Who do you turn to when looking to sell a self-storage facility? The market is very fragmented, and ownership is still mostly held by private investors, small ownership/ management companies as well as the big boys. So what do you do when you want to find a buyer? Who do you call? How do you get started?

To do it right, youll need to find a broker, but its not as easy as it sounds. You need someone with self-storage experience and national exposure; someone who understands market valuation; someone who can give buyers a professional presentation of your facility in a clean, straightforward package so they know the details in an easy-to-understand summary. Its a tall order, but it can be done.

A broker will review why the facility is for sale, determine the exit strategy, present a strong income-analysis evaluation, consider the markets demographics, review the selling process, explain expectations and, most important, close the deal.

Realizing Maximum Value

Naturally, a broker should represent your interests in the best way possible and try to maximize your return. But this is only the beginning of the process. He should also minimize your financial risk in the transaction, assist in recommendations regarding your goals and objectives on the sale, and ensure a smooth exit and transition in the closing process.

A professional broker will assist you in qualifying the buyer and make sure you are dealing with a qualified prospect: someone with experience in the market and in management, and someone who has financial ability to make the purchase. Several confidential issues must also be reviewed with a buyer.

The buyer will want to know why you are selling. Is it because of retirement, health issues, burnout, personal diversification, wealth protection, death, divorce, partnership disagreements, loss of market share? The broker can determine how best to present your property to the prospect so he will understand your motivation.

Valuation

The sale is not a wish list based on some magical number. It has to make sense for a buyer to purchase your property. He needs to cover his debt service and have the ability to increase cash flow through expansion, increased occupancy or rents. One or all of these will increase his net operating income and the overall value of the property. The buyer is generally reasonably informed and needs to find a value that works.

An appraiser would use comparative sales value, cost-recovery value including ground and depreciation, and the income value and capitalization rate to arrive at a value summary, heavily weighing the income value. A broker will primarily determine the income value of the property by finding the net operating income and the resultant cap rate price the market will bear.

The successful broker will share with the buyer the profit-and-loss statements for several years, a report indicating economic occupancy for the total property and each unit size, as well as demographics of the trade area and a summary of the competition in your market. He will need to show a buyer a five-year projected return on investment.

Your broker of choice will provide you with comparable sales in the region to determine earnings, real estate value, marketability factor and future growth in the area. Keep in mind you are trying to get the highest price for the property or the lowest cap rate, and the buyer is trying to purchase the property at the lowest price or the highest cap rate. A professional with integrity, confidentiality and experience will assist in finding a compromise price between the buyer and seller to put the deal together.

Moving Forward

A broker will act as the go-between and handle negotiations in a non-emotional focus to keep the process moving forward. He will:

Finally, the broker will put together the closing package, collecting a purchase offer and closing documents to meet the real estate laws of the state. This is critical to a successful transaction. Included in this package is the letter of intent to purchase, the purchase contract, due diligence procedure, deal structure, financing needs and closing information. He must also file the paperwork with the correct state agencies. Its one thing to find a qualified buyer, but the right broker is your coordinator to get the sale closed. In summary, make sure you find someone with:

A professional broker should help make the sale and closing process a good and profitable experience for you, the seller. Find the right one, and youre one step closer to nailing a great deal on the sale of your self-storage facility. 

Harold Kolbe is the Georgia affiliate of Self Storage Brokers of America, and is founder and president of Southeastern Business Intermediaries, which provides client consulting services on business valuation, financing, and disposition and acquisition of businesses and real estate. With more than 20 years experience in management, finance and business ownership, he offers valuable insight into business valuation and real estate brokerage. For more information, call 800.556.9892; visit www.selfstoragebrokersofamerica.com.