Hayes: In some cases, sellers are willing to carry a portion of the down payment.
Laney:New Mexico storage owners are very aware of the national lending liquidity and are adjusting asking prices through both sales concessions and offering carry backs from 5 to 10 percent of the negotiated sales price. In addition, the seller financing option, which is fairly popular in the West, allows the owner to realize a stronger position in the final sales price, deferred or incremental capital gains, speed to close and additional significant interest income that continues years after the close of escrow.
Layton: Some owners in Washington are adding security or ancillary items (boxes, packing supplies, etc.) while others are increasing rents so the gross income improves. Fresh paint and asphalt are good, quick aesthetic fixes to improve the attractiveness of the property. Sellers are offering rent guarantees and/or owner financing to help facilitate the deal.
Lucas: Some sellers have decided that carry-back financing, possible rent guarantees and/or a slight reduction in purchase price are all alternatives to get a deal done. Raising rental rates to gradually generate more cash flow is also a way to increase the attractiveness of the property. If sellers can keep rents up, be creative with their marketing and cut back on expenses, they will be able to weather this downturn in the real estate cycle.
It wasn’t so long ago that we had multiple buyers for almost every facility, but today the buyers demand attention to their needs and wants. This not the time to believe that a seller has much negotiating power, either in matters of price or terms. It’s imperative for a seller to set a reasonable price and terms for the property. Buyers will often not bid on overpriced properties; they can either wait or find a property that is more reasonably priced.
Michael L. McCune is president of the Argus Self Storage Sales Network, a self-storage real estate brokerage and development company based in Denver. Argus also operates www.selfstorage.com, a marketing medium for owners in the self-storage industry. For more information, call 800.55.STORE.