Okay, so you’re convinced that you want to look at buying an existing self-storage facility, but how do you go about finding suitable business opportunities?
Well as we’ve already discussed, with all of the advantages that self-storage facilities offer, this makes it difficult to find a number of facilities for sale compared to other property types such as single-family, multi-family, industrial, or other commercial properties.
Where do I find good self-storage facilities for sale?
Personally, I subscribe to the “shotgun approach” which embodies a number of different resources to locate self-storage properties for sale. All these resources will help you scope the market and find self-storage investing opportunities in a place you may not have thought of looking at previously, you might even find businesses that are prepared to sell but have not yet put their storage units on the market. This approach provides you with an in-depth view of the industry and allows you to keep a finger on the commercial real estate markets at all times.
You can look in your local yellow pages, or search the internet for “self-storage brokers” in your area. However, be careful not to enter into any exclusive agreements with him or her that would prohibit you from using other brokers. You’re simply letting them know that you are in the self-storage business and actively looking for facilities that are available for sale.
Brokers specializing in self-storage should be able to give you a detailed description of the unit beyond the price itself; this might include details such as population density, the number of potential tenants your storage units can attract, and the average household income of the population living in your chosen location.
In short, make use of the broker’s address book to find the units that are the most likely to yield the highest revenue and optimize cash flow, and make sure they know about businesses that are selling without actively marketing it because these often are great investments opportunities.
Staying in contact with these brokers, for example, by setting up an email alert will help you grow your business by keeping you up to date with the hottest investments available.
Self Storage websites
There are a number of companies that specialize in self-storage facilities. An internet search such as “self-storage facility for sale” will give you a good start on the various companies specializing in the sale of self-storage facilities around the country. That way you can get in touch with brokers and self-storage specialists in regions in which you might not have thought of looking for a storage facility for sale.
However, when performing such as search, you must be mindful that not all self-storage websites keep their listings up to date, so you might want to follow up an online inquiry with a visit to the site or a phone call depending on how close you are to the location. That way, you can double-check whether the first impression that was made by the website was the right one.
There are local and national list brokers that possess databases of self-storage facilities and names per state and municipality. These can be purchased for a nominal fee to be used in conjunction with a postcard or a letter to be sent to the owner offering to buy their units.
I have generated a large number of leads in the past by using this method. In my home state of Indiana, I bought a mailing list of roughly 1,000 owners/facilities and I regularly send each of them a letter in a handwritten addressed envelope with an individual stamp (not a postage machine), so that it would appear as if it were personal mail. I consistently receive approximately 30-50 responses, and of those 30-50, I end up with approximately 10 good leads. This is by far my most successful form of lead generation, with approximately 75% of my apartment and self-storage facilities being purchased using this strategy.
Picking up the yellow pages in your area and calling each facility and talking to or finding out who the owner is can yield great results. The trick is to determine whether the person on the other end of the phone is the owner or the manager of the facility. Many times, if it’s the manager, they have been instructed by the owner not to give out his or her information, acting as “the gatekeeper” to keep you from getting through to the owner. But with some practice, you will become adept at striking up a conversation with the person on the other end to extract the information you need and will begin to develop a database to call regularly.
Tip: don’t forget to ask if they know of other owners that may be looking to sell locally. Most of the fellow investors you talk to in this business will have intimate knowledge of their market and the status of their competition. Also, don’t let a negative response put you off, calling up the businesses from which you got a negative response a few months earlier can yield completely different results a few months down the line.
While traveling, I am always on the lookout for potential self-storage investing opportunities. If I happen to pass a facility that looks attractive, I’ll often stop in and introduce myself as a fellow self-storage site owner. I’ll ask the person behind the counter about the business and if they are the owner. Next, I will politely ask if they or the owner has ever considered selling the self-storage unit. If there is a level of interest, I’ll ask when would be a good time to talk and then request a specific time to meet with my list of questions and due diligence questionnaire.
Remember, if you strike out, don’t hesitate to ask if they may know of other storage unit landlords that may be interested in selling their facility, and I ALWAYS leave a business card. I’ve received calls, sometimes several months after my initial visit, from an owner who is now interested in exploring the possible sale of their facility. Experience has taught me that time and circumstances change the minds of all sellers, so be persistent, it definitely pays off.
I regularly review the Commercial Property for sale and the income/investment property for sale sections of my local Sunday paper. There are a number of owners who know that there are investors actively looking for properties and that they don’t necessarily have to hire and pay a commission to a broker for listing and selling their facility. You can also take out an ad yourself in the real estate wanted section with the heading: “I buy self-storage units” and a phone number. I have bought 2 properties from calls that I received from my postings in the real estate section of my local Sunday paper without having to employ the services of a broker to help me scroll the self-storage listings.
Advertising through these channels can be particularly fruitful if you are after a specific type of storage to bolster your portfolio. You can for example specify the storage space per unit, the type of service you would like to offer on-site, and the number of units you are prepared to invest in. You never when businesses might decide to sell, so keep an eye on your listings and set up email alerts so you can keep your finger on the pulse.
If you are truly in the market and have the ability to buy a facility, then it pays to let as many people as possible know that you are in the self-storage business. The greater the number of your peers that know you are actively looking for self-storage facilities for sale, the better your chances they will call you if they know of someone selling their self-storage facility business due to Death, Divorce, Partnership Break-ups, Bankruptcy, Retirement, etc. In other words, become a living billboard and flap your lips!