7 Costly Mistakes to Avoid When Buying A Self Storage Facility

Self storage has emerged as a profitable and resilient asset class in real estate, offering investors strong cash flow, lower overhead costs, and recession-resistant demand.

However, while the industry presents significant opportunities, it also comes with challenges that can turn a promising deal into a financial drain.

Many new investors assume that self storage is a simple, hands-off investment, only to realize too late that poor market analysis, incorrect pricing strategies, or operational inefficiencies can erode profits. Even experienced investors can fall into common traps, such as overpaying for a facility, miscalculating expenses, or underestimating competition.

Whether you're entering the self storage market for the first time or looking to scale your portfolio, being aware of the most frequent mistakes can save you from costly setbacks.

Here are seven critical missteps to avoid when investing in self storage.

1. Waiting for the "Perfect" Deal That Doesn’t Exist

Many investors, especially beginners, hold out for the “perfect” self storage opportunity—one with low competition, high rental rates, and minimal operational issues. The problem? That deal doesn’t exist. Waiting too long often results in missed opportunities. My saying is, “we don’t find good deals - we make them.”

What Makes a Good Storage Investment?

Instead of chasing perfection, focus on deals with controllable issues. Facilities with poor management, weak marketing, or underutilized space can be improved with the right strategies. On the other hand, external factors like oversupply, high property taxes, or declining demand are risks beyond your control.

Examples of good opportunities:

• Mismanaged facilities with low occupancy due to poor marketing and operations.
• Underutilized space with potential for expansion or unit reconfiguration.
• Poor customer experience due to lack of online booking or security upgrades.

Red flags to avoid:

• Oversaturated markets where too much supply drives down rental rates.
• High fixed costs that cut into profitability.
• Economic downturns or local market shifts that reduce long-term demand.

Rather than searching for perfection, smart investors focus on identifying solvable problems while avoiding risks that cannot be mitigated.

2. Relying on the Wrong Metrics for Decision-Making

One of the most common mistakes new self storage investors make is relying on square footage per capita as their primary decision-making metric. While this figure can offer insight into market saturation, it doesn’t provide a complete picture.

Many assume that markets with lower square footage per capita are under-supplied and ripe for investment, while those with higher square footage per capita are oversaturated. In reality, this isn’t always true.

Instead of fixating on a single metric, investors should evaluate actual market conditions by analyzing occupancy rates, rental trends, and the competitive landscape. A city might have low square footage per capita. Still, if facilities in the area struggle to maintain stable occupancy or need to lower rents to consistently attract tenants, this signals weak demand rather than opportunity.

On the other hand, a market with a seemingly high square footage per capita could still be thriving, with facilities maintaining full occupancy and raising rates consistently.

Conducting on-the-ground research is a more reliable approach. Secret shopping competitors can reveal real-time demand and pricing trends. Checking local move-in and move-out rates provides insight into turnover, while observing how quickly vacancies fill can indicate the true strength of the market.

Ultimately, investors should look beyond static industry benchmarks and focus on dynamic market behaviors directly impacting facility performance.

3. Ignoring Future Supply and Demand Trends

Another major oversight is failing to account for future market changes. Many investors assess demand based only on current occupancy rates and rental prices but neglect to consider how upcoming developments could reshape the competitive landscape.

A market that appears strong today could quickly become oversaturated if multiple new facilities open nearby.

Before investing, it’s crucial to investigate planned developments in the area. City planning documents, permit applications, and zoning laws provide insight into future self storage projects. If a single large development adds hundreds of new units to a market with limited demand growth, rental rates can drop, and existing facilities may struggle to stay profitable.

Investors should also analyze local economic trends. Are new businesses and housing developments driving population growth, or is the area experiencing stagnation or decline?

Understanding long-term demand trends is just as important as evaluating current occupancy levels.

4. Comparing Apples to Oranges in Market Analysis

Not all storage facilities are created equal, and comparing dissimilar properties can lead to unrealistic expectations. A high-end, Class-A facility with climate control, top-tier security, and prime highway frontage will naturally command higher rental rates than a small, drive-up facility in a rural area.

Yet, some investors mistakenly assume that rental rates apply uniformly across different types of storage properties, leading to overestimations of potential revenue.

When analyzing competition, compare properties with similar characteristics, considering unit mix, amenities, location, and customer demographics.

For example, a facility with mostly large drive-up units should not be compared to a multi-story indoor facility with climate control. Investors should also avoid relying solely on market averages, as these can be skewed by high-end facilities.

Instead, secret shop competitors, analyze actual occupancy trends, and assess whether the property’s unit mix aligns with demand. Understanding these nuances prevents overestimating revenue potential and making costly investment mistakes.

5. Misjudging Unit Demand and Mix

Many investors mistakenly believe that strong overall market demand ensures all storage unit types will perform well. However, this is often not the case. Some areas experience an oversupply of small units (e.g., 5x5), while others face high demand for larger drive-up units (e.g., 10x20 or 10x30). (Source)

A poorly aligned unit mix can result in prolonged vacancies and reduced income. To optimize occupancy and revenue, analyzing local market demand and adjusting your unit mix is crucial.

Investors should analyze competitor facilities and track occupancy by unit size to avoid this. Creating a spreadsheet of nearby facilities’ unit types, pricing, and occupancy levels can reveal market trends. If competitors consistently have high occupancy in specific unit sizes, that indicates strong demand.

Failing to match unit supply with demand may require costly reconfigurations, such as removing walls to create larger units.

Storage demand is not one-size-fits-all. Investors must ensure their unit mix aligns with what tenants in the area actually need rather than making assumptions based on general market trends.

6. Failing to Conduct Thorough Due Diligence

Thorough due diligence is essential for any successful self storage investment, yet many investors either rush through the process or fail to investigate key areas. A common mistake is relying solely on seller-provided financials without independent verification.

Sellers may present numbers that make the facility appear more profitable than it actually is. Without proper due diligence, investors may inherit undisclosed problems such as misaligned rent rolls, inaccurate occupancy reports, or unaccounted expenses.

To avoid costly surprises, investors must conduct a detailed review of several critical areas:

• Financial Verification: Scrutinize income statements, tax records, and profit-and-loss reports over multiple years. Verify rental income by comparing bank statements with rent rolls and investigate whether the facility has hidden delinquencies or non-paying tenants.
• Property Condition Assessment: Inspect the facility thoroughly, checking for deferred maintenance, roof leaks, drainage issues, security problems, and other costly repairs that might not be evident at first glance.
• Operational Review: Analyze the facility’s rental agreements, tenant insurance programs, and management software to ensure a smooth transition post-acquisition. A well-run facility with good management systems is easier to scale and optimize.
• Zoning and Permitting Compliance: Verify that the facility is properly zoned for self-storage and check for any pending legal issues, environmental concerns, or roadblocks that could prevent expansion or redevelopment.

A lack of thorough due diligence can turn an otherwise promising deal into a financial burden. Investors should never rely on assumptions—confirm everything with hard data, professional inspections, and legal research before committing to a purchase.

7. Overanalyzing Instead of Taking Action

The final and perhaps most damaging mistake is paralysis by analysis. Many aspiring investors spend years researching, attending seminars, and running numbers without ever making a move.

While due diligence is essential, waiting indefinitely for the “right moment” can lead to missed opportunities and rising acquisition costs.

Instead of overanalyzing, set clear investment criteria, develop a structured underwriting process, and take calculated risks.

Partnering with experienced mentors or investment groups can also help bridge the gap between theory and action, providing the confidence needed to move forward.

Final Thoughts: Learn from These Mistakes to Succeed

Investing in self storage can be highly profitable, but avoiding common mistakes is crucial for long-term success. By focusing on actionable opportunities, using the right data for decision-making, and conducting thorough due diligence, you can mitigate risks and maximize returns.

Whether you’re a first-time investor or looking to scale, remember that success in self storage is not about finding the perfect deal—it’s about making smart, informed decisions that align with market realities.

If you’re ready to take the next step, start evaluating opportunities with a clear strategy and a willingness to adapt.