First, consider contracting the services of a qualified self-storage real estate broker. The sale and acquisition of self-storage facilities is unique to the commercial real estate industry. A qualified broker will have the experience and knowledge to assist in determining the property value and what the current market will bear. The broker will also be able to formulate a marketing plan that will expose the facility to as many qualified buyers as possible.
Invest time in the process of preparing a facility for sale. Not spending the time to properly prepare a facility before marketing it will adversely impact your ability to achieve your targeted sales price. Before an offer is accepted from a prospective buyer--and even before the marketing begins--there are two main areas that need to be addressed: the consolidation of financial records along with the collection of related property documents, and an inspection of the physical aspects of the property.
Financial Records and Property Documents
An owner should have the following documents ready to submit to prospective buyers:
1. Occupancy history (two years)
2. Year-end rent rolls (two years)
3. Year-end income and expense statements (two years)
4. Copy of most recent real estate tax bill
5. Copy of Yellow Pages bill and contract
6. Copy of existing survey and legal description
7. Copy of environmental reports, if they exist
8. Copy of certificate of occupancy
9. Market survey (rates of competitors, photos, maps, etc.)
10. Pro forma income and expense statement
These documents will eventually be required from your prospective buyer and his lender, so having them available right from the beginning helps everyone in the evaluation of the facility and expedites the review process after an offer has been accepted. Please note certain documents don't necessarily need to be passed along to a prospect until after an offer is accepted, but having them available will keep the sales process running smoothly.
When it comes to the physical aspects of the property, overlook nothing. Curb appeal is nearly as important to selling a facility as it is to selling a home. Many of the following tasks should be common practice for day-to-day operations, but when an owner is ready to sell, these tasks become imperative. An obvious lack of routine maintenance sends a message to buyers that the facility may have even bigger problems once it is thoroughly inspected. This perceived neglect equates to a tangible reduction in value.
The grounds should be policed for trash on a daily basis and weeds should be pulled or sprayed weekly. Landscaping should be manicured and attended to according to a preset schedule. Any repairs needed to buildings should be addressed and taken care of in a timely manner. Here is a brief checklist of items to be reviewed:
2. Gutters and downspouts
3. Doors and windows
4. All exterior surfaces
This is only a general checklist, and your inspection should not be limited to these items alone. An owner knows his facility better than anyone and is aware of areas prone to needing attention, so the actual inspection process will need to be customized for each individual property.
After thoroughly reviewing the above list of items and formulating a punch list, it is important to make all necessary repairs before putting a property on the market. If it isn't feasible to make certain repairs, they should be documented with cost estimates. All vacant units should be checked regularly and kept spotless. The management office needs to be well-organized and free of clutter. The office is where first impressions are made, so it needs to be welcoming and professional in appearance for prospective buyers and tenants.
Throughout the entire sales process, it is important not to lose site of existing operations. Now more than ever is when you need to make a concerted effort to maintain and, if at all possible, improve occupancy. A byproduct of successfully preparing a facility for sale is existing operations tend to improve.
When all required financial and property documents have been collected and all physical features have been addressed, you have properly prepared your facility for sale. Remember preparation is the key. If you spend a little time up front, you will greatly improve your chances of achieving the highest possible price the market will bear.
Rob Schick is vice president of Revel & Underwood Inc., which was established in 1973 and specializes in the disposition and acquisition of self-storage facilities. The company represents buyers and sellers throughout the United States. For more information, call 800-875-5439 or e-mail [email protected]