05/21/2026
Every week we go through deals in our pipeline meeting.
IRR comes up first. Always. And the first thing we do is ask what is driving it.
In self-storage, IRR is almost always most sensitive to two things: the exit cap rate assumption and the stabilization timeline. Change either one and the number moves significantly.
We have killed deals with a 22% IRR because the exit assumption had no basis in what was actually trading in that market.
Here is how we actually run all three metrics before anything moves forward:
IRR: We set the exit cap rate based on where deals are actually clearing, not where we hope they will be. We stress test the stabilization timeline. If the conservative case does not clear our minimum threshold, we move on.
Equity multiple: We work backward from a realistic exit, not forward from an optimistic revenue model. We show it alongside the projected hold period and model what happens if the hold extends by 12 months.
Cash-on-cash: We show it year by year with the source broken out. Distributions from operating income and distributions from reserves look the same on a statement. They are not the same thing.
The one question that tells you everything about any sponsor:
Ask them to walk you through the conservative case for all three metrics and then ask what specific assumption has to fail to get there.
If the answer is specific and grounded in real data, you are talking to a team that has done the work.
We have that answer ready before the first investor conversation happens.
For self-storage owners who want to understand how buyers and operators analyze a facility before moving forward, our partners at Storage Point Advisors can walk you through that process.
Based in Sarasota, FL. We go through the numbers with a fine-tooth comb. Every time.
The link to the full article is in the comments section.
