Posted by Tom on March 18, 2007 at 09:58:56:
I am just venturing into that arena. There are two rough rules of thumb to go by. First you need to determine the local population within a certain radius depending on urban or rural. 5 Miles is a good max in urban, 10 in rural. Multiply the the population in that area by 6 ft and you will have a rough guess at the number of sqaure ft of storage space that market can handle, Example: rural 10 mile radius is 10,000. Total square ft if storage for that market is around 60,000 sq. ft. #2 rule typically market percent occupied is 85%. Above that there is growth room. Below that you might be looking at an over built area for self storage. As I said these are rough rules that I go buy but are not absolute. I have 2 different senerios one where the the percent occupancy is 96% so there is growth there and there is a little competition. Another is 77% (cash flow at that) with no copetition. The problem with the second is poor management and no marketing in a rural area. This owner is willing to hold 80%. Both sound good. My point is rough rules are good but due diligence is better. Let us know how you make out.
BTW insideselfstorage.com is an excellent resource. Good Luck!
Tom