Buying a Storage Units: Due Diligence Checklist & Red Flags (2026)

Red flag: Significant fluctuations in occupancy or unexplained drops in average rental rates, or high delinquency rates among tenants.

Ask: Please provide monthly occupancy rates, average rental rates per unit size, and delinquency trends for the past three years. What are the common reasons for tenant churn?

Red flag: Over-reliance on late fees for revenue, or inconsistent or undocumented records for ancillary income sources like retail sales of packing supplies or insurance.

Ask: Can you provide a breakdown of all revenue sources, including rent, late fees, administrative fees, potential tenant insurance commissions, and retail sales, for the last three years?

Red flag: Unexplained spikes in repair costs, unusually low marketing spend for the market, or significant discrepancies between reported expenses and industry averages.

Ask: Please provide a detailed history of all operating expenses, including utilities, property taxes, insurance premiums, maintenance and repair costs, marketing expenditures, and software subscriptions, for the past three years. Are there any deferred maintenance items?

Red flag: Discrepancies between reported income/expenses in financial statements and actual bank deposits or merchant processing volumes.

Ask: Can I reconcile bank statements and merchant processing reports against your reported income and expense figures for the last 12-24 months?

Red flag: Visible signs of major deferred maintenance such as leaking roofs, cracked pavement, outdated security cameras, or non-functional access gates.

Ask: What is the age and condition of the main structural components, including roofs, paving, fencing, and all security systems (cameras, access control)? When was the last major refurbishment?

Red flag: Outdated or inefficient management software, a non-existent or poorly designed website, or lack of online booking/payment options.

Ask: What storage management software do you currently use, and how effective is your online presence (website, review sites, online booking/payments)? What are your online lead generation channels?

Red flag: High employee turnover, lack of documented training procedures for facility management, or reliance on a single individual for all operational aspects.

Ask: Please describe your current staffing structure, including roles, responsibilities, compensation, and any provided benefits. Do you have documented training for new staff?

Red flag: Absence of a systematic maintenance schedule or a record of ongoing repairs, suggesting a reactive rather than preventative approach.

Ask: Can you provide your routine maintenance schedules for the facility and a log of all repairs performed over the last two years?

Red flag: Declining local population, an abundance of new self-storage construction nearby, or a significant increase in vacancy rates for comparable facilities.

Ask: What are the key demographic trends in this area, and how has population density changed over the last 5 years? How much new self-storage capacity has been added or is planned within a 3-5 mile radius?

Red flag: The subject property's rental rates are significantly higher than competitors without clear justification, or competitors offer superior amenities at a similar price point.

Ask: Can you provide a competitive analysis, including current rental rates, occupancy, and key amenities of the top 3-5 competing storage facilities within our market?

Red flag: Poor street visibility, difficult access for large vehicles, or inadequate signage that prevents easy identification.

Ask: Describe the facility's visibility from main roads and ease of access for customers, especially those with moving vans or large trucks. What are the typical daily traffic counts on adjacent roads?

Red flag: A unit mix that doesn't align with local demand, or an inflexible pricing strategy that hasn't adapted to market changes.

Ask: How was the current unit mix (e.g., number of 5x5, 10x10, RV spaces) determined, and what is your current dynamic pricing strategy based on demand and seasonality?

Red flag: Cloudy title, unrecorded easements, or boundary disputes that could limit future development or operational flexibility.

Ask: Please provide the official property deed, a recent survey, and any documentation regarding easements or restrictive covenants on the property.

Red flag: Non-conforming use status, pending zoning changes that could negatively impact operations, or restrictions on expansion or ancillary services.

Ask: What is the current zoning classification for the property, and are there any pending zoning changes or land use restrictions that could affect operations or future development?

Red flag: Existence of hazardous materials on site, prior environmental contamination, or proximity to known superfund sites that could lead to liability.

Ask: Has a Phase I Environmental Site Assessment (ESA) been conducted recently? If so, please provide the report. Are there any known environmental concerns?

Red flag: Operating without required local permits, or expired licenses that need immediate renewal, posing a risk of operational shutdown or fines.

Ask: What operational permits and licenses are required for this business, and are all current and in good standing? Can you provide copies?

Red flag: Lack of documented standard operating procedures (SOPs) for key functions, indicating inconsistent practices and higher training burden.

Ask: Do you have documented standard operating procedures for daily operations, marketing activities, tenant onboarding, and delinquency collections?

Red flag: Critical vendor contracts that are non-transferable, expiring soon, or significantly overpriced compared to market rates.

Ask: Please list all key vendors (e.g., security, maintenance, software, insurance) and provide copies of their current contracts. Are these contracts assignable?

Red flag: No plan in place for retaining existing staff, leading to potential loss of institutional knowledge post-acquisition.

Ask: What is your plan for ensuring a smooth transition and retention of key employees post-acquisition?

Red flag: Incomplete or disorganized tenant records, or proprietary software that makes data transfer difficult or impossible.

Ask: How are tenant records maintained, and what is the process for transferring the entire tenant database and digital records to a new owner?