Self Storage ROI Calculator
Self storage ROI is what your cash actually earns once the loan is paid: not the unlevered cap rate, but the cash-on-cash return on the equity you put in. Enter a facility's price, NOI, and financing below to get cash-on-cash return, annual cash flow, and DSCR, then read on for what counts as a good return and how it differs from IRR.
How to calculate ROI on a self storage investment
The self storage ROI most investors mean is cash-on-cash return: the annual cash the deal puts in your pocket divided by the cash you put into it. It layers financing on top of the property's NOI, which is why two buyers of the same facility can earn very different returns.
Cash-on-cash ROI (%) = (Annual cash flow ÷ Cash invested) × 100
DSCR = NOI ÷ Annual debt service
Cash invested is the down payment plus closing and upfront costs; annual debt service is the amortizing loan payment over a year. The lever that swings storage unit ROI most is the loan itself. Cheap, long-amortization debt lifts cash-on-cash return, while a high rate can turn a healthy cap rate into thin or negative cash flow. That is also why DSCR matters: it is the lender's test that the self storage cash on cash return isn't being manufactured with debt the property can't safely carry. Investopedia's cash-on-cash return definition is a good primer on the metric.
Cash-on-cash, IRR, and equity multiple
Cash-on-cash is the entry snapshot, but self storage investment returns are usually judged over the full hold. IRR (a self storage IRR calculator models this) folds in rent growth, principal paydown, and the eventual sale, discounted for time; the equity multiple is total dollars returned divided by dollars invested. A value-add deal often shows a modest year-one cash-on-cash but a strong IRR and self storage equity multiple once it hits pro forma. This calculator sizes the year-one return that grounds those projections. The multi-year model is a separate pro forma. Whether storage units are a good investment comes down to whether that entry return, and the growth stacked on top of it, clears your hurdle rate.
ROI FAQ
What is a good ROI for self storage?
For a stabilized facility bought with typical leverage, a first-year cash-on-cash return in the high single digits, roughly 6%–10%, is a common target, with value-add deals underwritten to more once rents and occupancy improve. "Good" is relative to risk and to what safer assets yield: if a treasury pays 4%, a levered, management-intensive storage deal needs a clear spread above that. Expected ROI on self storage also depends heavily on your debt terms, not just the property.
How do you calculate cash-on-cash return on a storage facility?
Cash-on-cash return = annual pre-tax cash flow ÷ total cash invested. Annual cash flow is NOI minus annual debt service. Cash invested is your down payment plus closing and upfront costs. It answers the question that cap rate ignores: given my loan and my equity, what yield is the deal actually throwing off in year one?
What is the difference between cash-on-cash return and IRR?
Cash-on-cash is a single-year snapshot: this year’s cash flow over cash invested. IRR (internal rate of return) is a whole-hold metric that also captures rent growth, principal paydown, and the sale proceeds, discounted for the time value of money. A deal can show a modest year-one cash-on-cash but a strong IRR if it grows into its pro forma. Use cash-on-cash to sanity-check the entry; use IRR and equity multiple to judge the full hold. Those need a multi-year projection this calculator does not model.
What is a good DSCR for a self storage loan?
Most lenders want a debt-service coverage ratio (NOI ÷ annual debt service) of at least 1.20–1.25 on stabilized self storage, and often 1.30+ on ground-up or lease-up deals. A DSCR near 1.0 means the property barely covers its loan payment: thin cushion for a bad quarter. If your inputs produce a DSCR below the lender’s floor, expect a smaller loan or a higher required down payment.
Are storage units a good investment?
Self storage has historically produced steady, recession-resilient cash flow with lower operating complexity than most commercial real estate, which is why storage unit investment returns attract first-timers. But the returns are not automatic: they depend on buying at a defensible price, real (not pro forma) NOI, sane debt, and a market that is not oversupplied. The math on this page is how you separate a genuinely good deal from a good story.
Related: NOI calculator, cap rate calculator, and all self-storage investment calculators.