Seller pro forma has 4 percent rent growth in years two and three on the back of a housing thaw. I've got it flat and the deal dies.

I'm reading this twice like everything else, so a slow question. When you say economic occupancy is 81 against 89 physical, is that eight points of discounts and free months, or is it people not paying? Those seem like very different facilities to me and I can't tell which one you're looking at.

Juniper, that gap is usually concessions and promotional rates that never got stepped back up, plus a slice of delinquency. Ledger, that's where I'd spend my time before touching the growth assumption. If eight points of the gap is 200 tenants sitting on a first-month-free rate from 2024 that nobody raised, you have rate growth available inside the rent roll without needing anybody to sell a house. That's a different kind of upside and it's one you control.

Anchor's point is the one that changes the deal for me. Ledger, can you actually see rate history per tenant in the seller's software, or just current rate?

The three-case spread you built is the right shape, and the answer depends on which of two things you're underwriting. Street rate growth and in-place revenue growth are separate lines and they respond to different drivers.

Street rate is the price you post to fill a vacant unit. It's set by local supply and by move-in volume, and move-in volume is where the frozen housing market bites. Yardi's slowdown heading into 2026 and its projection of a gradual, uneven recovery are statements about street rate in aggregate. You have no edge forecasting when home sales move, and neither does the broker, so treating that line as flat is defensible.

In-place revenue is different. It moves with tenure, with how far existing tenants sit below current street, and with whatever rate increase practice the seller has or has not been running. Your 17-month average stay against 12 two years ago is consistent with the longer-tenure pattern being reported sector-wide, roughly 60 percent of surveyed users expecting to stay past a year. Longer tenure means more of your revenue base is exposed to existing-customer increases rather than to move-in volume.

So the model that survives scrutiny puts street rate flat, then prices in-place growth off the actual gap between in-place and street, unit type by unit type, with a churn assumption attached because some tenants leave when the rate moves.

One caution on the year-five value. If you hold street rate flat for 24 months and then apply an exit cap tighter than entry, you've moved the recovery bet from the revenue line to the exit and it's harder to see there. Keep the bet in one place.

The exit cap point is the one I'd have missed. I've watched people do exactly that on land deals, hold the income honest and then just assume the buyer pool is better in five years. They never actually write that assumption down anywhere.

Flat. If the deal only works on a forecast neither party can make, it isn't the boring dependable asset everyone says storage is, it's a rate bet with a fence around it.

Depends heavily on where this is. In the small markets I look at there's been essentially no new supply for years and street rates never ran up much in the first place, so there's less to give back. If Ledger's 212 units are sitting in a metro that added three facilities in 2022, flat is optimistic and I'd model a decline for the first year.

Hollow, that's the split nobody prices properly. The guide language about recovery favoring low-supply markets is doing a lot of work and it means the same 4 percent assumption is reasonable in one county and fantasy in the next one over.

The delinquency slice inside that eight points would worry me more than the concessions. What's the process for a non-paying storage tenant, and how long does it take before the unit is back on the market? I assume that varies by state.

Wren, it does, quite a lot. Lien and auction procedure for self-storage is set by state statute and the notice periods and advertising requirements aren't the same anywhere, so anyone underwriting delinquency needs the rules for that specific state confirmed with a local attorney rather than a general rule of thumb.

I keep the same discipline on my small apartment stuff and I'd apply it here. Underwrite what the asset does today, and treat everything else as the reason you'd be pleased in year three rather than the reason you're buying in year one. My last building only works because I bought it on in-place numbers and the rate lift came later. If it hadn't come, I'd still own something that pays.

Cairn's version is the one I've been able to live with over long holds. Ledger, one thing I'd add on the land side. What's the excess dirt situation on this site? If there's expansion pad available and it's zoned for it, that's an option you're getting for something close to free at a 6.1 on trailing, and it's worth more in a low-supply submarket than any rent growth assumption. Zoning and setback treatment for storage expansion differs by jurisdiction so I'd confirm the specifics with the planning department before assigning it value.

Flat street rate, and then I'd cut the expense side of the seller's forward too. Every seller pro forma I've been handed on anything has property insurance flat and it hasn't been flat in years. Same with the payroll line if they're understaffed at the counter right now.

The payroll point matters more than people think. If the seller has been running that facility with one person 30 hours a week, and you plan to staff it properly, your expense line moves before your revenue line does.

Ledger, I'd stop calling it a growth assumption and call it a move-in volume assumption, because that's the input the housing market actually touches. Build the model so move-ins per month is an explicit driver, then you can sensitize the thing you're worried about instead of a percentage that mixes rate and occupancy together. When I've done that on storage the answer usually comes out that a facility already at 89 percent physical has far less to gain from a relocation thaw than the broker implies. There isn't much room to fill. The thaw shows up mostly as pricing power on vacant units, and you have 23 of those.

23 vacant units is the whole 4 percent story then. That's the part that made me sit up.

Sextant's reframe is going in my notes. I'd never have separated move-ins from rate.

What does the rate increase program cost you in churn though? If Ledger raises in-place tenants to close that gap to street, some of them walk, and now he's refilling units into a market where nobody's moving. Feels like the in-place upside and the flat street rate assumption fight each other.

Tally, that's the tension I couldn't articulate. The two levers aren't independent.

They aren't independent, and the way operators handle it is to increase by cohort and watch move-out rates rather than pushing everyone at once. Longer average tenure helps here, a tenant 17 months in has more inertia than one three months in. Doesn't make it free. It makes it measurable, which is more than you can say for the housing forecast.

On the renovation question the thing I'd want priced is the deferred stuff, because it always turns out bigger than the walkthrough suggested. Roof age on the metal rows, pavement, gate motor, camera system that was new in 2016. On an 89 percent occupied facility you can't do that work at your convenience, you do it around tenants with trucks. Ledger, has anyone been up on those roofs?

Reading this whole thread back, the vote I'd cast is flat street rate plus in-place growth, which is basically what rena-expert laid out and what sextant made operational. What surprised me is how little the housing question ended up mattering once people separated the lines. The deal lives or dies on 23 vacant units and a rate roll that hasn't been touched, and both of those are things you can look at directly.