The Anatomy of a Successful Self-Storage Real Estate Transaction

Buying and selling self-storage properties is a complex process. This article outlines the structure of a deal and will help to ensure a smooth transaction.

By Jay J. Crotty

Buying and selling self-storage properties is a complex process that depends on the alignment of all interested parties. To reach a successful closing, several important steps and key players must all come together. For example, someone must keep all parties on schedule, adhering to the timeline set forth in the purchase-and-sale agreement, to move the transaction forward.

The best buyers and sellers are able to keep the big picture in mind, understand the human side of the process and pay close attention to detail. A successful buyer must also understand the seller’s top priority—achieving the highest value, quickest closing or most hassle-free transaction—while also monitoring broader economic trends, such as interest rates, and keeping on top of all the closing documents.

To fully understand the anatomy of a deal, let’s first take a look at how the process evolves once a seller has chosen a buyer. Here are the seven primary steps of a real estate transaction:

  1. A purchase-and-sale agreement is created, negotiated and fully executed.
  2. A critical-dates memorandum is prepared to keep the process moving along the timeline outlined in the contract. This should include the dates of the due-diligence period, the closing date, deposit due dates, and any other dates specified in the agreement.
  3. The buyer puts a deposit into escrow. This deposit will be refundable until the due-diligence period expires.
  4. Due diligence begins. During this period, pursuant to the contract, the seller will be required to gather documentation for the buyer, while the buyer will perform various inspections and review the documentation.
  5. Once the due-diligence period expires, the deposit becomes non-refundable. At this point, there’s a strong likelihood the transaction will close.
  6. During the closing period, all final documents are pulled together including the title, survey, payoffs and loan documentation (if applicable).
  7. On the day of closing, the property is officially signed over to the buyer, and the money is transferred to the seller’s account.

Now that you have a firm grasp on how the process will unfold, here’s some important advice to help buyers and sellers navigate a smooth self-storage transaction.

Advice for Sellers

Take care of any deferred maintenance. In particular, review your roof, air conditioning, heating equipment and asphalt, as the buyer will conduct inspections on these items. If you don’t take care of necessary repairs, value might be subtracted from your property. You may also be required to perform these maintenance tasks prior to closing.

Hire a good, deal-making real estate attorney. A transaction won’t be smooth or quick if your attorney is constantly litigating, nitpicking and arguing with the buyer’s representation. Choose someone who has your best interest in mind as well as experience closing real estate transactions, someone who understands that your goal is to close the deal.

Hire a quality broker. Find an agent who makes deals happen and has a proven track record in closing transactions. A quality broker will serve as an intermediary, liaison and adviser during this stressful time, making sure deadlines are kept and everyone leaves the transaction achieving their goals.

Get your paperwork in order. The typical documents required during a real estate transaction are as follows:

  • Prior two years and year-to-date operating statements (income and expense), and balance sheets
  • Prior two years and year-to-date monthly management-summary reports
  • Current month-to-date bank deposits
  • Service contracts for trash removal, lawn maintenance, security system, etc.
  • Existing surveys (if available)
  • Property tax invoices/bills with parcel ID number
  • Personal property listing

Know your balance sheet. The ideal time to sell a facility is when your monthly collections are on a consistent or upward trend for at least three months.

Advice for Buyers

Pre-select a lender. Begin working with a quality bank or mortgage broker prior to making an offer. Look for an individual or institution with a track record in self-storage transactions, because the industry is different than other commercial real estate sectors.

Perform an audit. Always conduct an onsite lease audit. You want to have a clear picture of how a facility is performing before finalizing a deal.

Keep your eyes open. When conducting a site visit, pay particular attention to the condition of the roof, asphalt, unit doors, fire-sprinkler systems, and air-conditioning and heating units. These areas will cost you the most money if they’re in need of repair.

Have your ducks in a row. Underwrite the property with the financials available to you prior to writing a formal offer to ensure you aren’t wasting your time or the seller’s.

Whether you’re buying or selling a self-storage asset, paying attention to these critical areas during the process will help you keep a firm grasp on procedures while working to close a transaction with confidence.

Jay J. Crotty is a managing partner with SkyView Advisors (formerly BayView Advisors), a national investment sales and advisory firm focused exclusively on the self-storage market. Jay provides a range of advisory services including acquisition, disposition and recapitalization strategies, asset valuation, joint-venture structures, and debt and equity finance strategies. The BayView team has completed more than $1 billion in transactions throughout their careers. For more information, call 813.579.6363; visit

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