Analyzing the Financials of a Self Storage Facility
Simply put, I love self storage. The reasons for this love are numerous and far reaching but I'd be lying if I said that the underlying financials inherent to this industry weren't a primary draw. While the following is a gross over-simplification, I hope that it will at least serve as a point from which the budding storage investor can start from.
Below is a breakdown of the "typical operating expenses" of a self storage facility. Obviously these expenses are going to vary from market to market but when all is said and done, a well run storage facility can be run for approximately 33-35% of gross income with only minimal tending to by the principals.
Expense What to Expect
Property Taxes Varies Considerably (I pay 7% of gross)
Insurance roughly 10 cents per year per square foot (2% of gross)
Advertsing 6% of Gross Rent: More in Year 1
Payroll/Benefits $12 per hour includes Workers Comp./Disability/Payroll -roughly 8% of gross as hours required increases proportionally with size of facility
Office Supplies .5% of gross
Phone/Internet 1.5% of gross
Grounds Maintenance 3% of gross
Repairs/Maintenance 4% of gross
Trash/Water 1% of gross
Profesional Services 1.5% of gross
Miscellaneous .5% of gross