Buying Self-Storage: Finding a PRIME Property That Meets Your Goals

Dale C. Eisenman Comments
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Consider the nature of the competition, including location but, more important, their practices. Do they cut rates dramatically and quickly to build occupancy or strive to maintain rates? Are the properties comparable or less visible and less appealing? Are there significant barriers to entry in the market? Barriers could be financial such as the cost of the land, availability of sites or community attitude as reflected in zoning ordinances. A call to the local planning and zoning authority will provide information as to future competitors.

As our industry becomes more competitive, management is a key element of success. As a buyer, consider what changes, if any, should be made in the management structure. If the onsite team falls in the category of caretaker, there may be a significant opportunity to install a customer- and sales-oriented team who could build occupancy and income. While location, visibility and other elements may be impossible or cost-prohibitive to change, management can be addressed promptly and efficiently. It may be one of the most significant contributors to success. 

E = Expectations and Exit

This is probably the most overlooked aspect of the analysis by a buyer. Unless a buyer defines expectations, how can he know if the property will meet them? Identify, in writing, expectations with regard to budget, cash contributed over the life of the project, acceptable rates of return, growth, expansion, involvement, etc.

Most buyers spend a great deal of time considering their entry to a specific industry or market but little time contemplating an exit. Target how long the property will be held as defined by time, occupancy, income or other parameters. When considering a property and its characteristics, a buyer is well served to consider how those parameters will impact the property’s eventual disposition. Additionally, assumptions necessary to calculate the above mentioned IRR analysis will include those many associated with the planned exit.

As you can see, the last element of PRIME brings us back to the first step—your goals and objectives. It’s where the investigation and buying process begins and ends. Buying a self-storage facility is much more about the buyer’s goals, objectives and expectations than the property itself. The buying process should compare the characteristics of a facility to the specific criteria of the buyer to find a probable match. It’s when a compatible facility is found that a PRIME property should be aggressively pursued.

Dale C. Eisenman is the president and broker in charge of Midcoast Properties Inc., as well as a licensed real estate broker in Georgia, and North and South Carolina. In addition to being a professional pilot early in his career, Eisenman has practiced law, owned and operated several small businesses, and been an active commercial real estate investor for more than 20 years. He now specializes in the self-storage industry as an investor and broker. To reach him, call 843.342.7650; e-mail dale@midcoastproperties.com; visit www.midcoastproperties.com.

Related Articles:

National Snapshot 2010: The Self-Storage Real Estate Market

An Overview of Self-Storage Exit Strategies: Careful Planning for Leaving a Business

Self-Storage Valuation: A Technique for Checking an Appraisal's Fairness

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