Self Storage

  • Self-storage properties typically offer stable and predictable cash flows due to a diverse tenant base and low turnover rates.

    These facilities have lower operating costs compared to other commercial real estate types, requiring minimal staffing and incurring lower maintenance expenses, which positively affects their net operating income.

    They also tend to maintain high occupancy rates, even during economic downturns, as people need storage for various reasons like moving, downsizing, or other life changes, ensuring steady demand.

    When financing self-storage properties, lenders often focus on the asset's performance and potential rather than the borrower's creditworthiness. They assess factors such as the property's location, occupancy rates, and revenue potential.

    Effective management is crucial, and lenders may evaluate the borrower's experience and the quality of the property management team to ensure consistent cash flow and successful operation.

    Self-storage properties must comply with specific zoning laws and permit requirements, and lenders will assess these compliance factors as zoning issues can impact the property's viability and potential for expansion.

    These properties are scalable, allowing owners to add more units as demand grows, and lenders take into account the potential for future expansion when considering financing.