Looking for a potential Self Storage acquisition is a great way to get into the industry while not taking on the risk of developing ground up.
Here’s a step-by-step Checklist to get started:
*** 1. Research and Identify Potential Properties ***
- Location Analysis: Study the demographics, competition, and demand for self-storage in your target area.
- Property Size: Look for facilities with up to 30,000 NRSF, which is manageable and a good size for learning the business- but also justifies the salary of having someone on site to run the location.
- Visit Facilities: Visit multiple self-storage facilities to understand the market, condition, and operation of existing properties (are there REITs around? Are they climate controlled or Non-Climate?) Find out what type of units are in high demand.
*** 2. Financial Analysis and Offer ***
- Evaluate Financials- Underwrite the deal: Review income statements, expenses, occupancy rates, and market rates for rent. See what you can do to add-value to the property and drive revenue. Get the owner of the facility you are looking to buy or the broker advertising it to provide you with the previously listed items.
- Due Diligence: Check for any legal issues, liens, or environmental concerns.
- Make an Offer: Based on your analysis, make a reasonable offer. Ensure your offer considers potential renovation or improvement costs. And that you are purchasing the facility at a favorable Cap Rate in line with transactions happening in the market.
- Negotiate: Be prepared to negotiate terms and price with the seller!
*** 3. Learning the Operational Side ***
- Management: Understand the day-to-day operations including tenant management, security, and maintenance.
- Software and Systems: Invest in property management software that can help streamline operations.
- Marketing: Develop marketing strategies to attract and retain tenants.
- Consider bringing on a Third Party Management partner to help with the operations side of your business.
*** 4. Building Relationships ***
- Networking: Build relationships with other self-storage owners and operators, Commercial brokers, chamber of commerce members and even church communities.
- Follow-Up: If a deal doesn’t go through, maintain contact with the sellers and revisit the opportunity every six months.
- Join Associations: Consider joining self-storage associations for networking and learning opportunities.
*** 5. Continuous Learning and Scaling ***
- Education: Continuously educate yourself about industry trends, technology, and customer preferences.
- Scaling Up: Once comfortable with operations, consider expanding by purchasing additional facilities or building more units on your existing property
- Professional Development: Attend industry conferences and workshops- to connect with experts who you can learn from.
*** 6. Financial Management ***
- Revenue Management: Optimize pricing strategies based on demand and competition.
- Expense Control: Keep a close eye on expenses and look for ways to improve efficiency.
- Profitability: Monitor and improve profitability by enhancing services and possibly adding value-added services.
Starting small allows you to make and learn from mistakes without risking large sums of money. This approach helps you build a solid foundation, understand the intricacies of the business, and grow confidently in the self-storage industry.
