Okay, so you’re convinced you want to look at buying an existing self storage facility, but how do you go about finding suitable 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 facilities for sale?
Personally, I subscribe to the “shotgun approach” which embodies a number of different resources to locate properties. These sources include:
- Contacting a real estate broker who specializes in self-storage properties.
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 him or her know that you are in the business and actively looking for facilities that are available.
- Self Storage websites
There are a number of companies that specialize in self-storage facilities. An internet search such as “self storage for sale” will give you a good start on the various companies specializing in the sale of self storage facilities around the country.
There are local and national list brokers that possess databases of self storage facilities and owners 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 facility.
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.
- Cold Calling
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 of owners to call on a recurring basis. Tip: don’t forget to ask if they know of other owners in the area that may be looking to sell. Most owners have intimate knowledge of their market and the status of their competition.
- Site Visits
While traveling, I am always on the lookout for potential opportunities. If I happen to pass a facility that looks attractive, I’ll often stop in and introduce myself as a fellow self-storage 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 facility. 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 owners in the area 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 changes the minds of all sellers, so be persistent, it definitely pays off.
- Local Newspaper/Craigslist
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 facilities” 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.
- Sell yourself
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 business. The greater the number of your peers that know you are actively looking to increase your holdings, the better your chances they will call you if they know of someone selling a facility due to Death, Divorce, Partnership Break-ups, Bankruptcy, Retirement, etc. In other words, become a living billboard and flap your lips!