I've been in commercial real estate since 2013, and self storage is the asset class I kept coming back to. Year after year, I watched investors build serious wealth with storage facilities while I was focused on office buildings and retail centers. So in late 2024, I finally pulled the trigger: my partner Jacob and I bought a failing 105-unit self storage facility in Madison, Tennessee, and I'm documenting every step of the turnaround.
This page is your complete guide to self storage investing. Whether you're wondering if the self storage business is right for you, trying to figure out how to buy your first facility, or looking for strategies to maximize the value of an existing property, everything I've learned (the wins and the mistakes) is right here. I'll keep updating this page as our project progresses and as I publish new content on the topic.
Madison Self Storage: our 105-unit facility in Madison, Tennessee.
In This Guide
Is Self Storage a Good Investment?
How the Self Storage Business Works
How to Buy a Self Storage Facility
Value-Add Strategies That Actually Work
Is Self Storage a Good Investment?
Short answer: yes. But let me give you the longer version, because the "why" matters more than the "yes."
Self storage has a few characteristics that set it apart from other commercial real estate investing asset classes. First, the demand is remarkably recession-resistant. People need storage when the economy is booming (they're buying more stuff, upgrading homes, expanding businesses) and when it's struggling (they're downsizing, moving in with family, consolidating). Life transitions drive storage demand, and life transitions happen regardless of interest rates or GDP growth.
Second, the operating costs are low compared to almost any other property type. There are no kitchens, no elevators, no lobbies to staff. Climate-controlled facilities have HVAC costs, but non-climate-controlled units are essentially metal boxes that cost almost nothing to maintain. That means a larger percentage of your rental income drops straight to the bottom line.
Third, and this is the one that really gets me excited, self storage has some of the best value-add potential in all of commercial real estate. You can physically add more units to a property, raise rents incrementally, improve technology and automation, and expand into ancillary revenue streams like truck rentals and moving supplies. Every dollar of NOI increase gets multiplied by the cap rate into property value. The math compounds in your favor in a way that's hard to replicate with other property types.
Why Self Storage Stands Out
Recession Resistant
Demand in all economic cycles
Low OpEx
Minimal maintenance costs
Expandable
Add units to increase NOI
How the Self Storage Business Works
At its core, the self storage business model is straightforward: you own a building (or a collection of units) and rent individual spaces to tenants on a month-to-month basis. There's no long-term lease negotiation, no tenant improvement allowances, and no build-out periods. A tenant signs up, gets a code, and starts storing their stuff.
The revenue drivers are simple: number of units, occupancy rate, and average rental rate per unit. Your goal as an owner is to maximize all three. A 100-unit facility at 90% occupancy charging $100 per unit per month generates $108,000 in gross annual revenue. Bump that to 140 units at the same occupancy and rate, and you're at $151,200. Raise the average rate to $120, and you're at $181,440. Every lever you pull compounds.
There are a few different types of self storage facilities worth understanding. Climate-controlled facilities are fully enclosed buildings with temperature and humidity regulation. They command premium rents and attract tenants storing furniture, electronics, documents, and other sensitive items. Drive-up facilities are the traditional outdoor units you see along highways. They're cheaper to build and maintain but also command lower rents. And then there are hybrid facilities like ours in Madison, which have a climate-controlled building plus room for outdoor units like shipping container storage.
The three metrics I pay closest attention to are: average unit cost (what each unit rents for), occupancy rate (what percentage of your units are leased and paying), and customer retention (how long tenants stick around). That last one matters more than most people realize. A tenant who stays for three years is worth far more than one who stays for three months, because every turnover means a period of vacancy and a new tenant acquisition cost.
How to Buy a Self Storage Facility
I wrote a detailed breakdown of this based on my own experience, which you can read in my post on how to buy a storage facility. But here's the high-level overview of what the process looks like.
Finding deals. Self storage properties show up on platforms like Crexi, LoopNet, and local broker listings. Many of the best deals, though, come through off-market channels: driving neighborhoods, reaching out to owners of older or visibly neglected facilities, and building relationships with brokers who specialize in self storage.
Evaluating the deal. The two most important numbers are NOI (net operating income) and cap rate. You'll want to understand the current financials, but more importantly, you need to project what the property could produce with better management. That's your underwriting, and it's the skill that separates successful investors from everyone else. Don't just accept the seller's numbers at face value. We learned that lesson the hard way.
Due diligence. This is where you verify everything. And I mean everything. Walk every unit. Verify every tenant on the rent roll. Check the condition of the HVAC systems, the roof, the gates, the security cameras. Look at the competition within a three-mile radius. Understand the local zoning so you know whether you can expand. I go deeper on this in my commercial real estate due diligence guide.
Closing. Self storage transactions typically close in 60 to 90 days, though complicated deals can take longer. Make sure your financing is lined up, your insurance is quoted, and your management plan is ready to execute on day one. If you're new to buying commercial property, my guide on how to buy your first commercial property covers the entire closing process in detail.
Value-Add Strategies That Actually Work
This is where self storage investing really shines. There are more levers to pull for value creation than in almost any other asset class. Here are the ones I've either implemented or am actively working on:
Raising rents to market. If you buy a mismanaged facility (and many of the best deals are mismanaged), the rents are almost always below market. Research what competitors within a three-mile radius are charging, then bring your rents in line. This is the single easiest way to increase NOI because it costs you nothing.
Adding physical units. If you have unused land or parking areas on the property, you can add units. Shipping containers are the most cost-effective option: we're adding them at our facility for $4,000 to $8,000 each. I wrote a complete breakdown of this strategy in my post on shipping container storage. At a 7.5% cap rate, every $100/month unit you add at 85% occupancy creates roughly $13,600 in property value. That's the kind of return on invested capital that's almost impossible to find elsewhere.
Improving operations and technology. Upgrading to modern management software, installing smart locks and keypad entry, adding security cameras, and building a basic website can all drive occupancy. Tenants increasingly expect to be able to rent a unit online, set up autopay, and manage their account from their phone. If your facility still runs on paper ledgers (like ours did), modernizing the tech stack will attract a higher-quality tenant base.
Vertical integration. This is a more advanced strategy, but it's what we're doing with Jacob's moving company. If you own or partner with a complementary business (moving company, real estate brokerage, estate sale company, contractor), you can create a captive customer pipeline that eliminates marketing costs entirely. The savings flow straight to your NOI, which means they get capitalized into property value.
Ancillary revenue. Truck rentals, moving supplies (boxes, tape, bubble wrap), tenant insurance, and even vending machines are all common add-on revenue streams for self storage. None of them are game-changers individually, but together they can add 5 to 10% to your top line with minimal effort.
Operations and Management
The biggest misconception about self storage is that it's passive income. I get a little twitchy when I hear that. Is it simpler to manage than an apartment complex or a retail center? Absolutely. But there's still work involved, especially in the first year of ownership.
At a minimum, you need to handle: rent collection and delinquency management, unit turnovers and lock-cuts for abandoned units, basic property maintenance (lighting, landscaping, pest control, snow removal), tenant inquiries and move-in/move-out coordination, and marketing and lead follow-up. You can either do this yourself, hire a site manager, or contract with a third-party management company. Management companies typically charge 6 to 10% of gross revenue, and many also tack on marketing fees. For our facility, we self-manage through Jacob because the moving company partnership makes that the clear best option.
One thing I learned the hard way: budget 60 to 90 days for the operational transition after you close. Vendor onboarding, utility transfers, software migrations, and insurance setup all have dependencies on each other, and everything takes longer than you'd expect. I go into more detail on this in my post on our 90-day self storage turnaround.
Financing a Self Storage Facility
There are several paths to financing a self storage acquisition, and the right one depends on your experience level, the deal size, and the property's current performance.
SBA loans are great for first-time buyers purchasing smaller facilities. The SBA 7(a) program can go up to $5 million, and the 504 program works for owner-occupied situations. Down payments are typically 10 to 20%, and terms can extend to 25 years.
Conventional commercial loans from banks or credit unions are the standard path for stabilized facilities. Expect 20 to 30% down, 5 to 10 year terms with 20 to 25 year amortization, and interest rates that vary with the market. The key here is that lenders underwrite to current NOI, so if you're buying a distressed property, you may need to bring more equity or structure the deal creatively.
Seller financing can be a powerful tool, especially when the seller is motivated and the property doesn't qualify for traditional lending. I've written more about creative financing approaches in my post on buying commercial real estate with no money down.
Investor capital and syndications are what we used for our Madison facility. We raised equity from investors, structured it as a syndication with a defined hold period, and retained operational control. This works well for larger deals or value-add plays where you need more capital than a single investor can provide.
Whichever route you take, run a cost segregation study as soon as you close. Self storage facilities have a lot of depreciable components (metal buildings, HVAC systems, paving, fencing, security equipment) that can be accelerated under bonus depreciation. The tax benefits from cost segregation can meaningfully improve your year-one cash-on-cash return.
Drive-up storage units at the facility, the type of units that make self storage so cost-effective to operate.
Our Real-World Case Study
I'm documenting our entire self storage journey in a series of posts. Here's where you can follow along:
How to Buy a Self Storage Facility - The full acquisition story: finding the deal, underwriting, due diligence mistakes, financing, and our value-add game plan.
90 Days After Buying an Abandoned Self Storage Facility - What the first 90 days actually looked like: operational chaos, tenant retention strategies, and the moving company marketing hack.
Shipping Container Storage: Adding 46 Units for $150K - How we're using modified shipping containers to add 46 storage units to the facility, the math behind the investment, and what it means for property value.
Madison Self Storage: The Numbers
$1.7M
Purchase Price
105 â 140+
Unit Expansion
60% â 95%
Occupancy Target
2-3 Yrs
Projected Hold Period
Key Takeaways
Self storage is one of the most accessible CRE asset classes. Lower operating costs, simpler tenant relationships, and strong recession resistance make it an ideal entry point for new commercial real estate investors.
The real money is in value-add. Buying stabilized facilities at market price works, but the outsized returns come from fixing mismanaged properties through operational improvements and physical expansion.
Due diligence is non-negotiable. Walk every unit, verify every tenant, and never take the seller's word for occupancy or revenue numbers. The 20% of time you spend on diligence saves you from 80% of potential mistakes.
Think about your competitive moat. Whether it's a moving company partnership, a prime location, superior technology, or a local brand, having something that your competitors can't easily replicate is what turns a good investment into a great one.
It's not passive, but it's simpler than most CRE. Especially after the first 90 days of setup and onboarding, self storage operations can be streamlined to a manageable time commitment. But don't go in expecting mailbox money from day one.
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Join the CRE AcceleratorAbout the Author
Tyler Cauble is a commercial real estate broker, investor, and developer based in Nashville, Tennessee. He is the founder of The Cauble Group, the author of Open for Business: The Insider's Guide to Leasing Commercial Real Estate and the host of the Commercial Real Estate Investor podcast. Through his CRE Accelerator mastermind at CRECentral.com, he coaches investors at every stage of their commercial real estate journey.