How to Know If the Deal You've Found is REALLY a Deal
By Mike Wagner with The Storage Rebellion
If you've been following along the past couple weeks, you know that we've covered how to find Self Storage deals. When you find a deal that has merit, you are going to want to dig deeper. With a little practice you will be able to complete your preliminary analysis in 30-60 minutes (don't be discouraged if it takes you a little longer than this in the beginning). Your goal is to determine if this potential deal is worth any more of your time. Here's an overview of how you'll do that from the comfort of your own home:
Look at the financial date: All you are doing here is looking at the income and expenses to formulate what we call the Net Operating Income. You'll do this for the property as it stands today as well as for how it could perform if it was running at its full potential. Then you will simply compare those numbers and decide if the change in value is enough to get you excited. Here is a link to a video where I describe how to do this:
Here's a deeper dive into this valuation method:
Another down and dirty way to valuate a property using what is known as the Gross Rent Multiplier (GRM). Quite simply, the GRM is calculated using the following formula:
Purchase Price (per square foot) DIVIDED by Annual Rent (per square foot) = GRM
Here's an in depth video tutorial on GRM:
Next, You are Going to want to check out the market demographics: At this stage of the game, all you are looking at is the total population within the market as well as at the sq. ft. of storage in the market to see if the market can support the amount of storage within it. Here's how I do that:
Here's a Deeper Dive into Supply and Demand:
Finally you will take a QUICK look at competition: And yes I do stress “QUICK”. You don't need to become an expert in this area yet. Just get a feel for how the subject properties rates and amenities compare to other nearby properties.
Based on your findings, you will know if this property deserves any more of your time.
I hope this article has been helpful for you and invite you to dive a bit deeper by exploring some of the FREE content we put out into the world. To do so, simply visit www.thestoragerebellion.com or our facebook page at https://www.facebook.com/StorageRebellion/ . I wish you all the best on your Journey into the world of Self Storage.