A Roadmap to Success: Due Diligence Checklist for Buying a Self-Storage Property

Due Diligence Checklist

November 8, 2023

Purchasing a self-storage property can be a lucrative investment, but it’s essential to do your homework before taking the plunge. Due diligence is a critical step in the process, helping you ensure that you’re making an informed decision. To guide you on this journey, here’s a handy due diligence checklist of key considerations when under contract to buy a self-storage property.


1. Property Location and Market Analysis

  • Location, Location, Location: Assess the property’s location. Is it easily accessible and visible to potential customers? Consider proximity to residential areas, businesses, and major roads.
  • Demand Analysis: Assess the local demand for self-storage by considering population growth, demographics, and economic trends.
  • Competitive Analysis: Investigate the competition in the area, their rental rates, and any expansion plans they may have.


 2. Property Inspection

  • Physical Condition: Conduct a thorough inspection of the property to assess its structural condition (roofs, roll up doors, aisles). Look for signs of deferred maintenance, water damage, and pest infestations.
  • Security Systems: Examine the existing security measures, including surveillance cameras, access control systems, and perimeter fencing.
  • Infrastructure Upkeep: Evaluate the condition of infrastructure elements like roofs, drives aisles, drainage, and utilities. Identify any necessary repairs or upgrades.


3. Insurance and Risk Assessment

  • Coverage: Review insurance coverage, including liability, property, and flood insurance, and assess its adequacy.


4. Financial Review

  • Income Statements: Request historical income statements to evaluate the property’s revenue and expenses. Ensure you have a clear understanding of its financial performance.
  • Lease Agreements: Review all existing lease agreements to assess and confirm rental rates, tenant obligations, and lease terms. Are there any delinquent tenants?
  • Expense Statements: Analyze expense reports, including maintenance costs, utilities, property management fees, and property taxes.
  • Future Income Projections: Create financial projections based on the property’s historical performance, market trends, and any planned improvements.


5. Property Zoning and Legal Considerations

  • Zoning Regulations: Check with local authorities to ensure the property is appropriately zoned for self-storage use.
  • Environmental Compliance: Verify that the property complies with environmental regulations. Look for any potential contamination issues.
  • Title Search: Perform a title search to identify any outstanding liens or encumbrances on the property.
  • Contracts: Confirm what services for the property the seller has contracted that may need to be terminated or transferred upon closing.
  • Lawsuits: Investigate any pending or past legal disputes, lawsuits, or tenant complaints related to the property.


6. Legal and Other Professionals

  • Consult Experts: Work with experienced legal and financial professionals who specialize in real estate transactions to ensure you’re protected throughout the process. Consider the expense of an attorney, consultant or broker an investment, as a wrong decision or mistake could be far more costly.


7. Exit Strategy

  • Exit Plan: Develop a clear exit strategy for the property, considering potential resale, expansion, or any other long-term plans.


Completing a thorough due diligence process is essential to mitigate risks and make an informed decision when purchasing a self-storage property. Each step of this checklist plays a crucial role in assessing the property’s potential, financial viability, and the legal and regulatory aspects that can impact your investment. With careful research and analysis, you can set yourself up for success in the self-storage industry. Happy hunting!


Checkout our other related content:

  1. Blog: https://crdrealty.com/self-storage-property-or-rv-park-which-investment-is-right-for-you/
  2. Blog: https://crdrealty.com/how-do-you-calculate-unknown-expenses-on-a-self-storage-pro-forma-commercial-real-estate/


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