• Welcome to AppraisersForum.com, the premier online  community for the discussion of real estate appraisal. Register a free account to be able to post and unlock additional forums and features.

Mini/self-storage

Status
Not open for further replies.

allansappraisal

Freshman Member
Joined
Oct 10, 2013
Professional Status
Certified General Appraiser
State
Illinois
Is there any literature out there regarding appraising mini/self-storage facilities? I am wondering how to separate the business value associated with them. Example: In my market, these facilities generate additional income from setup/late fees, moving supplies, truck rentals, etc. The sales all include this income in addition to their monthly storage rates. I would imagine if I exclude this "additional" income from the sales' data, the cap rate would be misleading because the sale price included it.

I understand the concept of market value of a going concern (which I believe this is), but do not know how to separate the real estate from the business in this instance. Any help would be appreciated. Thank you.
 

Howard Klahr

Senior Member
Joined
Oct 4, 2004
Professional Status
Certified General Appraiser
State
Florida
The business value associated with this property type is much less significant that you might expect, unless the facility(ies) that you are examining include significant other services as compared to the majority of the competitive set. Have you explored information published by the Self Storage Association?
 

PL1957

Senior Member
Joined
Jul 19, 2004
Professional Status
Certified General Appraiser
State
Illinois
Is there any literature out there regarding appraising mini/self-storage facilities? I am wondering how to separate the business value associated with them. Example: In my market, these facilities generate additional income from setup/late fees, moving supplies, truck rentals, etc. The sales all include this income in addition to their monthly storage rates. I would imagine if I exclude this "additional" income from the sales' data, the cap rate would be misleading because the sale price included it.

I understand the concept of market value of a going concern (which I believe this is), but do not know how to separate the real estate from the business in this instance. Any help would be appreciated. Thank you.
The AI has a book on appraising self-storage.
 
Joined
Jun 2, 2007
Professional Status
Certified General Appraiser
State
Florida
The business value associated with this property type is much less significant that you might expect, unless the facility(ies) that you are examining include significant other services as compared to the majority of the competitive set. Have you explored information published by the Self Storage Association?
I buy this: http://store.insideselfstorage.com/c/93/colliers-reports (used to be C&W data, I believe). I also use the Self Storage Association data through Reis Reports.
 

Scott.A

Sophomore Member
Joined
Dec 17, 2013
Professional Status
Certified General Appraiser
State
Iowa
If the additional income is common to self-storage in your area, then it may not be the problem that you think it is. The comparables are likely to have included the similar income in their purchase price.

In our neck of the woods, self-storage is pretty straight forward, and documentation is typically sufficient to pick out any income and expense that may skew the calculations. I think the key is just make sure it's apples to apples.

I find self-storage appraisals to be "fun". If one comes through our office, I'm quick to jump on it. I think you'll find that once you've done one, you'll be keeping your eyes out for others.
 

Michael S

Senior Member
Joined
Mar 18, 2009
Professional Status
Certified General Appraiser
State
New Mexico
Buyers purchase these properties based on income, just like an apartment complex. Replace apartments with storage units and people with boxes and it's pretty similar to an apartment. You could argue that an apartment complex is a going concern as well but in reality the market looks at it an sees real estate, not a business. If it's managed well the income should reflect that (higher occupancy, high rents, low expenses, etc.) and the typical buyer will be willing to pay more than if it's been run into the ground and is underperforming. It all comes down to NOI and a cap rate or DCF with some secondary consideration for sale price per square foot (price per unit is meaningless given the wide range of unit sizes).
 
Status
Not open for further replies.
Find a Real Estate Appraiser - Enter Zip Code

Copyright © 2000-, AppraisersForum.com, All Rights Reserved
AppraisersForum.com is proudly hosted by the folks at
AppraiserSites.com
Top

AdBlock Detected

We get it, advertisements are annoying!

Sure, ad-blocking software does a great job at blocking ads, but it also blocks useful features of our website. For the best site experience please disable your AdBlocker.

I've Disabled AdBlock
No Thanks