How to Value a Self Storage Facility - Don't Overpay!
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- Опубликовано: 26 окт 2023
- 📉 Take advantage of todays market conditions with us: cedar.cc/invest
Valuing self storage is essential if you are looking to invest in or purchase your own facility. You have to look at many factors, including the market, the asset itself, and how much potential it has.
There are two types of value you need to look for: intrinsic and extrinsic.
Too often, we focus on only the extrinsic: what's the price? What does the market say?
And we forget about the intrinsic: how much revenue does it make? Is it doing well?
But in reality, true value should be based on BOTH intrinsic and extrinsic. In this episode, let's walk through the differences in the two types of value, and how to apply it to the numbers - yes, we use one of our deals as an example!
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Great video! I would add that because the financing is likely going to be done by any type of bank, an Appraisal will be required, and because these are income produccing properties, the appraiser will likely value the propery based on the Income Capitalization Approach, which is what you are describing, by applying the Appraiser's concluded CAP rate to the NOI.
AJ. You are very professional with your business plan explained. I bought a facility in Hot Springs and I looking to buy my second property in the same area. I agree 100% with you… it’s time to buy! Thanks
Congrats on the deal you shared. Great instruction!
Thank you!
Thanks getting into self storage so watching your vids
Rock on!
Gold right here. Thanks!
@laleilha - glad to hear! Thanks for the comment!
How is the vegas market for storage buying right now?
Prices are down per sq ft and people are leaving storage as they dont have the money to pay. Auctions bring in low money and can actually loose money
Cashflow / Price (or Fair Market Value) = Cap Rate === By those numbers it is below 3% Cap Rate, unless you use the Value of the Investment which would be in the high 5% which makes more sense but do not see how you get a fair market value so much higher than the value of the investment, so what is the difference between Value of Investment and Fair Market Value?
I am a bit confused. If the income goes up or down wouldn’t it effect the cap rate? Isn’t cap rate noi divided by asset value?
Can you explain the large increase in Y4? Did you pay down or recast the loan? Thank you!
Please explain...
Cap % < interest + inflation rates = no
How did you learn how to break down the costs like that? Do you have an assist or accountant.? If so what company do you use?
Years and years of hard work and practice!
But yes, we have an awesome accounting team. Plus, my business partner is well versed in the finance world.
👍
I have found a few deals
Hey, I hope this comment reaches someone who can answer but what is the best way to start learning this business? I been watching videos but still don’t feel like I can just jump right in
Hey @qoo0z - thanks for the comment! Head over to my site www.selfstorageincome.com/ to get my free self-storage starter pack and join our free newsletters to learn more about investing in self storage! 💪
Generally some good information, especially on intrinsic vs extrinsic information, but your percentage math is WAY off. You can tell without doing any math because you can't have a more than -100% drop unless revenue goes negative (which is impossible). In Section 4, at 10:55, you show a -138% decline. Revenue going from $1.66M down to $625K is a -62.5% drop, not -138% drop. It makes me a little concerned how you can run a successful syndication when you can't do simple math.
I love you AJ Osborne why would you give away all your secrets? When you could have done the same thing here in Idaho and across the country over and over again and now you let the genie out of the bottle? Love you but help me understand.😊
This makes no sense to me...
I stopped paying attention. Get to the point faster.