I'm currently deep in thought exploring the best way to enter the self-storage market and trying to weigh the question: is it generally better to build a new facility or buy an existing one?
As for location I'm thinking generally, but based near Austin, TX for context. Id love to hear your experiences for both paths buying and building and any advice yall might have for just starting out in self storage.
Specifically would love to understand:
- What kind of operating margins do you typically see for a stabilized existing facility versus a newly built one once it reaches stabilization?
- Realistically, what does the timeline look like from initial concept/land acquisition to opening day and reaching stabilization for a new build (including entitlements, permits, construction, lease-up)?
- How does this compare to the typical timeline for acquiring an existing facility (finding the deal, due diligence, closing) and potentially implementing any value-add plan?
- What are the major tax considerations or differences you've encountered between building and buying?
- In your experience, which path (building from scratch or buying existing) tends to be more lucrative or profitable in the long run, considering the different risk profiles, required effort, and return metrics (e.g., ROI, IRR, Cash-on-Cash)?
- Are there certain market conditions where one strategy clearly shines over the other?
I'd love to hear your experiences, or any pros and cons you weigh heavily when faced with this decision.