Seller financing self storage deals is not a niche tactic — for some operators it is the default. Alex Quezada of Vault Ventures has closed 19 self-storage facilities since 2020, and 14 of them included some portion of seller carry. Across his $80 million portfolio, 70 to 80% carries seller paper.
The reason is market structure, not negotiating magic. Storage is still owned largely by mom-and-pop operators, while multifamily is roughly 80% institutional. Sellers who own free and clear, have no lender to satisfy, and want to spread out a tax bill will carry paper. Institutions will not.
What follows: the terms Quezada actually locked in, how he sources sellers across four states, why he is lowering his target IRR, and the permit issue that killed $13 million of contracts in a single week of due diligence.
Key takeaways
- Seller carry is normal in storage, not exotic — 14 of Quezada’s 19 facility acquisitions included some portion of it, usually a slice of the purchase price rather than 100% of it.
- Locked-in seller notes at 3% interest-only and 4% on large commercial deals are the single biggest reason his portfolio scaled while market rates rose.
- Underwriting to an 18–20% IRR makes almost nothing pencil at current rates; targeting 15% in stronger markets widens both the buy box and the investor pool, because wealthy LPs read a promised 20% as risk.
- Verify permits and certificates of occupancy at the municipality yourself — a 150,000 sq ft Texas facility under contract at $7.5M had none, and that plus a $5.5M deal wiped out an entire year’s planned acquisitions.
- Follow-up horizon matters more than campaign volume: one of his best deals closed after three and a half years of follow-up, and a dead Florida campaign pushed him into Texas, where the first mailer produced a deal.
From the Real Estate Pros Show
This article draws on an interview with Alex Quezada of Vault Ventures on the Real Estate Pros Show, hosted by Meghan Escobar.
Why Self-Storage Sellers Still Carry Paper
Storage is a bifurcated market. A meaningful share of facilities are still owned by individual operators who built or bought them decades ago, often with no debt left on them. That is the whole answer to why seller carry is available here.
Compare that to multifamily. Quezada puts institutional ownership at roughly 80% — REITs and private equity. A fund does not carry paper for a buyer. It has an investment committee, a disposition mandate, and a lender. So value-add multifamily deals with a flexible, motivated, note-friendly seller are genuinely hard to find.
In storage, the seller is frequently a person. That person may be 70 years old, tired of the calls, sitting on a low basis, and more interested in a monthly payment stream than a lump sum that triggers a large tax event. A note solves their problem and yours at the same time.
The results are not marginal. Of the $80 million Vault Ventures has under ownership, 70 to 80% involves seller financing in some form. Of 19 self-storage acquisitions since 2020, 14 included it. That ratio is the point: if you are marketing to storage owners and treating seller carry as a long shot you ask about at the end, you are mispricing your own odds.
The same logic extends to the adjacent asset classes where mom-and-pop ownership persists — small bay flex, mobile home parks, small retail. Where the owner is a person rather than a fund, structure is negotiable.
What Seller-Carry Terms Actually Look Like on Commercial Storage
On large commercial deals, Quezada has locked seller notes at 3% interest-only and 4%. Those are the terms he names, and they were signed while market rates on commercial debt moved sharply higher.
Two details matter more than the headline rate. First, this is almost always some portion of the purchase price, not the whole thing. A seller carrying 40%, 50%, or 60% behind a new first position or a cash-and-note structure is the realistic shape of these deals. Expecting a 100% carry will cost you deals a partial carry would have won.
Second, interest-only changes the asset’s behavior during the value-add period. On a storage facility where you are raising month-to-month rents and filling vacancy, an interest-only note keeps early cash flow where you need it — in operations and lease-up — rather than in amortization.
The strategic effect is that a below-market fixed note becomes an asset in itself. As market rates rise, a 3% note does not reprice. Quezada is explicit that he does not underwrite to rate cuts:
- Rates are assumed flat for the hold period.
- Exit cap rate is underwritten at or wider than entry, not compressed.
- Any cap rate compression on exit is treated as upside, not as the thesis.
That discipline is what makes a carry structure safe rather than clever. If the deal only works when rates fall a point, the seller note is not protecting you — it is hiding the problem.
They’re not going to go down anytime in the near future that we can see and predict. But they’re going to come down eventually at some point. And we don’t bank on that. We don’t underwrite to that. But if you get that bonus when you go to sell and cap rate compresses a point or two, that can really just change your life.
— Alex Quezada, Vault Ventures
Sourcing: Direct Marketing, Market Expansion, and Long Follow-Up
The first eight storage facilities came out of Florida direct marketing. Then two consecutive campaigns produced no calls at all — not bad leads, no calls.
Rather than run the same list a third time, Quezada opened Texas. The first Texas campaign produced a deal. From there the marketing expanded into South Carolina and Georgia, with markets selected on two screens: population growth and job growth. The reasoning is straightforward — you want income growth underneath your rent increases, not just a cheaper entry price.
The second lever is follow-up duration, and it is where most operators quit early. One of the best deals in the portfolio, bought in September, came out of a three-and-a-half-year follow-up cycle. A mom-and-pop owner who says no today is not a dead lead; they are a lead with a life event that has not happened yet. Death, divorce, a property tax reassessment, a bad year of occupancy, a management company quitting — any of those can turn a three-year no into a signed LOI.
Three channels feed the pipeline beyond mail:
- Direct marketing to owners in growth markets, run as repeated campaigns rather than one-offs.
- YouTube and social content — deal studies and facility walkthrough videos that make him the obvious person to forward a listing to.
- Mastermind and peer relationships — a connection made years earlier at one group led to a capital partner willing to fund deals for a share of the GP, on better terms than his existing investors.
Note that none of those replace the mail. They compound on top of it.
Underwriting: Why He’s Lowering His Target IRR to 15%
Quezada spent years underwriting to an 18–20% IRR. At current interest rates, almost nothing clears that bar, which is exactly why he bought five commercial deals last year and, by choice, none so far this year.
The shift came from coaching feedback that reframed the problem. He had been treating a high promised return as a selling point. The feedback: telling a sophisticated, wealthy investor you will deliver a 20% IRR reads as higher risk, not higher reward. Capital at that level is looking for durable, boring, protected returns.
Lower the target to a 15% IRR in a stronger market and two things happen at once:
- The buy box widens. Deals that were three points short of penciling now clear, and they clear in better markets than the ones you were forcing at 20%.
- The investor pool widens. A 15% projection in a growth market is easier for large check writers to believe, and easier for you to actually deliver.
This is not a case for sloppy underwriting. His conservatism sits elsewhere in the model — flat rates, no assumed cap rate compression, and a willingness to sit out a year. The 15% target is about where you set the hurdle, not how honestly you fill in the assumptions.
For anyone raising outside capital, the related lesson is on the equity side: relying on a handful of large check writers is fragile. Quezada’s stated regret is having a list of smaller prospective investors he never nurtured, because the easy money was always available. When a deal needs a different structure, that neglected list is the thing you wish you had built.
Due Diligence: The Permit Problem That Killed $13M of Contracts
In a single week of due diligence, two contracts totaling roughly $13 million died. One was a 150,000 sq ft Texas facility at $7.5 million. The other was a $5.5 million deal. Together they represented more than half of a $25 million annual acquisition target.
The Texas problem: no permits existed for any building on the property. Not expired permits, not permits with open items — none.
The sequence of how that happens is worth understanding, because it is repeatable. The seller under contract had not built the facility; he bought it, and had nothing in his closing documents either way. Quezada tracked down the original developer, who eventually explained it plainly: the city wanted a retention pond and an easement on his road. He did not want to deal with either requirement, so he built the facility piece by piece. Nobody from the city ever said anything. His tax bill kept rising, so he assumed everything was fine.
An increasing assessment is not an approval. A property can be taxed on improvements the municipality never permitted.
Two operating rules come out of this:
- Verify permits and certificates of occupancy at the municipality, not from the seller. Pull the file yourself, building by building. A seller who says “you don’t need permits for storage” is telling you he never checked.
- Do it early. This surfaced late enough to consume most of a year’s acquisition plan. Permit and CO verification costs almost nothing and belongs in the first days of due diligence, ahead of your survey and environmental spend.
Build a replacement pipeline before you need it. Two dead contracts in one week is not unusual at scale.
Why Small Bay Flex Is Showing Up Next to Storage
Two of Vault Ventures’ larger acquisitions are roughly half industrial flex: a 66,000 sq ft Jacksonville property bought with seller financing, and an 80,000 sq ft Texas facility that is one of the biggest in the portfolio. In both cases the flex space came attached to the storage, and it changed how the asset performs.
The operational contrast is the useful part:
- Storage runs on month-to-month leases with constant churn. Tenants move in and out continuously, which is good and bad — you can raise rents quickly, and turns are cheap, but occupancy never sits still.
- Small bay flex tenants are contractors and small businesses with revenue that funds the rent. They sign longer-term leases. Less churn, slower rent growth, more stable cash flow.
A mixed property gives you both levers: the fast repricing of storage and the lease-term stability of flex.
The demand drivers Quezada cites for flex are small business formation, warehousing, manufacturing, and e-commerce, against a genuine supply shortage in many markets. Nobody has been building small bay industrial at scale, and the tenant base keeps growing. He is now pursuing standalone small bay flex deals, with a team member actively underwriting one in Texas.
On storage itself, his read is that the correction is over. Rates and occupancy declined for a couple of years and have started rising again — a view echoed at a recent industry event he attended. If that holds, buying now means buying in-place rents that are below where they are headed, which is a different proposition than buying into a declining market.
Frequently asked questions
What percentage of a self-storage purchase price will a seller typically carry?
In practice it is a portion, not the whole thing. Alex Quezada describes 14 of his 19 storage acquisitions as including “some portion of seller financing” — meaning the note sits alongside cash, new debt, or raised equity rather than replacing them.
The amount depends entirely on the seller’s situation: whether the property is free and clear, what their basis is, and whether they want income or a lump sum. Ask for a carry on every deal and structure around what the seller will actually do, instead of walking away because 100% wasn’t available.
Why is seller financing easier to get in self-storage than in multifamily?
Because of who owns the assets. Storage remains heavily owned by individual mom-and-pop operators, while multifamily is roughly 80% owned by REITs and private equity, in Quezada’s assessment. Institutional sellers have lenders, investment committees, and disposition mandates that make carrying a note impractical.
An individual owner with no debt and a low basis has the opposite incentives — a note can spread out a tax event and produce monthly income. That is a person who can say yes to creative structure.
What IRR should you underwrite a self-storage deal to in a high-rate market?
Quezada is moving his target from 18–20% down to 15% in stronger markets, for two reasons. At current rates, almost no deal pencils at 20%, and a 20% projection actually reads as elevated risk to wealthier limited partners rather than as an attractive return.
A 15% target widens the buy box and the investor pool at the same time. Keep the conservatism in the assumptions — flat interest rates, no assumed cap rate compression on exit — rather than in an inflated hurdle rate. This is one operator’s approach, not investment advice.
What due diligence items most often kill a self-storage or flex acquisition?
Entitlement and permitting problems. Quezada lost two contracts worth roughly $13 million in one week, including a 150,000 sq ft Texas facility at $7.5 million where due diligence revealed no building permits existed at all. The original developer had built piece by piece to avoid a city-required retention pond and road easement.
Pull permits and certificates of occupancy directly from the municipality in the first days of due diligence, for every building. Do not accept the seller’s word, and do not treat a rising tax assessment as evidence that improvements were ever approved.
How do you find self-storage sellers outside your home market?
Run direct marketing campaigns to owners in markets selected for population and job growth, and expand when a market stops producing. Quezada’s first eight deals came from Florida marketing; after two consecutive campaigns generated zero calls, he opened Texas and got a deal from the first campaign there, then added South Carolina and Georgia.
Pair that with genuinely long follow-up. One of his best acquisitions closed after three and a half years of staying in touch with the owner. Content and peer relationships add deal flow on top, but the mail is what starts the conversations.
The bottom line
If you want seller carry on your next storage deal, the highest-value change is to your marketing target, not your pitch: build a list of individually owned facilities in growth markets, market to it repeatedly, and keep following up for years rather than months — then verify permits at city hall before you spend a dollar on third-party reports.
