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01 Apr 2019

Acquisitions 101: Do Your Due Diligence Part I


Anna Taylor

Live Oak Bank

Congratulations! You’ve done your homework and have decided that self storage is a business for you. Great!

So, what’s next? How do you find a facility or piece of property that is right for you? Let’s start from the top.

Getting started

A common starting point is to go online and search for a term or phrase like “self storage facilities for sale.” This is a good start, however, everyone else is likely taking this same approach. You need to take the time and do your diligence. How are you going to find a facility that is perfect for you? Where should you begin? How can you take a different approach?

Think outside the box

If you find a facility locally that you’re interested in acquiring, stopping in or calling the business is always an option. You may or may not have initial contact with the owner when you call or visit. If you have an opportunity to speak with the manager of the facility, however, this could also be a great starting point. Reach out and see who is available to speak about acquisition opportunities that might be available. Managers of competing facilities often talk to one another. If the facility you’re interested in is not for sale, they may know of other facilities available for purchase. If you do speak to the owner, you may have the good fortune of catching them at just the right time. He or she may be considering retirement, or there may be other factors that could cause the owner to want (or need) to sell at that specific point in time.

Our motto is: “You never know unless you ask.” Even if they aren’t ready to sell at that specific moment in time, expressing your interest in acquiring the facility is important. This way, they will know you are serious and may contact you in the future if or when they are ready to take next steps in selling.

You’ve got mail

Direct mail is another viable option for reaching a potential seller and can help you find a facility for your self storage business. Obtain a list of the self storage facilities in a region that interests you, and then mail those facilities a postcard or handwritten letter. This method can do wonders to help you stand out from other junk mail that these facility owners receive on a daily basis. It doesn’t cost much, and it could help you get one foot in the door for a conversation with the seller.

Commercial real estate brokers

Another route to self storage acquisition is to let the commercial real estate brokers in the region know you are interested in getting into the business of self storage. Explain to them what you are looking for, and provide them with details such as your desired building size and cost. Some people try to avoid using brokers at all costs because they want to avoid the fees that come with doing so, but the value in working with them is that they may know of relevant deals that are not yet listed elsewhere.

Association membership

Join state associations in the areas where you are interested in acquiring. Associations can get you exposure to existing owners and will give you a chance to network with key members of the self storage industry. We always recommend being a member of your state association, as they are typically able to connect with local government officials and inform you on what’s happening in the area. Many states also offer an attorney-written self storage lease agreement for your state. Joining these associations can help you get closer to achieving your ultimate goal: To find a facility and make your entrance into the world of self storage ownership.

Opportunities for learning

You can also learn more about self storage and educational opportunities on finding, buying and operating self storage facilities through trade shows, books and specialized training by individuals and groups. Leverage all the self storage resources out there to learn about the industry and help you make a decision about which facility will be right for your business.

Are you ready to get started?

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