Most new self-storage investors underwrite off a broker's pro forma and call it a day. That's how you overpay.

The broker's NOI almost always assumes stabilized occupancy (85-90%) and doesn't reflect the facility's actual trailing 12-month collections. Two things I check on every deal before I even think about a cap rate:

1. Trailing 3-month economic occupancy vs. physical occupancy. A facility can look 90% full on units but be collecting like it's 70% full once you back out delinquencies, comps, and manager units. That gap is your real risk.

2. Expense ratio vs. market norm. Self-storage should run 30-40% expense ratio. If a seller's showing you 25%, they're either under-reporting payroll/marketing or you're about to inherit deferred maintenance.

Once you rebuild NOI off real numbers, re-run your cap rate. If it doesn't still work at a conservative exit cap (add 50-100bps to today's rate), walk.

Built a whole underwriting + automation stack around catching this stuff faster — happy to answer questions on self-storage deal analysis in the comments.