The self-storage real estate market in the U.S. has been very lucrative in recent years, with aggressive pursuit of acquisitions. If you’re a facility owner and think you’re ready to sell, there’s no better time than now to do so. But don’t assume you’ll get top dollar. Before you list your property, take some time to prepare. The following steps should help you sell your asset quickly and at optimum value.
Have a Strategy
As a self-storage owner, you should already have an exit strategy to ensure you safeguard the current value of your facility and increase its future worth. To make the right decisions along the way, consider your own goals as well as the size, location and amenities of the property.
If you need guidance, consult with a real estate broker or financial adviser who has industry experience. To choose a qualified adviser, interview multiple candidates and ask pertinent questions. Ultimately, their knowledge of the market should help you plan your exit effectively, position your business properly, maneuver around potential obstacles, and guide you through the selling process when the time comes.
Raise Your Rental Rates
Increasing your self-storage facility’s rental rates to align with the market will help improve its current and future income. An increase in net operating income leads to greater asset value and results in more appealing financials for prospective buyers and lenders. In the end, all of this allows you to command a better sale price.
Prospective self-storage buyers will evaluate your financial records before they arrive at a final purchase decision, so contact your accountant or financial adviser and enlist their help to gather all the important documents, especially from the past 12 months. Transparency is critical, so include all of your income and expense statements, balance sheets, cash flow, tax returns, and so on. Keeping everything organized will prepare you to answer buyer queries.
In addition, find and update (if necessary) all necessary government licenses, permits and certificates. This is important, as many buyers will need financing to acquire the property. This means they’ll need to verify the status of all local and state approvals and licenses for prospective lenders.
Also, keep a complete inventory list at the ready. Categorize your self-storage units by their features, such as location (drive up or interior), floor and proximity to an elevator (if applicable), size, climate-controlled or standard, and so on. This information will make it easier for buyers to gauge potential income and analyze the facility’s market competitiveness.
Determine Facility Value
After you collect all the data related to your self-storage property, it’s time to get a professional statement of value. Determining an accurate and competitive price for your facility is crucial, for you and your potential buyers. A proper assessment will provide insight to the facility’s past and current performance as well as its future worth.
Rather than pay for an appraisal, you can also simply ask a qualified real estate agent or broker for their opinion. Just keep in mind that some may provide an overly optimistic number to win your business.
However you approach this task, be aggressive yet realistic, and evaluate your property just as a buyer would. Review its pros and cons objectively, and set a price based on the current market. Factor in accessibility, neighborhood safety, location, demand, unit sizes, economic elements as well as any other pertinent site and market considerations.
Focus on Maintenance and Upgrades
Though major improvements aren’t always necessary, simple and inexpensive upgrades may compensate for any weaknesses your self-storage facility may have and encourage potential buyers to focus on its strengths. Here are some measures that may help modernize the site and create a better first impression:
- A fresh coat of paint
- New signage
- Revitalized landscaping
- Additional lighting at entry points
- New furnishings
- An updated security system
That’s just a starter list. You can also ask your broker for advice on budget-friendly upgrades that’ll help beautify the property and potentially increase its asking price. They’ll help you decide which modifications are worth the investment as well as those that won’t help the sale. Together, you can make smart decisions, so you don’t waste time and money. Just remember that a clean, well-maintained, secure property will significantly ease the takeover process for any buyer.
List Your Facility for Sale
Once you’re ready, you can list and advertise your self-storage facility for sale. Though it’s possible to sell your property without realtor, a qualified broker with industry experience will help you craft an efficient marketing strategy and provide a vast network of potential buyers. They’ll help you optimize your listing and choose the best platforms on which to reach a wide audience. They’ll also deal with all of the nitty-gritty of the process.
Selling a self-storage facility can seem tricky, but taking the above steps to prepare for the eventual sale of your business can ensure the process goes smoothly. Following these simple steps will help you position your asset to sell quickly at a fair value.
Tim Randle is owner of QuickOffers, a Round Rock, Texas-based company that acquires self-storage facilities. He’s been investing in real estate since the mid-90s. He left corporate life as a CPA and senior financial analyst in 2000 to become a full-time real estate investor. After purchasing his first self-storage property in 2014, he redirected his focus to buying and fixing mismanaged facilities across the South. To reach him, call 512.890.0091.