Syndication Launch Newsletter #00113

Asset Class Showdown: Self-Storage vs Multifamily in 2025

In today’s high-rate, high-inflation environment, choosing the right asset class can make or break your next deal.

Two of the most popular choices for operators entering the CRE space?
Self-Storage and Multifamily.

Each has its strengths. Each has its risks. And in 2025, they’re playing very different games.

Here’s a breakdown of how they stack up across the categories that matter most:

📈 1. Market Demand & Rent Growth

Multifamily:

• Demand remains strong in high-growth markets.

• Affordability is becoming a real headwind, especially in Class A assets.

• New supply hitting the market in many metros could pressure occupancy.

Self-Storage:

• Demand driven by life events: moves, downsizing, divorce, and business overflow.

• Rent growth cooled in 2023–24, but stabilized in Q1 2025.

• Urban infill and undersupplied suburban submarkets still show strength.

💰 2. Operating Expenses & Management

Multifamily:

• Higher payroll, maintenance, and ongoing CapEx.

• Leasing and tenant management are time- and tech-intensive.

• Utilities, repairs, and turnover costs are unpredictable.

Self-Storage:

• Lean operating model with minimal staff—can often be managed remotely.

• Lower maintenance and tenant interaction (month-to-month leases, no toilets).

• Automation tools (keypad access, online billing) improve margins.

🔧 3. Value-Add Opportunity

Multifamily:

• Classic value-add model still works—renovate units, push rents, reduce vacancy.

• More competition means returns may be thinner unless you have an edge on construction or management.

• Often requires heavier CapEx and more tenant disruption.

Self-Storage:

• Value-add plays include rebranding, automation, rate optimization, or expansion.

• Often under-managed by mom-and-pop owners with no revenue management systems.

• Easier to increase income with dynamic pricing and ancillary revenue (boxes, locks, insurance).

🧠 4. Investor Perception & Capital Flow

Multifamily:

• Still the most familiar asset class—investors understand it.

• Easier to raise capital from retail LPs who’ve lived in apartments themselves.

• But LPs are more cautious now—asking tougher questions on rent growth assumptions.

Self-Storage:

• Less intuitive for the average investor but gaining popularity fast.

• Institutional capital has ramped up dramatically—REITs and funds love it.

• Your pitch needs education baked in, especially for first-time investors.

🏁 5. Exit Strategy & Liquidity

Multifamily:

• Deep buyer pool: private investors, syndicators, funds, institutions.

• Liquidity is strong in major markets, though valuations have compressed.

• Multiple exit options: refi, sale, 1031, long-term hold.

Self-Storage:

• More liquidity than you might think—especially for stabilized assets.

• REITs and institutional buyers are acquiring aggressively.

• Cap rates holding steadier than in multifamily, especially for Class B/C assets.

🎯 Final Take: Which Should You Pursue?

If you're starting out and want simplicity, efficiency, and hidden upside from under-managed assets—self-storage might be your best bet in 2025.

If you're experienced in leasing, construction, and raising capital—or want to build long-term wealth through appreciation and scale—multifamily is still a powerful path.

Either way: the key is clarity. Know your market, know your team, and know your investor base.

CRE Terminology of the Week

Multiple on Invested Capital (MOIC)

MOIC measures how much total return an investor receives compared to their original investment. It’s expressed as a multiple — for example, a 2.0x MOIC means the investor received twice their initial capital back. The formula is simple: Total Cash Distributions ÷ Total Equity Invested.

Why It Matters:

• Shows total return regardless of the investment timeline

• Easy for passive investors to understand

• Useful for comparing deals side-by-side

• Complements IRR by showing the “big picture” return

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