What You Should Know Before Selling Your Self Storage Facility
Updated: Apr 8, 2022
Selling a business is always a scary prospect. Maybe you’re moving on to your next big thing, or it’s time to hang your hat up for your golden years. Either way, selling your self-storage facility is a big step, and you want to have all the information before you hand over the keys.
Broker or No Broker
As with most things in life, there are pros and cons to this so you must be aware of them before venturing into this. The biggest pro with getting a broker is having someone experienced on your side to field multiple offers and choose whichever is best.
However, brokers fees will take up a huge chunk of your profit. Just like any realtor, they have to make a commission somehow, and they do this by taking it from the sale price.
Going for "sale by owner" may sound scary, but if you choose to work with a company that specializes in buying self-storage facilities, your risk is minimized. They help by streamlining the process, making sure you understand the process and that the deal is beneficial for everyone.
For added protection, choose to work with a company that values your experience, and will work directly with you one on one to make sure you get the best possible deal for your property.
If you do choose to go with a self-storage facilities buyer, or a company that specializes in it, rather than a broker, make sure to do lots of research before committing to a company.
Things to research can include their policies on:
A huge dent can be made into your profits from repairs. Most buyers require that any repairs need to be completed before the sale takes place, taking up your time and money before the sale can take place.
Personal sale companies will cover the cost of repairs themselves. They pay for the repairs and handle everything on their side after the deal is completed. One less thing to threaten your peace of mind.
The location of your storage facility matters. Depending on what company you go with, they may pay less if your facility is located rurally. In the research phase, be sure to specifically ask if your facility’s rural location will affect the price.
Be aware that there are companies with “Any Location” policies. They will consider your property regardless of whether it’s in an urban or rural setting. Some companies don’t advertise this, so be sure to reach out and ask whether your location will affect the price.
Having vacancies is a normal part of the ebb and flow of business. These vacancies usually fill up within a few months but if you’re trying to sell the business it may feel like these vacancies are a black mark on your record.
When researching, look for companies that work with you on vacancies. Some companies are willing to give you a fair deal despite vacancies. If they don’t advertise it on their website, make sure to ask what their policy is when you talk to them.
If you decide to go with a broker, an extra cost you are sure to incur is their commission. This is the cost of doing business with a broker who needs to be paid for their services. However, it is not compulsory to work with a broker. There are a wide variety of companies that will work one-on-one with you to ensure a fair deal without commission.
Another common cost to creep up is the closing cost. Filing papers is a common cost that appears at the end of a land transaction. When discussing the price, make sure to confirm whether this is something the buyer will handle, or whether you’re expected to yourself.
Some companies will waive the closing costs. Make sure to find one that offers zero closing costs and covers the commissions and fees themselves.
Extra Hassle- Appraisals, Showings, And Financing
Lenders require an appraisal before releasing the funds. This means that before you can get paid, you have to pay for an appraisal to be done, and then wait for the report to make its way back to the lender before the lender will decide if they will finance the buyer.
However, private buyers are self-financed. One-stop-shop teams can manage, buy, sell, and improve storage companies without waiting for lenders to approve their actions. This means a faster, more streamlined process for you as you sell.
The longest part of a transaction can be between showing a potential buyer your property and waiting for them to return with an answer. With agents and brokers, showings can happen dozens of times and take months to complete. Not only do you need to work around people coming to judge your business and a broker coming in but this also means waiting much longer to find out if you have a sale.
With private sales, the buyer can come in to see the property once. They survey the property one time and don't bother you again if it isn't a good fit. When it is a good fit most companies can get you a cash offer in 72 hours to 5 business days.
While financing is a huge pain to deal with when buying a home or business, it’s also difficult when you’re selling. Financiers have hoops and regulations that you have to jump through and satisfy before they will allow their money to be released to the buyer.
When going through a company that finances themselves they’re able to tell you within 72 hours to 5 days whether they will buy your property. No waiting for financing to come through, no hoops. Financing is a huge topic - during the financing of a self storage facility in Farwell Michigan, this author became familier with the intricacies of SBA financing. We will have a post on that in the future!
How Should I Sell My Self Storage Facility?
While there are a variety of ways to sell your self-storage facility with sale-by-owner it can afford you wider flexibility and control over the process of selling.
Choosing the correct person to sell your business can also be intimidating. That’s why there are businesses that specifically buy self-storage facilities. They specialize in customizing the experience to your needs and working closely to make sure you get the best deal possible for your facility.
At Investing Storage, we commit to:
Do repairs ourselves- If there are repairs needed to your facility, don’t worry. We specialize in doing our repairs in-house, so there’s no need for you to shell out on repairs before selling your location.
No closing costs- you don’t have to pay anything to get the sale finalized.
No commissions or fees- we cover commissions and fees, to make sure the deal is in your best interest.
Optional inspection contingency.
No appraisal- since we are our own financiers we don’t require an appraisal before going forward with the sale. The only appraisal is a free no-obligation appraisal we do once ourselves, to make sure the property is a good fit for us.
One showing only- We come by the property, and if we like it, we come to buy the property! No back and forth scheduling showings.
72-Hour turnaround- Within 72 hours we're able to get you a cash offer.
Discretion- We are a two-man company. No one needs to know that you’re considering selling but us two and you.
Before Selling Your Facility
There are a lot of considerations before selling a property. Making sure you’re getting a fair price, not having to pay for extra services that you may not need, and that it’s being sold quickly are a few things that will make the process easier on you in the long run.
If you’re interested in how we can help you get the best deal for your facility, message us directly here.