Self Storage Expense Ratios: What’s Normal and How They Affect Your Value

Key Takeaways

A well-run self storage facility should have an expense ratio between 35% and 45% of effective gross income.

Expense ratios above 50% signal either a management problem or an opportunity for buyers — which directly affects your sale price.

Every dollar you cut from expenses at a 6.5% cap rate adds approximately $15.38 to your property value.

Institutional buyers actively seek facilities with high expense ratios because they know they can compress them — and they price the upside into their offers.

Understanding your expense categories and how they compare to industry benchmarks is one of the most powerful things you can do before selling.

Here’s a number that might surprise you: a self storage facility generating $500,000 in revenue with a 48% expense ratio is worth roughly $615,000 less than the same facility with a 40% expense ratio.

Same revenue. Same location. Same number of units. But a difference of eight percentage points in operating expenses translates to over half a million dollars in property value. That’s the power — and the danger — of your expense ratio.

Most self storage owners know their top-line revenue. Fewer understand how their expenses compare to the industry. And almost none realize how dramatically their expense ratio impacts what a buyer will pay for their facility.

Let’s change that.

What Is an Expense Ratio, and Why Does It Matter?

Your expense ratio is simply your total operating expenses divided by your effective gross income (EGI), expressed as a percentage.

Expense Ratio = Operating Expenses ÷ Effective Gross Income × 100

If your facility generates $500,000 in EGI and your operating expenses total $210,000, your expense ratio is 42%.

Why does this matter so much? Because your NOI is what’s left after expenses — and NOI is the numerator in the cap rate equation that determines your sale price. Every dollar of expense that doesn’t need to be there comes directly out of your NOI, and at typical cap rates, each unnecessary dollar of expense destroys $14 to $20 in property value.

Industry Benchmarks

Based on transaction data and industry surveys, here’s where self storage expense ratios typically fall:

Performance Level	Expense Ratio	What It Signals
Best-in-class (REIT-managed)	28%–35%	Highly optimized, institutional management
Well-run facility	35%–45%	Efficient operations, reasonable costs
Average / Mom-and-Pop	45%–55%	Room for improvement, typical owner-operator
Underperforming	55%+	Management problems, deferred maintenance, or very small facility

There’s nuance in these numbers. A 500-unit facility in Texas will naturally have a lower expense ratio than a 100-unit facility in New Jersey, because fixed costs are spread across more revenue and property taxes differ wildly by state. But the benchmarks give you a starting point for understanding where you stand.

Expense Breakdown: Category by Category

Let’s look at each major expense category, what’s normal, and where owners commonly overspend.

Property Taxes (8%–15% of Revenue)

Property taxes are typically the single largest expense for self storage facilities, and they’re the hardest to control. Rates vary enormously by state and municipality. A facility in Texas might pay 2.5% of assessed value annually, while a similar facility in Alabama might pay 0.8%.

Key considerations:

Reassessment risk on sale: Many jurisdictions reassess property values upon sale, which means the buyer’s tax bill may be significantly higher than yours. Sophisticated buyers factor this in.
Appeal opportunities: Many owners never challenge their property tax assessments. A successful appeal can reduce this expense by 10%–25%.
Typical range: $40,000–$75,000 annually on a facility generating $500,000 in revenue.

Insurance (3%–5% of Revenue)

Insurance costs have risen sharply since 2020, particularly in coastal and disaster-prone areas. Coverage typically includes property, general liability, and umbrella policies.

Facility size matters: Premiums don’t scale linearly — a facility twice the size doesn’t cost twice as much to insure.
Claims history: A facility with prior claims (flooding, break-ins, lawsuits) will pay more.
Typical range: $15,000–$25,000 annually for a mid-size facility.
Opportunity: Shopping insurance annually and bundling policies can save 10%–20%.

Payroll and On-Site Staff (10%–18% of Revenue)

This is where expense ratios diverge most dramatically between owner-operated and professionally managed facilities.

Owner-operated: The owner often doesn’t pay themselves a market salary, which artificially deflates reported payroll — but buyers will normalize this.
Full-time manager: $35,000–$55,000 annually depending on market, plus benefits.
Part-time or kiosk-based: Some facilities operate with minimal staff using technology (automated access, online rentals, call centers).
Remote management trend: Increasingly, facilities are managed remotely with technology replacing on-site staff, reducing payroll to 5%–8% of revenue.
Typical range: $50,000–$90,000 for a facility with one full-time and one part-time employee.

Utilities (4%–8% of Revenue)

Utility costs depend heavily on whether the facility has climate-controlled units and the local cost of electricity.

Drive-up only: Minimal utility costs — mainly lighting, gate systems, and office HVAC. Typically 3%–5% of revenue.
Climate-controlled: Significantly higher — HVAC systems for climate-controlled units can push utilities to 7%–10% of revenue.
LED retrofits: Switching to LED lighting throughout the facility can reduce lighting costs by 50%–70%.
Typical range: $20,000–$40,000 annually.

Maintenance and Repairs (3%–6% of Revenue)

Regular maintenance includes landscaping, pest control, door repairs, paving upkeep, roof maintenance, and general facility upkeep.

Deferred maintenance trap: Owners who defer maintenance save on annual expenses but create a problem at sale — buyers discount for deferred items, often more than the actual cost to repair.
Replacement reserves: Buyers and lenders typically assume $0.15–$0.30 per SF annually for replacement reserves, whether you’re spending it or not.
Typical range: $15,000–$30,000 annually.

Marketing and Advertising (3%–6% of Revenue)

Marketing spend has shifted dramatically toward digital channels. The facilities that generate the most calls and rentals per dollar are investing in:

Google Ads / PPC: The primary lead source for most facilities. $1,000–$3,000/month depending on market competition.
SEO and website: Professional websites optimized for local search. $200–$500/month ongoing.
Aggregator listings: SpareFoot, SelfStorage.com, and similar platforms. These often take a commission rather than a flat fee.
Traditional (signage, direct mail): Still relevant for drive-by traffic, particularly roadside signage.
Typical range: $15,000–$30,000 annually.

Management Fees (5%–8% of Revenue)

If you use a third-party management company, you’ll typically pay 5%–8% of effective gross income. Some companies charge a flat fee plus a percentage.

Self-managed facilities: No management fee, but the owner’s time has value. Buyers will add a pro-forma management fee (typically 6%) when underwriting.
This is a critical normalization: If you self-manage and report a 35% expense ratio, a buyer will add 6% for management, making your normalized ratio 41%.
Typical range: $25,000–$40,000 for third-party management on $500,000 revenue.

How Expense Ratios Vary by Facility Type

By Size

Smaller facilities almost always have higher expense ratios because fixed costs are spread across less revenue.

Facility Size	Typical Expense Ratio
Under 20,000 SF (< 150 units)	50%–65%
20,000–40,000 SF (150–350 units)	42%–52%
40,000–70,000 SF (350–600 units)	36%–45%
70,000+ SF (600+ units)	30%–40%

A 100-unit facility still needs a manager, insurance, property taxes, and marketing — those costs don’t shrink proportionally with revenue. This is why smaller facilities are harder to value and why institutional buyers often pass on them unless there’s expansion potential.

By Class and Condition

Class A (modern, climate-controlled, well-located): 32%–40%. Higher utility costs from HVAC are offset by higher revenue per SF and efficient design.
Class B (functional, good condition, secondary location): 38%–48%. Typical working facility with reasonable costs.
Class C (older, deferred maintenance, tertiary location): 45%–60%+. Higher maintenance costs, less efficient operations, and lower revenue to absorb fixed costs.

By Management Style

REIT-managed: 28%–35%. Centralized systems, bulk purchasing, remote management technology, and optimized staffing.
Third-party managed: 38%–48%. Professional management with local staff.
Owner-operated (mom-and-pop): 40%–55%+. Variable — some owner-operators are extremely efficient, others aren’t. But buyers normalize by adding a management fee.

The Mom-and-Pop Premium: Why High Expense Ratios Attract Buyers

Here’s something counterintuitive: institutional buyers often prefer facilities with high expense ratios.

Why? Because they see built-in upside.

An institutional buyer acquiring a mom-and-pop facility with a 55% expense ratio knows they can likely bring it down to 38%–42% through:

Implementing revenue management software (dynamic pricing)
Replacing on-site staff with remote management technology
Negotiating bulk contracts for insurance, supplies, and maintenance
Eliminating personal expenses running through the business
Optimizing marketing spend toward higher-ROI channels

If a facility has $500,000 in revenue and the buyer can reduce expenses from 55% to 40%, that’s a $75,000 increase in NOI — worth over $1.15 million in additional value at a 6.5% cap rate.

This is why private equity firms target mom-and-pop facilities. They’re not buying the property for what it is today. They’re buying it for what it can be under professional management. And they often pay more than you’d expect because their internal model reflects the optimized expense structure, not yours.

The Flip Side: Implications for Sellers

If you’re a mom-and-pop owner with a high expense ratio, you have two choices:

Optimize before selling. Spend 6–12 months trimming expenses, and sell at a higher NOI with a correspondingly higher price.
Sell as-is and let the buyer capture the upside. You’ll get a lower price, but you avoid the work — and some institutional buyers will still pay a premium because they’re confident in their ability to optimize.

Option 1 generally yields a higher total return, but it requires time and effort. Option 2 is faster but leaves money on the table.

How to Improve Your Expense Ratio Before Selling

If you have 6–12 months before a planned sale, here are the highest-impact expense reductions:

1. Audit and Renegotiate Insurance

Get three competing quotes. Many owners have been with the same carrier for years and are paying 15%–25% more than necessary. Potential savings: $3,000–$8,000/year.

2. Challenge Your Property Tax Assessment

File an appeal if your assessed value is above market value. You may need to hire a property tax consultant (they typically work on contingency). Potential savings: $5,000–$15,000/year.

3. Reduce Staffing or Shift to Remote Management

If you have two full-time employees and your facility could operate with one plus remote support, the savings drop straight to NOI. Potential savings: $25,000–$45,000/year.

4. Eliminate Personal Expenses from the P&L

Personal cell phones, vehicles, meals, family member salaries for no-show jobs — buyers see through all of it, but cleaning your books makes the NOI more defensible. This doesn’t change actual expenses, but it changes how buyers perceive them.

5. Optimize Utility Costs

LED lighting retrofit, motion sensors, programmable thermostats for climate-controlled units. Potential savings: $3,000–$10,000/year.

6. Renegotiate or Rebid Service Contracts

Landscaping, pest control, snow removal, security monitoring — get competing bids. Potential savings: $2,000–$6,000/year.

Real Example: The $615,000 Difference

Let’s put this all together with a concrete example.

Facility: 40,000 SF, 320 units, secondary market Revenue: $500,000 effective gross income

Before optimization (48% expense ratio):

Operating Expenses: $240,000
NOI: $260,000
Value at 6.5% cap rate: $4,000,000

The owner spends 8 months making improvements:

Renegotiates insurance: saves $5,000
Appeals property taxes: saves $8,000
Shifts to one full-time plus remote management: saves $18,000
LED lighting retrofit: saves $4,000
Rebids service contracts: saves $5,000
Total expense reduction: $40,000

After optimization (40% expense ratio):

Operating Expenses: $200,000
NOI: $300,000
Value at 6.5% cap rate: $4,615,385

Value increase: $615,385 — from $40,000 in annual expense reduction.

That’s the multiplier effect of the cap rate. Every $1 in expense savings is worth $15.38 in property value at a 6.5% cap rate. The $40,000 in annual savings didn’t just put $40,000 in the owner’s pocket — it put $615,000 into the sale price.

What Buyers See When They Look at Your Expenses

When a sophisticated buyer reviews your financials, they’re looking for:

Expense categories that are above benchmarks — these represent immediate upside
Personal expenses mixed with business expenses — red flags that suggest NOI is understated
Missing expense categories — if you show no management fee, they’ll add one; if you show no reserves, they’ll add those too
Year-over-year trends — are expenses growing faster than revenue?
One-time items — a new roof last year shouldn’t be counted as a recurring expense

The cleaner and more transparent your financials, the more confidence buyers have — and the more they’re willing to pay. Messy books don’t just slow down due diligence. They reduce offers.

The Bottom Line

Your expense ratio isn’t just an operating metric — it’s a valuation lever. Understanding where your expenses fall relative to industry benchmarks, and taking action to optimize before a sale, can mean the difference between a good outcome and a great one.

The math is simple: lower expenses = higher NOI = higher sale price. The execution takes work, but the payoff is measured in hundreds of thousands of dollars.

Not Sure If Your Expenses Are in Line?

We’ll benchmark your facility’s expense ratio against comparable properties in your market — and identify specific opportunities to improve your NOI before a sale. It’s free, it’s confidential, and it could be worth six figures.

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Self Storage Expense Ratios: What's Normal and How They Affect Your Value