Who me - A Seller?    Yes, No, Maybe…

by Jason Laughton

With almost 30,000 self-storage facilities around the country, there is bound to be an owner who is contemplating parting with his/her beloved facility each and every day.  Whether its personal issues or external issues, rarely does an owner wake up one day and decide to sell.  Why should you?  The demand for storage space has never been greater.  Baby Boomers continue to accumulate wealth as well as “stuff” and those in their Golden Years remember the days when they didn’t have much at all and refuse to part with anything.

Yet, at some point selling your facility may not be such a bad idea or even a necessity.  Whether its next year or 10 years from now, someday owning your self-storage investment won’t be in your long-term plans.   Determining if and when you are a “real” seller is the single most important step in the process of selling your investment.  It’s at this point where both your mindset and actions are geared toward the goal of being an “Ex” self-storage owner. 

It’s not only important to be a seller, but to be a REAL seller. This is someone who has a defined reason to sell and is also willing to price the sale at a level that’s within the market.  Sellers who are not really serious about selling can greatly harm their sales effort when they do become serious.  Buying as well as selling a self-storage facility is a lot of work.  So serious buyers want serious sellers.  When a buyer finds out a seller isn’t realistic about or committed to selling they will seldom get interested again - they won’t be like Charlie Brown and keep trying to kick the football.  The result is that a non-serious seller offends his best prospects and they will remember!

Experience shows that motivated sellers, who are willing to accept a price that is acceptable in the marketplace, will in fact see their property sell quickly.  Now this doesn’t mean that you have to accept a low-ball offer.  What it means is that the deal is consummated so that you get a fair value for your investment and the buyer gets a fair value for the future potential of the property.  The elements that establish value for self-storage are well defined in the market place and almost all transactions take place in a very narrow range using realistic parameters of value (See www.selfstorage.com for more info on Cap Rates and Sales Prices).  Often one will hear an owner say,  “Well, I’d be glad to sell if I could get my price.”   Who wouldn’t! Unfortunately, for them the market determines the price and quite often won’t satisfy their “need” to sell.  If the seller’s price and the buyer’s price aren’t equitable then the deal doesn’t happen.  In economics it’s called an efficient market and this is where deals take place.

DETERMINING IF I AM A SELLER

Eventually almost everyone will end up being a seller.  It’s a mater of “when” that concerns most owners.   Often an owner finds it difficult to admit that it’s time to move on.  Thinking through the following events will help determine if you might be a seller sooner rather than later. 

Personal Issues - Retirement, estate planning, partnership problems and divorce are just a few things that make owning any investment property difficult.  In today’s market the business of self-storage is becoming more and more competitive every day.  More personal time and energy is required to make a facility competitive and if personal issues are affecting the ownership it makes the thought process regarding a sale more important.

Refinancing – Over the last 18 months refinancing has become less and less attractive to those who are not thinking about staying in the business for the long-haul (5-10 years).   What once was a no-brainer, refinancing can now be a challenge to those owners whose property has been hurt by competition or under-managed.

Competition - Another factor effecting the ownership decision is increased competition.  Take your eye off of them for one minute and the next thing you know your competition is building a facility down the street, which forces your occupancy and cash flow down.  In many areas the days of relying on the facility to “sell itself” are over. 

Probably the most important question to ask yourself to help you determine if you are a seller today is, “Are there any issues that will affect my decision to be in this business for the next 3-5 years?”  If the answer is a strong “no” then go down that path full steam ahead and enjoy your investment. Even though there will certainly be some “bumps”, storage is going to continue to be an excellent investment over the long-term.  BUT, if you see some of the above issues affecting your desire to be an owner then maybe you should think about doing some more investigating.

There are numerous reasons an owner may determine that it's time to sell. 

Each and every owner comes to that conclusion in a different way.  Whatever the reason it’s important to remember that the goal is to sell your property at the best possible price and move on to your next adventure.