When you have finally made a self storage facility purchase, it is without a doubt an exciting time! How can you ensure though, that when you look in retrospect, that you don’t have any regrets? Keep on the watch for the “writing on the wall”! Check out these following things that you should be on the lookout for.
Short Term Ownership
This should be an immediate red flag. You should be looking for a property that is established. If someone has only owned a property for a short amount of time, it would typically imply that there is something wrong with it! The only exception to this rule is when the seller has passed away or if they have a health problem. Now, this isn’t to say that it is going to be an immediate disqualification, but it should mean that you look at the deal through a magnifying glass.
Former Foreclosure
There aren’t many facilities that get foreclosed on. If you stumble upon one, that means that something has gone terribly wrong with the business. Typically, it is a sign that the owner put everything they had into the business, and it still failed. Some foreclosures are the result of poor management, and others are the result of a bad market. If you are considering a foreclosed on facility, be sure to figure out which reason it was. One can be fixed. The other cannot.
New Leases with Little Payment History
With a national average of 10% customer replacement every month, you will rarely see a self storage with a large amount of newly signed tenants. If you do see this, you should investigate to make sure that the books haven’t been “cooked”. If you do see this, then be leery! It would be devastating to enter into this new facility and have those people end up being a ton of non-payments or people who were friends or family of the previous owner who suddenly cancel their leases as soon as the dotted line is signed.
