Self Storage Investing Guide: How to Buy and Profit from Storage Facilities in 2026

Self storage has been one of the best-performing [[[commercial real estate](/blog/commercial-real-estate-financing)](/blog/commercial-real-estate-investing-beginners)](/blog/commercial-real-estate-financing) sectors for over two decades. During the 2008 financial crisis, self storage REITs outperformed every other property type. During COVID, demand surged as people moved, downsized, and reorganized their lives. Even in rising-rate environments, the sector has held up better than most.

There are roughly 50,000 self storage facilities in the United States, and the industry generates over $40 billion in annual revenue. Yet it remains one of the most accessible commercial real estate investments for individual investors. Many facilities change hands between $500,000 and $3 million — well within reach for a serious investor.

This guide covers the economics, how to evaluate a facility, what to look for (and avoid), and how to operate profitably.

Why Self Storage Works as an Investment

Recession Resistance

People need storage during good times (buying more stuff) and bad times (downsizing, moving, divorce, death). The four Ds of self storage demand — death, divorce, dislocation, and downsizing — happen regardless of economic conditions.

During the 2008–2009 recession, self storage occupancy dipped from around 90% to 82% nationally. Compare that to office (which dropped to the 70s) or retail (which saw widespread vacancies). Storage bounced back faster than any other sector.

Low Operating Costs

A self storage facility is essentially a metal building with doors. There's no plumbing in individual units, minimal HVAC (except climate-controlled units), and no build-outs for tenants. [Operating expenses](/blog/net-operating-income-guide) typically run 30%–40% of gross revenue, compared to 45%–55% for apartments and 40%–50% for office buildings.

Month-to-Month Revenue Flexibility

Most storage leases are month-to-month. This sounds risky, but it's actually an advantage: you can raise rents frequently without waiting for lease expirations. Existing tenants are surprisingly sticky — the average storage customer stays 12–15 months, and many stay for years. Once someone moves their stuff in, inertia kicks in. Raising rent $10–$20 per month rarely triggers a move-out.

Scalable Operations

Modern self storage operations are highly automated. Cloud-based management software handles rentals, payments, access control, and late notices. Many facilities operate with one part-time manager or even no on-site staff at all. A single owner can manage 200–400 units with the right systems.

Fragmented Market

About 70%–75% of self storage facilities in the U.S. are owned by independent operators — mom-and-pop owners who may not be running the business optimally. This creates opportunities to buy underperforming facilities and improve operations (raise rents, add online marketing, upgrade access control, reduce expenses).

Self Storage Economics

Revenue Model

Revenue comes from several sources:

• Unit rentals — The core business. Monthly rent per unit varies by size and market:

  • 5×5 unit: $40–$80/month
  • 10×10 unit: $80–$175/month
  • 10×20 unit: $120–$250/month
  • 10×30 unit: $180–$350/month
  • Climate-controlled units: 25%–50% premium over standard

• Late fees — Typically $20–$50 per incident. Can represent 2%–4% of total revenue.

• Tenant insurance — Most facilities require tenant insurance and offer it at $10–$15/month. With 300 tenants, that's $3,000–$4,500/month in nearly pure profit.

• Retail sales — Locks, boxes, packing supplies. Small revenue but high margins.

• Truck rentals — U-Haul or Penske partnerships generate referral fees and drive customer traffic.

Operating Expenses

Typical expense breakdown for a 200–400 unit facility:

• Property taxes: 8%–15% of revenue
• Insurance: 3%–5% of revenue
• Payroll: 8%–15% of revenue (can be near zero with automation)
• Utilities: 3%–6% of revenue
• Marketing: 3%–6% of revenue
• Repairs and maintenance: 3%–5% of revenue
• Management software: 1%–2% of revenue
• Miscellaneous: 2%–4% of revenue

Total operating expenses: 30%–45% of revenue, depending on the facility size and level of automation.

Cap Rates

Self storage cap rates in 2026 vary significantly by facility quality and market:

• Class A facilities (climate-controlled, major MSA): 5.5%–6.5%
• Class B facilities (mix of climate and drive-up, suburban): 6.5%–8.0%
• Class C facilities (older drive-up, rural/small town): 8.0%–10.0%
• Value-add opportunities (under-managed, below-market rents): 7.0%–12.0% going in, with potential to drive cap rates down through improved operations

How to Evaluate a Self Storage Facility

1. Market Analysis

The most important factor is supply and demand in the local market.

Demand indicators:

• Population of 50,000+ within a 3–5 mile radius
• Population growth (look for 1%+ annually)
• Median household income above $40,000
• High percentage of renters (apartment dwellers use storage more than [homeowners](/blog/home-insurance-savings))
• Military bases, universities, and transient populations nearby

Supply indicators:

• Calculate the square feet of storage per capita in the trade area. The national average is about 7–8 sq ft per person. Markets with 5–6 sq ft per capita have room for growth. Markets above 10 sq ft per capita may be oversaturated.
• Check for new facilities under construction or in the planning/permit stage. New supply is the #1 threat to existing facility performance.

2. Physical Inspection

Walk every unit. Look for:

• Roof condition — Metal roofs last 20–30 years but rust and leak. Replacement costs $3–$8 per square foot.
• Door condition — Roll-up doors take the most abuse. Budget $500–$800 per door for replacements.
• Drainage — Water is the enemy of storage. Look for grading issues, standing water, and water stains inside units.
• Pavement — Cracked or potholed drives need attention. Asphalt overlay runs $2–$4 per square foot.
• Security — Fencing, gates, cameras, lighting. Inadequate security hurts occupancy and increases break-in losses.
• Climate control systems — If applicable, evaluate HVAC age and condition. Replacement is expensive.

3. Financial Analysis

Request these documents:

• Trailing 12-month profit and loss statement
• Rent roll — Current occupancy by unit size and type, with actual rents being paid
• Rate sheet — Advertised street rates
• Expense [documentation](/blog/heloc-documentation-requirements) — Tax bills, insurance policies, utility bills, payroll records

Key things to verify:

• Is the occupancy real? Cross-reference the rent roll with actual deposits. Some owners count comped or unpaid units as "occupied."
• Are rents at market? Compare to competitors within 5 miles using SpareFoot, Google Maps, or calling competitors directly.
• Are expenses complete? Owner-operators sometimes pay expenses personally and don't record them (insurance through a family policy, maintenance they do themselves, etc.).
• What's the economic occupancy vs. physical occupancy? A facility can be 90% physically occupied but only 80% economically occupied if 10% of tenants are delinquent.

4. Expansion Potential

Can you add more units? Check:

• Available land on the existing parcel
• Zoning allows additional construction
• Demand supports additional supply
• Cost to build new units ($35–$55 per square foot for drive-up, $60–$100 per square foot for climate-controlled)

Adding units to an existing facility is one of the highest-return strategies in self storage because you already own the land and have existing customer flow.

Value-Add Strategies

Raise Rents

The #1 value-add play. Many mom-and-pop operators haven't raised rents in years. If competitors charge $120 for a 10×10 and your facility charges $85, you have immediate upside. Raise rents in phases — $10–$15 every 3–6 months — to minimize move-outs.

Improve Online Presence

Many older facilities have terrible websites, no Google Business Profile optimization, and no online rental capability. Simply creating a modern website with online reservations and rentals can increase move-ins by 20%–40%.

Add Revenue Streams

• Tenant insurance (if not already offered)
• Retail sales
• RV/boat parking ($50–$150/month per space)
• U-Haul or truck rental partnership
• Wine storage or specialty units at premium rates

Reduce Expenses

• Automate with kiosks and smart locks to reduce or eliminate on-site staff
• Install LED lighting to cut electric costs 40%–60%
• Shop insurance annually
• Appeal property tax assessments (many facilities are over-assessed)

Expand the Facility

If you have land, adding units offers the best return on invested capital in storage. A new drive-up building might cost $35–$45 per square foot to build and generate $10–$15 per square foot annually in rent — a 25%–35% return on the construction cost.

Financing Self Storage

• SBA 504 — If you'll manage the facility on-site (owner-occupied), you can put as little as 10% down with favorable terms.
• Conventional — 25%–35% down, 5–10 year terms, 20–25 year amortization. Community banks that already finance storage in your market are the best bet.
• [Bridge loans](/blog/dscr-loan-fix-and-flip) — For value-add deals that need stabilization before permanent financing.
• [Seller financing](/blog/seller-financing-guide) — Common in self storage, especially with retiring owners who want installment sale tax treatment.

Operating a Self Storage Facility

Technology Stack

Modern facilities run on:

• Management software — StorEdge, SiteLink, or Hummingbird. Handles rentals, billing, access control, and reporting. Budget $3–$6 per unit per month.
• Smart locks/access control — Noke, Nokē Smart Entry, or Janus. Allow contactless rentals and remote access management.
• Website with online rentals — Essential. 60%+ of storage customers start their search online.
• Call center — Services like XPS Solutions or Go Answer handle after-hours and overflow calls for $3–$5 per call.

Staffing

• 0–150 units: Owner-managed or one part-time employee
• 150–400 units: One full-time manager
• 400+ units: Manager plus part-time assistant
• Fully automated: Possible with smart locks, kiosks, and call center backup

Revenue Management

The most sophisticated operators use revenue management software (like Prorize, Veritec, or built-in tools in SiteLink) that automatically adjusts street rates and existing tenant rates based on occupancy, demand, competition, and seasonality.

The basic principle: raise rents on existing tenants every 6–12 months. Most operators see only 2%–5% move-out rates per rent increase when raises are $10–$20 per month.

FAQs

How much does it cost to buy a self storage facility?

Prices range widely. A 100-unit facility in a rural area might sell for $300,000–$700,000. A 300-unit facility in a suburban market might cost $2M–$5M. Institutional-quality, climate-controlled facilities in major metros can sell for $10M+. The median transaction price for facilities changing hands is roughly $1.5M–$3M.

What is a good occupancy rate for self storage?

85%–92% is the sweet spot. Below 80% suggests a problem (bad location, poor management, or oversupply). Above 95% means you're likely undercharging — raise your rates.

How much can I make owning a self storage facility?

A 200-unit facility with average rents of $100/month generates $240,000 in gross annual revenue. At a 60% operating margin, that's $144,000 in NOI. After debt service on a typical loan, expect $50,000–$80,000 in annual cash flow — plus equity buildup and potential [appreciation](/blog/home-appreciation-explained). Returns improve significantly with value-add execution.

Is self storage recession-proof?

No investment is truly recession-proof, but self storage is one of the most recession-resistant asset classes. Occupancy may dip 5%–10% in a severe recession, but the sector recovers faster than retail, office, or hospitality. People still need to store their belongings during economic downturns — sometimes more so as they downsize or relocate for jobs.

Should I build or buy a self storage facility?

Buying an existing facility is generally less risky — you're acquiring existing cash flow and customer base. Building offers higher potential returns but comes with construction risk, lease-up risk (it takes 18–36 months to stabilize a new facility), and significantly more capital upfront. Most first-time storage investors should buy, not build.

How do I find self storage facilities for sale?

• Brokers: Argus Self Storage Advisors, Marcus & Millichap, and Cushman & Wakefield all have storage-specific teams.
• Online marketplaces: LoopNet, Crexi, and the SSA (Self Storage Association) marketplace.
• Direct outreach: Many of the best deals come from contacting owners directly via mail or phone. Look for older facilities with minimal online presence — these owners are often ready to sell.

Bottom Line

Self storage is one of the most compelling commercial real estate investments available to individual investors. Low operating costs, recession resistance, fragmented ownership creating value-add opportunities, and increasingly automated operations make it ideal for investors who want strong returns without the headaches of managing apartments or retail tenants.

The key is buying in the right market with the right fundamentals, paying a fair price, and executing a clear plan to improve operations and revenue. Do that, and self storage can generate excellent cash-on-cash returns while building long-term wealth through equity and appreciation.

Related Articles

• Property Taxes Explained: How They Work and How to Reduce Them
• How to Challenge Your Property Tax Assessment (And Win)
• Can You Get a HELOC with a Property Tax Lien?