By Bill Alter
You’ve received dozens of inquiries over the years from brokers and so-called “buyers” wanting to list or buy your self-storage property. You’ve read other articles like this one, so you know capitalization (cap) rates are down, real estate investment trusts (REITs) are buying, and financing is available for qualified buyers. After weighing the positive reasons for selling now against the challenges and risks, you’ve decided now’s the time. Now what?
The first thing to do is decide whether you’re going to sell your property yourself or enlist the help of a broker. All the recommendations and suggestions made here assume you’re hiring a broker. If you’re going to sell your property on your own, you should transfer all the responsibilities I’ve assigned to the broker in this article to yourself.
If you do decide to use a broker to represent you, select the right one. By the "right" broker I mean somebody who knows the self-storage business and your local market in particular. This will be a professional with a track record of helping other owners market and successfully sell their facilities. There are a lot of risks in this market. Don’t let your choice of broker become one of them.
Set a Realistic Price
First, you and your broker have to establish realistic expectations of what the property will ultimately sell for and set an appropriate asking price to increase the likelihood you achieve that goal. By setting the asking price too high, you run the risk of not selling at all, thus missing the opportunity to achieve optimum value. When setting the asking price too low, you run the risk of leaving money on the table.
Most important, you must understand current market conditions and know if values are trending up or down. With this knowledge, be prepared to set a price that’s “ahead” of the trend, whichever direction it’s going.
Address Maintenance Needs
The right broker will advise you as to which, if any, deferred maintenance issues should be dealt with before putting the property on the market. Unless your facility is new, the buyer should not expect it to be in “like-new” condition. Therefore, it may not be necessary to spend very much money improving the property’s physical condition prior to sale.
Take time to replace burned-out light bulbs, fix minor damage to doors and metal-building corners, replace faded or missing unit numbers, and generally clean up the appearance of the property. Apply a seal coat if the asphalt is showing signs of deterioration. If some aspect of your property might enhance the marketability of units or the amount of rent that can be charged, then that condition should have been addressed long ago. It would probably not be cost-effective to address these issues now.