For the seller of a self-storage facility, it's all about getting top dollar for the property. For the buyer, it's about purchasing a facility that looks great and operates well.
When it comes time for you to sell, you need to consider several areas, including the physical plant, financial operation, due-diligence preparation and general sale preparation. Here are some simple tips for getting a storage property ready to put on the market.
First, let’s talk about curb appeal. What’s the first impression a buyer has when he sees your self-storage facility? Is his first thought, “This is a nice property. I would like to own this one!” Or does he not give it a second glance? Here are some guidelines to boost your property's allure:
- All of your landscaping and grass should be trimmed, neat and clean.
- Cut or remove oversized plants. Add fresh annuals to your flower beds.
- Your signage should be clean, up-to-date and well-lit.
- The office should be freshly painted, clean, well-lit and free of clutter!
- The retail sales inventory must be fresh, clean and dusted.
- Clean and deodorize the office bathroom.
- All light fixtures must be working, in the office and around the property.
- Remove all garbage from the roofs, and fix downspouts and gutters.
- Fix all bollards and dings in building panels.
- Fix any asphalt or concrete driveways and add fresh seal coat.
- Pick up all trash, especially around fences.
- Aisle ways and hallways should be clean.
- All maintenance issues should be completed including broken door springs, bad hasps, fence damage, gate, etc.
These items reflect pride of ownership, and buyers will pay more for a property that doesn’t require substantial capital expenditures. It’s a good idea to bring in a friend or someone who doesn’t frequent the property and ask him to critique the condition and cleanliness of the site. Your visitor may see things you overlook every day. Managers from other stores as well as your real estate broker are also great people to ask to review the condition of the property.
Now let’s discuss the financial portion of the transaction. At least one year prior to putting the property on the market, make sure all the income from the property is recorded on the profit-and-loss statements (P&Ls) so a buyer can verify the amount collected and back it up with deposit statements from your bank. On the expense side, it’s helpful to record only expenses that are directly related to the facility. If there are expenses that could be allocated to other businesses or personal accounts, clearly mark them as such. Also clearly delineate any expenses that are “capital” vs. operating for tax purposes.
Buyers and their bankers will base their offering price on the trailing 12 months of income and expenses ( known as the trailing 12 or T12.) Most financial software, such as QuickBooks, can run this report in a matter of minutes. If you have a manual system, you’ll need to have this prepared each month your property is on the market.