Let me start by saying that owning a storage unit facility is a luxury in itself. In California, renting a storage unit typically runs from $35 (closet-sized) to $400 per month for larger (full-size) units. Industrial storage may go as high as $3,000.
So imagine if you are the owner of one of these storage unit facilities, with around $500 a month 12 months a year for each unit you would be making $6,000. And that’s a lot of money that could be reinvested elsewhere. Talk about circular economy!
But, what if you have the right buyer and you want to sell your storage unit facility?! How do you go about doing that?
I have the answer for you.
Preparing the Storage Unit Facility for the Sale
Before you list your storage unit facility for sale, it is essential that the unit is in pristine condition from top to bottom. Similar to how you would set up a house for a sale, these are the steps you should follow:
1) Evaluate the Facility
An initial assessment of the facility is a must. Start by inspecting the physical state and the overall condition of the storage unit. At this step, you should consider the following:
- Structural Integrity: Structural strength is one of the most vital elements when evaluating the storage unit facility. Check for any essential physical repairs or maintenance such as repainting the walls, etc.
- Cleanliness: Any buyer would expect a clean and tidy storage unit facility. Look for overgrown plants or algae or mold and get that removed.
- Security Features: Consumers who are using your storage unit facility should be comfortable with the security. Security features are a huge appeal to users so you should consider assessing and upgrading the surveillance cameras, lighting, gate access controls, etc if necessary.
2) Organize Financial Records
Potential buyers will want to see financial records and data to see the profitability your storage unit facility has to offer. Arrange the following documents:
- Income Statements: Provide records of your storage unit’s income including rental income and other revenues.
- Expense Reports: Include reports of all expenses like bills, maintenance, utilities, etc.
- Occupancy Rates: Display historical data on the occupancy rates to establish trust in the facility’s performance.
3) Enhance the Curb Appeal
First impressions are essential for buyers. So you may want to improve on the curb appeal of the storage unit facility such as:
Landscaping: Invest in landscaping to make the storage unit facility appear more attractive to buyers. Small shrubs and a well-maintained lawn go a long way for prospective buyers.
Signage: The signage should be clear, precise, and placed in appropriate locations. Replace any damaged or broken signs. A tip over here is to add the signage in another language (Spanish preferably) for a wider buyer demographic.
Exterior Lighting: Improve the lighting to enhance visibility and security.
How to Value My Storage Unit Facility
You can’t just quote a random amount and attempt to sell the storage unit. There is a process that comprises numbers and analyses to get the accurate cost. Ensure that you are getting the exact price for the storage unit. Overvaluing could deter potential buyers while undervaluing could result in financial loss. Here is what you need to consider:
1) Market Analysis
You start with a market analysis to understand the current real estate conditions. This involves researching recent sales of similar storage unit facilities in your area and studying the market trends around that sale.
2) Income Approach
The income approach is a common method for valuing storage unit facilities. This involves calculating the facility’s Net Operating Income (NOI) and applying a Capitalization Rate (cap rate). The formula is as follows:
Value = Net Operating Income (NOI) / Capitalization Rate (Cap Rate)
3) Replacement Cost Approach
The Replacement Cost Approach involves calculating the cost to replace your storage unit facility with a similar one, considering the current construction costs and depreciation.
4) Professional Appraisal
An appraiser will help provide an accurate value of your property. Hire a professional appraiser with experience in storage facilities. You could look by referrals or take the help of the old internet search option.
How do I Market My Storage Unit Facility
Now that your storage unit facility is prepared and valued, you finally get to market it for sale. An effective marketing strategy is critical to attracting potential buyers. Here are some strategies you may want to try:
1) Create a Listing
A creative real estate listing description is the first shot you take at attracting buyers. It should be something simple yet catchy. It should include:
- High-Quality Photos: Get your storage unit facility professionally photographed highlighting all the best features.
- Detailed Description: Provide a detailed description of the storage unit facility with the relevant information such as area, accessories, amenities, security features, etc. Don’t provide all the minute details as you want to leave some excitement for the viewing.
- Financial Information: Include financial data such as occupancy costs, income, and expenses. This will help potential buyers gauge what they are getting into financially.
2) Utilize Online Platforms
We live in the age of the internet so put that to good use. Online commercial real estate platforms such as Costar and Loopnet are efficient sources that have a wide customer reach and could attract potential buyers.
3) Engage a Commercial Real Estate Broker
A real estate broker with experience in the storage industry could open doors for your unit in the best way possible. They would effectively market the storage unit facility, arrange listings and viewings, negotiate on your behalf, and offer professional insights.
4) Leverage Social Media
Harness the reach of social media platforms such as Facebook or Instagram to promote the sale of your storage unit facility. Share information such as a small description, photos, and videos to reach a broader audience.
5) Network within the Industry
Attend trade shows, conferences, and network within the industry with potential buyers or other contacts who may lead to buyers.
How do I Negotiate the Sale of My Storage Unit Facility
Negotiation is a crucial stage in selling your storage unit facility. It could make or break the deal and here is how to get it done:
1) Be Prepared
Before negotiations begin, gather all relevant data including the financial records, appraisals, and any other documentation that endorses your asking price.
2) Understand the Buyer's Perspective
This may help resolve any concerns both parties may have and finding common ground might get easier.
3) Be Flexible
While it is essential to have a settling price in your mind, be open and flexible during negotiations. Consider offering incentives such as flexible payment options to make the deal more appealing.
4) Hire a Real Estate Attorney
Legal assistance could help you navigate the finer details, review contracts, and ensure that your interests as the seller are protected.
How do I Close the Sale of My Storage Unit Facility
Once the terms are agreed between the seller and the buyer, you can seal the deal. These steps are involved:
1) Due Diligence
A smart buyer will undertake due diligence that will include researching the storage unit facility, reviewing the financial records for ROI, inspect the physical condition, and the legal status. You should be prepared to offer this information when the time comes.
2) Purchase Agreement
Draft a purchase agreement that outlines the terms and conditions of the sale. It should cover the following:
- Purchase Price: The agreed-upon cost for the purchase.
- Closing Date: The date on which the sale will be finalized.
- Contingencies: Any conditions that must be met before the sale can continue such as financing.
- Representations and Warranties: Statements made by both parties about the condition of the storage facility and their ability to complete the transaction.
3) Escrow and Title Transfer
4) Final Inspection
The buyer may conduct a final inspection to ensure that the facility is in line with the agreed-upon conditions.
5) Closing
On the established closing date, both parties (buyer and seller) will sign the necessary documents and the funds will be transferred. The buyer will take possession of the storage unit facility and you will receive the funds from the sale.
What happens after I Sell My Storage Unit Facility
After the sale is complete, there are some additional steps to consider:
1) Notify Tenants
You should inform your current tenants about the change in ownership of the storage unit facility. Ensure that they are aware and provide them with the new owner’s contact information. This will help with a streamlined transition and hopefully maintain good tenant relations.
2) Tax Implications
Consult with a tax professional to comprehend the tax implications of the sale. You might have to pay capital gains tax from your end of the sale and there may be other tax considerations depending on your situation.
3) Reinvesting Proceeds
Consider what you want to do with the proceeds. Make the most of your earnings by retiring, setting up a new business, or reinvesting in real estate.
Final Thoughts on How to Sell My Storage Unit Facility
Selling a storage unit facility is similar to selling your home. It requires the same macro strategies that ultimately help with the sale. This How-To guide answers questions most readers may have. I know I have found answers to some questions I had.
Now all I am left with is to have enough money to buy a storage unit facility, follow all these aforementioned How-To steps, and then sell said storage unit facility. What a wonderful world!