How to Properly Prepare to Sell Your Self Storage Asset:
A Little Preparation Goes a Long Way
You’ve operated your self storage business to the best of your ability, and it’s been a significant part of your life since the journey began. Life presents you with unlimited possibilities, and one of those is taking advantage of the fruits of your labor to maximize your return on one of the biggest investments you’ve ever been a part of. How can you be sure you’ve positioned yourself well to cash-out when you finally decide to sell your self storage asset?
- Adjust Rental Rates to Market Limits
Part of your exit strategy should be to raise the storage unit rents to full market potential. The benefits are two-fold; you’ll increase your revenue while generating financials that are more appealing to buyers and their prospective lenders. To sell, you’ll need to provide a rent roll to help a prospective buyer evaluate the business potential of your location. If you’ve historically kept only a simple paper ledger, consider creating a digital file of all your self storage units categorized by interior and exterior locations, ground floor and upper floors, sizes, temperature controlled, and occupancy.
- Audit Yourself
Just like preparing to sell your home – get your ‘house’ in order. Gather your self storage business and real estate tax records. Correct any inaccuracies and compile a list of any historic property improvements and issues and/or problems. Make sure your entity records are up to date and be prepared to share your income records, expense documentation, tax filings, capital improvements and expense receipts. Knowledgeable self storage buyers will quickly move on from reluctant or questionable record-keepers. Think about the Boy Scouts® motto: “Be prepared.” This is also a great opportunity to review how far you’ve come with the business. If there are family members involved, consider involving your attorney in an estate-planning conversation. The sale of this storage asset should, at a minimum, involve your accountant for tax planning.
- Spruce Things Up
First impressions mean a great deal. Is your storage property clean and well-maintained? Is the landscaping in order? Have trash and any non-business materials been removed? Are all the lights, locks and doors working properly? How are the roofs, drains and signs on the property? Could the office use a paint job and a thorough cleaning? Yes, these are common sense recommendations, but the result will add value to your business and self storage property, and therefore increase your bottom line. Consider the time and minimal expense of a short-term investment like these with a great return in the end.
- Consider Capital Improvements
Maybe you’ve heard some suggested improvements from previous customers, or you’ve been advised by a previous self storage broker that certain capital improvements would make your property much more attractive to prospective buyers. Now, this could become a business decision. Would these improvements need to be done for any prospective purchaser to find your property more appealing? If so, bite the bullet and set yourself up for success by factoring the new improvements into the sale of the property. Keeping in mind that many prospective buyers are courting multiple lenders, having recent upgrades and improvements to the property completed is music to their lending underwriting department’s ears. The adage remains true: Added value adds more than its cost. It fosters trust.
- Remember the Golden Rule
Be nice and treat others as you would like to be treated. This includes your employees, especially your property managers. A happy employee can be invaluable during the due diligence process and could essentially be auditioning for a role with a new owner.
Our self storage brokers specialize in this industry and focus on helping clients buy and sell self storage in the states of Pennsylvania, New Jersey, New York, Virginia, West Virginia and the rest of the Mid-Atlantic and Northeast. We are happy help you create a plan to sell your self storage business – whether that is now, six months down the road or even in several years. We are experts at optimizing pricing in a very competitive market. If you think you are be ready to sell, contact us for a free self storage property valuation to put yourself on the path to peace of mind that you’ve set the best possible sale price of your self storage property.