1. Actual rent: The sum of actual rental rates for occupied units. (Does not include fees, insurance, merchandise, etc.)
2. Break-even occupancy: The occupancy level at which a facility’s expenses and revenue are equal. A facility will exceed break-even and show a profit when gross rent exceeds expenses plus debt service. 
3. Capitalization rate: A measure of performance and an indication of value.  The expected rate of return on a property when starting a self-storage business. A cap rate is expressed as a percentage.  A cap rate of 10 can be expected to return an annual return of 10 percent.  NOI / Cap Rate = Value  Example: $130,000 / 8 percent = $1,625,000 
4. Conversion: The process by which an existing structure is re-designed for use as a self-storage facility or the process of converting units to support supply and demand. (Example: a former Kmart store is transformed into a self-storage facility or two 5-by-10s are reconfigured into a single 10-by-10 unit by removing a wall.)
5. Concessions: Dollars not received as a way to obtain more rentals, i.e., discounts, free truck or unit rental. (Remember that every dollar not collected reduces the value of the facility.)

Knowing the terms and definitions within the self-storage industry can be very helpful in starting a self-storage business.  Not only will you be able to work with vendors and clients, you will be better able to keep track of the one thing that is “the bottom line” in any business – the bottom line (profit or loss). 
 

Starting a Self Storage Business