Most storage deals that cross our desk are dead inside 15 minutes. Not because we're not interested. Because 15 minutes is enough to tell whether a deal is worth the hours, sometimes weeks, of real work that come after.
The quick pass isn't the analysis. It's the filter that decides what deals earn the full analysis. We're not trying to prove a deal works in that window. We're trying to kill the ones that can't clear a low bar fast, before they eat a bunch of our time.
It's a score, not a verdict. We run four categories, and inside each is a stack of small checks. The list is longer than it sounds. It moves fast because we've run it on thousands of deals now. A deal doesn't have to win every category. It needs enough across the four to earn the closer look.
Most of us only ever learn how a house gets priced. A house is worth what similar houses nearby just sold for. Commercial real estate doesn't work that way. A storage facility is worth the income it produces.
The number that matters is net operating income: what's left after the operating expenses are paid, before any loan payment. You take that NOI and divide it by a cap rate, which is just the return the market expects for that kind of asset in that kind of place. NOI divided by cap rate is the value.
That's a small shift in how you look at the thing in front of you, and it changes everything. You're not looking at a building and asking what it's worth. You're looking at a stream of income and deciding what you'll pay for it. The building is just where the income happens to live.
Small changes in income create large changes in value. At a 7% cap rate, every extra $10,000 of annual income is worth about $143,000.
Take a real one. Plenty of these facilities still pay a $40,000-a-year employee to sit in an office alone all day. Remove that position cleanly and you've added $40,000 to NOI, worth roughly $570,000 in value at a 7% cap. Service doesn't suffer for it. We run remote, and most people would rather rent online than sit across a desk to sign a lease, so it's usually the better experience anyway. The same math runs in reverse: add income like tenant insurance and it's valued the same way.
So we don't buy storage hoping the market lifts the price. We buy income we can grow, because growing it is what moves the value. That idea sits under every check that follows. It's also why the price question is the one we're most ruthless about. If we pay today for income that doesn't exist yet, we've handed the seller the exact value we showed up to create.
This is the one that kills the most deals, so we get it out of the way first. We need a price based on current performance, not a proforma that assumes the work is already done. If a seller is pricing in the rate increases, the added fees, and the occupancy gains, they're asking us to do the work and pay for the value it creates. We're happy to buy a fairly priced underperformer and fix it ourselves. We just won't pay extra today for work we haven't done yet.
The best operations can't save a bad market, so it's the second thing we rule out. We pull it up in TractIQ and check a few things fast: square feet per capita (is it already oversupplied?), household income, how many new facilities are in the pipeline, and whether the market itself is growing or shrinking. A tertiary market with enough renter demand to keep the existing units full, and no wave of new construction about to flood it, is what we want. Saturated or shrinking, and the rest doesn't matter much.
This is where most of the upside lives. We start with the income the place actually collects and see how much of it survives to the bottom line after expenses. Then we look at what we could add: tenant insurance, admin and late fees, rate increases on below-market tenants, occupancy we could fill. And what we could cut: a staff position at a facility that should run remote, a dumpster the place pays for that non-tenants keep filling, an insurance premium that's high for no reason. One cuttable expense can move NOI more than a year of rate increases.
A facility that isn't marketing well is upside we can capture cheap. We check the website first: can you rent a unit online, or does it dump you to a phone number? Is tenant insurance offered (a claims button in the top corner usually means yes)? Then the Google Business Profile: how many reviews, what score, when did they last respond to one. Weak marketing isn't a problem to us. It's the easiest lever we have.
The four categories don't change. What changes is how we get the answers.
For a facility listed online with a broker, we get handed a package: a profit and loss statement, a rent roll, the marketing site. We can read the expenses line by line, see the real occupancy, and check whether tenant insurance income is already on the books. The data is right there, which is convenient and also the problem. Everyone else looking at the deal is reading the same polished story, and the price usually reflects it.
With an off-market facility, the data is thinner. There's often no clean P&L and no package, just an owner who may or may not have the data we need handy. So we get the answers the old-fashioned way, by asking. Most of those early conversations are us working through the same four categories: what are you collecting, what do you spend on staff and trash and insurance, are you renting online, what's your occupancy really. The information is harder to pull, but nobody else is pulling it.
That's why we lean off-market. On a listed deal we're bidding against a clean spreadsheet everyone has already seen. Off-market, we're building the picture ourselves, on a facility no one else is looking at, usually before a price has hardened around it.
The screen tells us whether a deal is worth our time. It doesn't tell us whether to buy it. Those are different questions, and the gap between them is where the real work lives.
The screen runs on the seller's numbers. Full underwriting starts by assuming they aren't correct. The most important thing we verify is whether the income is actually real, reconciling what the owner says they collect against what actually landed in the bank. More than once that gap has been the whole story: a facility that looked healthy on paper and was quietly collecting far less.
From there it's the unglamorous list. We run a standard operating model, so we already know most of our expenses going in. The ones we really have to pin down are the ones that change by property: insurance, property taxes, and utilities. Property taxes usually reset when we buy, and insurance we can get re-quoted to a real number. We verify market rents and real competitor pricing, check the physical condition, the lease, the title, and what financing we can actually get and whether its terms fit the plan. None of that fits in 15 minutes. It takes days, sometimes weeks.
It's not for everyone. But if you want to see the secret sauce, we recorded a full walkthrough of how we actually underwrite one of these, start to finish, on a real deal with the details anonymized. If the 15-minute screen is the trailer, that's the movie. [video link]
Most of what makes someone good at buying storage is being willing to say no quickly, and often. The 15-minute screen isn't about finding reasons to like a deal. It's about protecting the time, and eventually the capital, that would otherwise go into one that was never going to work. The deals that survive it have earned a closer look.
Nine out of ten deals don't survive that first 15 minutes, and we still pass on most of the ones that do. We turn down far more than we chase, and a few we walked away from probably would have been fine. We're okay with that. The expensive mistakes come from the deals you talk yourself into, not the ones you let go.
So when you look at any investment, are you paying for what it does today, or for what someone promises it'll do tomorrow?
If you're sizing this up from the other side of the table, here's the same process from the passive investor's seat.
If you'd rather follow along as we look at deals, the investor list is open. We won't pitch you, we'll just show you what we're seeing.
