Self-storage cap rate calculator
Value = NOI ÷ cap rate. Solve for value or for the cap rate an asking price implies, then see what a post-sale property tax bill does to both.
- Price per SF
- $77
- Price per unit
- $9.3K
- NOI per SF
- $5.02
- Value per $1 NOI
- $15.38
Value at nearby cap rates
Reassessed NOI| 5.50% | $4,745,455 | +$730K |
| 6.00% | $4,350,000 | +$335K |
| 6.25% | $4,176,000 | +$161K |
| 6.50% (yours) | $4,015,385 | |
| 6.75% | $3,866,667 | −$149K |
| 7.00% | $3,728,571 | −$287K |
| 7.50% | $3,480,000 | −$535K |
A cap rate is only as good as the NOI under it. Storage Underwriter builds NOI from the rent roll and P&L, then values it today and at stabilization.
iPhone app · coming soon →The cap rate formula
The cap rate is the unlevered first-year yield on a purchase. A facility producing $285,000 of NOI and valued at a 6.5% cap is worth $285,000 ÷ 0.065 = $4,384,615. The same formula runs in reverse: at an asking price of $4,250,000 the seller is asking you to accept a 6.71% cap on their NOI.
Because value is NOI divided by a small number, small moves matter. At $285,000 of NOI, the difference between a 6.25% and a 6.75% cap is about $338,000 of value. That is why the calculator shows a ladder of nearby cap rates instead of a single number.
Why the tax line changes the answer
In many jurisdictions a sale triggers a reassessment, so the seller's property tax bill is not the one you will pay. Every added dollar of tax is a dollar less NOI, and at a 6.5% cap each $1,000 of annual tax is worth about $15,400 of value.
| Seller's view | After reassessment | |
|---|---|---|
| Property tax | $28,000 | $52,000 |
| NOI | $285,000 | $261,000 |
| Value at 6.5% cap | $4,384,615 | $4,015,385 |
| Cap rate at $4.25M price | 6.71% | 6.14% |
The same price that looked like a 6.7% cap is a 6.1% cap on the NOI you will own. The property tax reassessment guide covers how to estimate the new bill before you make an offer.
Which NOI to capitalize
- In-place (going-in) NOI tells you the yield you buy on day one. Compare it with your loan constant to see whether the deal cash-flows before any improvement.
- Stabilized NOI (full occupancy at market rent) tells you what the facility could be worth after a lease-up. Never pay today's price on tomorrow's NOI without discounting for the time, cost and risk of getting there. The Deal Analyzer models that path.
- Forward NOI (next twelve months) is what a buyer will capitalize when you sell. The analyzer prices your exit on the year after the hold for that reason.
Cross-check with price per square foot and per unit
Cap rates compare income; price per rentable square foot and per unit compare the physical asset. A price per square foot well above recent comparable sales, or above what it would cost to build, is a signal to recheck the income. Enter rentable square feet and unit count to see both.
Results are estimates based entirely on the figures you enter. They are not investment, lending, tax or legal advice.
Questions
How do you calculate the cap rate on a self-storage facility?
Divide the facility's annual net operating income by its price or value. A facility with $300,000 of NOI priced at $4,800,000 trades at a 6.25% cap rate. Use NOI after all operating expenses, including a management fee and property taxes, but before debt service, depreciation and capital expenditures.
How do you value a self-storage facility?
Most buyers and appraisers lead with the income approach: stabilized or in-place NOI divided by a market cap rate. Sales comparables (price per square foot and per unit) and replacement cost are used as cross-checks. The income approach is only as reliable as the NOI, so rebuild it from the rent roll and bank deposits rather than accepting the seller's figure.
Should I use the seller's NOI or my own?
Your own. The seller's NOI often omits a management fee or payroll and reflects a tax bill that may reset after the sale. Underwrite the NOI you will operate, then decide what cap rate you are willing to pay on it.
What cap rate do self-storage facilities sell for?
It depends on quality, location, size, occupancy and the interest-rate environment at the time. Published broker and appraiser surveys report ranges by facility class; our cap rates guide summarizes the latest ones with their dates.
What is the difference between a cap rate and yield on cost?
A cap rate compares NOI with a market price. Yield on cost compares stabilized NOI with everything you spent: price, closing costs, repairs and expansion. A value-add deal is attractive when its yield on cost is comfortably above the market cap rate you could sell at.
Related
- Self-Storage Cap RatesWhat published surveys report for cap rates, and how to pick going-in and exit caps.
- Property Tax ReassessmentWhy the seller's tax bill is not your tax bill, and how to underwrite the difference.
- NOI & Expense RatioBuild NOI from rents, ancillary income and a quick expense ratio or a line-item P&L.
- Deal AnalyzerFull acquisition underwriting: unit mix, lease-up, NOI bridge, debt, IRR and a sensitivity grid.
- Self-Storage ReturnsCash-on-cash, IRR, equity multiple and yield on cost: formulas and what drives them.