A step-by-step guide to preparing your facility for sale

April 13, 2015 1
A step-by-step guide to preparing your facility for sale

Owners who take the time to prepare a self-storage facility for sale will find that it can pay big dividends.

The three main areas to focus on are enhancing revenue, cleaning up expenses and improving curb appeal. Maximizing revenue should be at the top of the list, as revenue stream has the biggest effect on property value. Additional services or enhanced revenue of as little as $1,000 a month can result in an extra $100,000 for the sale price, said Mike MacManus, an associate at Marcus & Millichap in Atlanta, GA.

When is the right time to sell your facility? Find out here: blog.selfstorage.com/self-storage-mom-and-pop/when-to-sell-your-storage-facility-4093.

Here’s a look at the items you must consider when preparing your facility for sale.


The sale price depends greatly on the net operating income (NOI) of the facility. Owners can drive income with the addition of extra products and services, boost occupancies or consider raising rents if the market will allow it, MacManus said.

It is key to get the occupancy rate to about 75 percent to 95 percent before listing a property for sale, according to MacManus. “This indicates that the market supports the facility and that the new owner has room to improve the numbers,” he said.

Revenue sources

moving truck rental

Components such as rental income, late fees, lien sales, insurance sales, truck rentals and merchandise sales all factor into the revenue stream.

“What I have found is that most small facility owners are much more reluctant to raise rent on tenants. So they should take a look at when the last time was that they raised existing tenant rents,” said Tom de Jong, a vice president at Colliers International in San Jose, CA.

When assessing a property for sale, de Jong surveys surrounding facilities before he lists the property to compare where that facility is vs. the competition. Are rents on the low side, and is there an opportunity to raise rents to be more on par with the market before listing the property?

Delinquent tenants

Another important step is to remove delinquent tenants – get them paid up or get rid of them, said Joan Lucas, owner of Joan Lucas Real Estate Services in Denver, CO. Buyers will discount delinquent tenants who are being carried on the books because they assume they’ll need to remove those delinquent tenants, which ultimately will reduce the occupancy.

Puzzled by how to deal with delinquent tenants? Learn more here: blog.selfstorage.com/self-storage-operations/how-to-handle-delinquent-storage-tenants-5222.


bank statement

Owners also should get financial statements in order. Buyers typically request 12 to 24 months of trailing income and expenses.

“Remember, if you haven’t deposited the income into the bank and you can’t account for it, you won’t get credit for it on the acquisition,” Lucas said.


Expenses are another priority. Can real estate taxes be appealed? Are expenses for marketing, administration and repairs in line with market norms? Most buyers take a hard look at expenses to see if an owner is cutting corners or whether there’s any “fluff,” de Jong said.

Sellers also need to clean up their expense reporting, including clearly identifying any expenses of a personal nature, such as the owner’s cellphone bill or car payment.

Curb appeal

curb appeal

Making cosmetic changes to a property might not enhance the value of a property, but those changes oftentimes can help a property sell more quickly.

“Much like a house, the general appearance of the facility can attract buyers or turn off prospects,” MacManus said.

Need some advice on sprucing up your facility? Check out this guide to curb appeal: blog.selfstorage.com/self-storage-operations/improving-self-storage-curb-appeal-4882.

The first step: Tackle deferred-maintenance items such as pressure-washing the buildings, fixing broken lights or adding a fresh coat of paint. Get rid of weeds, and correct problems such as potholes.

Ask a friend to walk through the property and have him or her tell you what kind of cosmetic changes should be made, Lucas said. “Sometimes it’s hard to see what needs to be done when you are at the property every day,” she said.

Due diligence

P&L statement

Owners should gather due diligence materials so that when an interested buyer or an offer comes along, the seller doesn’t waste any time in presenting a complete sales package to the buyer. A buyer’s due diligence typically requires two years of profit-and-loss statements, property tax bills, management and occupancy reports for at least 12 months, and utility bills for 12 months.

In addition, a seller should be ready to provide any other relevant documents, such as a property survey or an environmental report.

“Having those documents prepared in advance of accepting an offer will help with the amount of time that it takes to get from offer to closing,” de Jong said.


If the seller as an existing loan on the property, he or she should know the details of the loan, such as whether it’s assumable or whether it requires defeasance or a prepayment penalty.

“I have seen deals fall apart because they have a CMBS loan that would cost $700,000 or $800,000 to provide defeasance, and the sellers typically don’t want to pay that,” de Jong said.


Every situation is unique. So the best advice is to consult with an experienced self-storage broker who can walk you through the requirements and suggest what needs to be done in to get a property ready for the market.

Some properties might be ready to list tomorrow, while others might need work that can take weeks or even months. As an example, de Jong cites his meeting last year with a facility owner. “Frankly, I told him he wasn’t ready to sell,” he said.

just sold

Instead, de Jong gave him a list of recommendations to carry out before bringing the property to market. The owner since has made those changes and is ready to move forward with the sale. “I think he will get the value that he wants out of his property,” de Jong said.

Owners should consider working with professional self-storage brokers who can position their property for sale, as well as aggressively market the property to a nationwide array of qualified buyers, MacManus said.

“Too often, owners want to sell but wait for an acceptable offer to come along. This is the best way to leave money on the table,” MacManus said.

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  • Joshua Schroeder

    Very informative and accurate article! My partner and I represent eager buyers looking to pick up properties ASAP. If you are interested in selling or seeing what your facility is worth, please reach out to me at: (661) 410.6338 or valleystoragebrokerage@gmail.com. Have a great day! – Josh Schroeder – Self Storage Investment Services