Maximize Your Storage Investment: 7 Underwriting Mistakes to Avoid
May 19, 2025
Explore essential strategies for effective underwriting in self-storage investments. Learn to identify value-add opportunities and avoid common pitfalls that can thwart your success. Discover why smaller storage facilities can yield strong cash flow and examine alternative funding options beyond traditional equity. Understand the misconceptions surrounding square footage metrics and operating expense ratios. This insightful discussion equips investors with the tools needed to maximize their storage investments.
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volunteer_activism ADVICE
Buy Value-Add Storage Deals
Always buy self-storage deals that offer value-add opportunities.
Avoid paying retail prices on properties where you can't increase revenue or reduce expenses.
volunteer_activism ADVICE
Focus on Value Growth, Not Doubling
Don't focus only on doubling a property's value for success.
Even small percentage gains on large deals can yield substantial equity.
volunteer_activism ADVICE
Consider Small Storage Facilities
Don't overlook small storage facilities; they can provide strong cash flow.
Evaluate all deal sizes to find profitable opportunities.
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Understanding how to effectively buy more storage deals is crucial for anyone looking to expand their portfolio in the self-storage industry.
So, how do you improve your underwriting practices, rather than just increasing marketing efforts or generating leads?
I talk about the essential strategies to enhance your ability to identify and evaluate value-added opportunities within potential investments.
You will learn my insights from conversations with other investors, especially those who are eager to acquire additional facilities but are struggling with their current approaches.
I emphasize the importance of recognizing that most available deals are value-add opportunities, and I outline various misconceptions about underwriting that may hinder your success.
By the end of this episode, you’ll have a clearer understanding of how to approach storage investments more effectively.
Key Takeaways:
When assessing storage deals, prioritize value-add opportunities to enhance your investment's potential.
It's crucial to understand that doubling your investment's value is not always necessary for success.
Do not overlook smaller storage facilities, as they can provide excellent cash flow and strong returns.
Equity should not be your only means of financing; explore alternative funding options for your deals.
Square footage per capita is not a reliable metric for evaluating storage demand in specific markets.
Operating expense ratios can vary significantly; avoid relying solely on the 30-35% benchmark in your assessments.
Thanks for following, subscribing and listening to this episode of The Do More podcast hosted by Jon Farling. To learn more or ask questions, go to l4investing.com.
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