a rent roll with unit mix, move-in dates, in-place rents, and delinquency — not just a headline occupancy. Compare in-place to current street rates. Look at trailing move-ins and move-outs. Reconcile collections to the bank. Ancillary income should be split out. Recast any owner ‘management fee’ that would have to be replaced.
Licensing and key-person risk
Facilities have ordinary business licenses, but lien and auction law is the special paper. Practices have to match the state statute. Flood-zone status, fire codes, and, in some places, planning rules on expansion, matter as much as the license. If the real estate is part of the deal, that is a property closing, not just a business sale.
Equipment and condition
Gates, access systems, cameras, units, and roofs are the plant. Walk the property. Look at water intrusion, asphalt, lighting, and software. A tired gate or a software license in the seller’s personal name is a first-week problem. Expansion land is only an asset if it can actually be built on.
Seasonality and the calendar
Student and military markets have a calendar. Summer move-ins can puff occupancy. Look at a full year of move-in and move-out activity. A January close in a college town can look slower than the brochure.
Customer concentration
A few tenants in large units, or a local business using the site as cheap warehouse, can be a real concentration. If one tenant is a noticeable share of rent and is month-to-month, model them leaving. The neighborhood itself is a concentration: one new competitor with a promotion can reprice the street.
Questions to ask before you make an offer
- May I have a current rent roll with in-place rents, delinquencies, and unit mix, plus trailing occupancy by month?
- How do in-place rents compare with today’s street rates, and what increases have actually stuck?
- Please reconcile collections to deposits for at least 12 months.
- What ancillary income is locks, tenant insurance, and late fees, and how is each sold?
- May I walk the property and review roofs, gates, cameras, pavement, and any capital-need quotes?
- How are lien and auction processes handled, and have there been disputes?
- Is the real estate included, and what is the flood, tax, and survey picture?
- What software runs access and billing, and is the license in the company’s name?
- Are any employees or friends in unpaid or discounted units?
- After an LOI, may I speak with your accountant and your property manager, if that is not you?