Everyone is Happy…For Now!
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by admin
- December 23, 2015
- Market Monitor, What We're Reading
- 0
Sounds like good news – and it is! Never before have prices been higher for self storage properties – either in absolute dollars or in relation to the income they produce. Over the last 3 years or so, selling prices of self storage have risen dramatically. A typical owner could look at their facility and find that their value (without any increase in rents or occupancy) went up by about 27%; even more if your operating results improved. The really important result is that your equity went up by an astonishing 100%+ (assuming 75% LTV and 25% equity). This large jump in value comes almost exclusively from the compression in cap rates by 150-200 basis points. You may be wondering what risks will affect the self-storage investment train in the coming year. Let’s take a look at three things we learned in 2015 that will continue to impact investment opportunities in the self storage space…
