How do I check whether a self-storage facility is actually profitable?

A full row of doors does not prove a profitable facility. What matters is how much rent is collected, how much it costs to keep that rent coming, and what is left for you. A general method is in how to check whether a business actually makes money. Storage has a few features of its own, set out below.

In-place rent against advertised rates

The rate on the website is what a new tenant sees. The rate that existing tenants pay may be quite different, higher or lower. Ask for the rent roll, which lists each unit, its tenant, its rent and the move-in date. Check it against bank deposits for several months. Then ask how rents have been raised over time, and how tenants responded.

Discounts and rent that never arrives

Free first months and promotions fill units, but they reduce income at the start of every tenancy. Ask how often they are used. Then look at late accounts: how many tenants are behind, how long, and what the facility does about it, including how it handles contents of abandoned units. Your lawyer can tell you what the process requires. Write-offs belong in the profit.

Add-on income and the owner’s labour

Locks, boxes, tenant protection plans and truck rentals bring extra income. Ask for it separately, and ask whether the seller keeps or shares it. Then add back what a hired manager would cost if the owner works the site without pay. Ask your accountant to make this adjustment before you rely on the figures.