Self Storage Investment Calculator

It has been a strong one for many investors, thanks to low running costs, steady demand and easy rent increases on month-to-month leases. The risks are new competition nearby, which can cut occupancy and rents, and high purchase prices. The example returns 14.2% a year before debt and taxes.

Monthly income = units × occupancy × average rent − operating costs. In the example: 400 × 85% × $120 is $40,800 in rent. Minus $15,000 in costs, that's $25,800 a month, or $309,600 a year in net operating income.

Most buyers divide net operating income by a cap rate. With $309,600 of yearly income, a 7% cap rate gives about $4,420,000, and 9% gives about $3,440,000. Cap rates rise and fall with interest rates and local markets. Use a cautious sale price in the calculator.

Stabilized facilities often run 85% to 93% full. Below 80%, there's usually a problem with location, price or competition. New facilities often take 2 to 4 years to fill. The example uses 85%. Each point of occupancy here is worth about $480 a month.

Divide monthly operating costs by rent per unit. In the example, $15,000 ÷ $120 is 125 rented units, about 31% occupancy. Add your monthly loan payment to operating costs to find the break-even with debt, which is usually much higher.

Often 30% to 40% of rent: property taxes, insurance, on-site or remote management, utilities, repairs, software, marketing and card fees. The example's $15,000 is about 37% of rent. Remote-managed facilities with kiosks and smart locks can run lower.

Building costs often run $40 to $100 or more per square foot for single-story drive-up units, higher for climate-controlled multi-story buildings, plus land. A 400-unit facility can cost $2,000,000 to $6,000,000 or more depending on location and type. Buying an existing facility costs more per unit but starts earning right away.

Self storage cap rates have often ranged from about 5% to 9% depending on location, size and age. Lower cap rates mean higher prices and lower starting returns. Buy at a higher cap rate than you expect to sell at and the difference adds to your return.

They're one of the main ways storage owners grow income, since most tenants rent month to month. In the example, rents rising 3% a year lift the 10-year return from 144% to 173%. Set the growth rate under More options.

This calculator shows returns on the full price, as if paid in cash. A loan reduces the cash you put in and can raise your return on that cash, but the monthly payment cuts income. Use our real estate ROI calculator to model the loan, or add the yearly payment to operating costs here.