The answer depends on your goals and deal structure. CAP Rates are helpful for appraisers and for projecting future values, but they are often misrepresented and rarely determine what smaller investors should pay. NOI is the foundation since it represents the income stream you are truly buying. ROI provides practical year-by-year returns, critical for smaller investors and when raising capital. IRR offers a comprehensive look at long-term performance and is valuable for comparing investments and projecting overall profitability. For most smaller investors in self-storage, ROI and IRR tend to matter most. The key is to calculate your own NOI, project your own numbers, and use ROI and IRR benchmarks that align with your goals.
