The value of a professional self storage broker can’t be overstated. Having someone working for you who fully understands the nuances of the self storage asset class is essential in helping everyone achieve their goals and assure a smooth transaction.
Brokers who are unfamiliar with the self storage property type, specific due diligence processes, and qualifying counterparty performance can cause more harm than good during a transaction, unnecessarily prolonging a deal because they don’t know the deal. This inexperience puts additional stress on everyone involved and can put one party at a distinct disadvantage if a seasoned professional is on the other side of the table.
In one instance, I’ve seen a Seller lose out on sale proceeds because the broker didn’t review the Seller’s income statement and distinguish personal expenses from business expenses (there was a $62,500 reduction in overall value because at an 8% cap rate, and with $5,000 in personal expenses on the financial statement, the Net Operating Income decreased by $5,000 [$5,000/8% = $62,500]).
A professional broker will have an in-depth understanding of the following:
- Micro and macro market trends
- New supply coming online in the trade area
- Local and national lenders financing self storage
- Actual expenses in relation to the market
- Qualifying prospective buyers
- Transaction processes
- Management reports
- Additional opportunities to add value to your facility
- Capital Expenditure items that need to be addressed
- Underwriting
I encourage you to contact a professional Argus broker to avoid the pitfalls of inexperience!
Jared Jones, CCIM
