“The Process of Selling Your Self Storage Facility After Stabilization” podcast is a guide for self-storage facility owners who want to sell their properties. It covers the selling process, including identifying potential buyers, preparing financial statements, conducting due diligence, and negotiating the sale. The expert emphasizes the importance of planning and preparation to maximize the sale’s value. It’s a practical and valuable resource for anyone looking to sell their self-storage property.
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A Step-By-Step Guide On Selling Your Self-Storage Facility After Stabilization
In this episode, what I wanted to show you and what I wanted to go over is I talked a little bit about the management stuff for us. The reason I bring that up is because I’m in the process of selling three of my facilities. We are getting to the point internally. When I started investing in self-storage, I started in 2016. We bought our first facility in 2017. I have not been investing in self-storage that long. Our very first handful of facilities that we bought were small facilities, just like I teach.
Luckily, when I got into storage, 2017 is when we bought our first facility, people wanted to get into storage, honestly. That was back in the day when we were still coming out of the bubble and people were going towards multifamily so not a lot of people wanted to get into storage. It was a good time for me to be in the storage industry because I could drive around, talk to owners, give them an offer and they’d be like, “Let’s do it.”
We bought three facilities and I want to go over those. I want to go through the liquidations process that I’m going through because we are selling three of our facilities and I have never sold a facility before. It’s a new thing for me too but the thing is that I talk to a lot of owners. You don’t even know how many owners I talk to on a weekly basis, how many offers we put in and how many deals we look at. I had a weekly team meeting with my virtual assistants and we analyzed 30 deals. We put offers in probably half of those and we’re getting a good handful of five of those under contract. On a weekly basis, I’m analyzing a lot of deals.
There’s one thing that’s frustrating to me and I’ve talked about this several times in some of my past training sessions. I did one on the difference between talking to realtors on Crexi versus talking to owners. When you talk to owners and you’re cold-calling owners to see if they want an offer, they are not ready to sell. To get all the information that you need to run a deal analysis is like pulling teeth, honestly. You have to be patient in that process and be on top of everything to get all that.
When I see that, I see how difficult it is to get information. The truth is, even if you talk to a realtor and you’re getting information, realtors contact me all the time and say, “I have a deal ready.” I had one guy that’s a realtor contact me. He was like, “I have a deal in Arkansas. Do you want to take a look at that?” I said, “Sure.” He sent me one document which was a spreadsheet with some numbers on it. I’m like, “I’m supposed to make a decision on whether I want this deal with this one document? Where are all the things that I need?” Whatever I need to run deal analysis. I’m going to show you that.
In the same respect, whenever a buyer is looking at the deal, they’re also going to need that information. Whenever a lender is looking at that deal, they are also going to need that information. A lot of people don’t realize that but you need a lot of information to give you a good overview if it’s a good deal or not. To run a quick deal analysis, I say this over and over again, you don’t need emails, balance sheets and all this stuff. You just need certain numbers and the question is, “I’m going to run my numbers on the information that you gave me but can you prove this information? If you can prove it, then this is going to be my offer. It’s going to be somewhere around this. If you can’t prove this information, then I can’t give you an offer.”
You need a lot of information to give you a good overview if it's a good deal or not. Click To TweetThat’s the question that we ask the owners all the time, “Can you prove that information?” In the same respect, me selling my properties, I wanted to be able to say, “Yes, I can prove the numbers that I’m showing everybody in this pitch that I’m pitching to everybody.” I wanted to go through my pitch with you on the three facilities that we’re selling and give you an idea of how we put all the information together to run a deal analysis so you get an idea. At the same time, all that same information is exactly what you’re going to need. Would you want to sell your facilities or if somebody wants to look at your facilities?
Somebody complained that I did not know technology. This was the comment, “Stacy, you need to get better at technology. You’re not very good at it.” The truth is I am not good at technology at all. My husband typically helps me with all this stuff so I’m going to try to figure it out. What I’m good at is finding facilities, putting them under contract, buying storage and teaching people how to do that. Technology is not what I’m good at.
Facility #1: Fairburn
These are the three facilities. I’m going to go through them and show you what we put together to run the deal analysis. These three facilities that we’re selling are suburbs of Atlanta. I’ll show you on the map where they are. Essentially, if anybody knows Fairburn, it’s right South of the airport. These are all in Southwest Atlanta. Fairburn is maybe fifteen minutes South of the airport. Newnan is about maybe 25 minutes South of Fairburn. Franklin is probably about 20 minutes or 30 minutes South of Newnan. It’s like a line.
The one thing that we always do is we put together what we call an executive summary. Some people call it an OM or whatever you want to call it. We call it the executive summary. This document explains which property you’re trying to sell or the information. It’s an overall explanation of that. We have three facilities. This is Fairburn, Franklin and Newnan. We just painted this facility. It’s brand new paint. It looks good. We probably should’ve painted it a couple of years ago but we were too cheap. We were full all the time and there was no reason to paint it but because we’re selling, we decided to paint it so that the next person can have a nice facility.
I have four pictures of the property. It’s all nice, fenced and looks good. The location is Atlanta and right South is where Fairburn is located. I have the pictures of what it looked like before. It’s a concrete block. Also, another thing about this facility is this property is a commercial space. It’s a mechanic. There are four bays. We charge this guy $1,000 a month, which is probably not a lot of money. This probably could go for more but he’s been there for several years. When we bought the place, he was there. The mechanic comes with a commercial property. He parks his mechanic car sometimes in the front and then around the back. Fairburn has 17,000 people in it. Within a 10-mile radius, there are 300,000 people. There are a lot of people in Fairburn. This is a primary market.
The property is square-shaped and it is where the mechanic is. He has his bays and then he parks his cars in the back that he works on. This area is fenced in for him and then our area is fenced in for the storage. Our storage has two buildings. It’s 60 units so it’s not very big. All 3 of them are only 60 doors. These are our first three facilities so they were not big. We’re in a primary market so our competitors are U-Haul and Extra Space Storage. There’s only one storage facility that is a little bit bigger than us but it’s one of the late mom-and-pop ones. There are honestly not a lot of apples-to-apples competitors for us in this area. All of the big boxes, they came in and started building because it’s growing so fast.
Facility #2: Franklin
My virtual assistants put this together because when I run deal analysis, the only thing I look at is this and the deal analyzer. I’m going to show you what else we put in there but this is what I look at. It gives me an overview of the deal and then I look at the numbers. Franklin, Georgia is the next one. This is a nice facility. It’s also 60 doors but it has a couple of bigger size units. We have a 20×30 that we rent for $400 or $500 a month. It has a couple of bigger doors.
We put brand-new gravel down everywhere. It’s a nice facility. It’s got a gate and keypad. It’s on a bigger lot. It’s a good size lot. Maybe there’s a little bit of space in the back where you might be able to add some units. I have pictures of the facility showing the location, where it’s at on the map and the street view of what it looks like.
Franklin is a little tiny town. There are 1,000 people there. They got Piggly Wiggly there. There are 12,000 people within a 10-mile radius. You’re going from Fairburn to Newnan and then Newnan to Franklin. Fairburn to Newnan, I would consider it a primary market. From Newnan to Franklin, going out into the country is what you’re doing. This is in Coweta County. Coweta County is one of the fastest-growing counties in Georgia.
Here’s the property. You’ve got this property on the back end too. You may be able to add some units. We never added any units. Stabilizing the property is what we did. That’s us. There’s a bigger unit and regular units. There are a couple of competitors. There are a couple of storage facilities in Franklin. We’re all full. Of all three of our facilities, Franklin is always full. We always make the most amount of money. We’re always at 95% full on this thing. We do auctions. It takes a little while to get it filled up and then we’re back full again. These are the competitors, A to Z. This guy never answers his phone, County Line Storage.
Facility #3: Newnan
Finally, Newnan. It’s got 2 buildings and also 60 doors. It’s got parking in the front. One property is included where we never did anything. You could rework all this and do some boat and RV parking. You could add more units, whenever you want. There’s a facility in the same area, right South of Atlanta. All three of the properties are on major busy roads so very good.
Newnan has 43,000 people in it in the demographic. Within a 10-mile radius is 100,000. In a 5-mile radius, there are 45,000 and then in a 3-mile, there are 13,000. Newnan is very populated. One property got this weird shape but there’s a whole bunch of area in the back to add on. On one side is where all that parking is. You could reconfigure that and do parking. It’s a lot of good space.
When I’m looking at my deals, I am looking at how much space, land and area there is. Can I add on or not add on? Most likely, we’re not going to add on because we don’t do that. We stabilize. When I sell it to the end buyer, I want to make sure that there’s some meat on the bones. Our goal is to get our property as close to fair market value as possible for the rent. If there’s no meat on the bone, then it’s going to be very hard for us to sell the property. We want to make sure that you can at least increase the rent a little bit and add some room.
I like this portfolio because we thought a lot about which facilities we wanted to sell. We’re in the process of buying. We have another facility under contract and we’re about to get three more facilities under contract. We’re in the process of trying to figure out which facilities we want to sell from our smaller facilities so that we can buy the bigger ones that we’re looking at.
Here are the competitors. SecurCare Self Storage, U-Haul, StorMark and Greison. That’s the executive summary. I want to make sure that you know that so you have an idea. When I’m looking at my notes, the virtual assistants have to put an executive summary together for me because I quickly look through this to give me an overall idea of what the facilities look like. From there, I can look at the deal analyzer.
You can see how I separated this. We separated each facility, Fairburn, Franklin and Newnan into three different folders and then we made another folder, in which we put all three of them together and we ran the numbers together. We separated everything and put it all together. That way, we could look at them individually and then look at them together.
The truth is, if I was going to sell one of these, this portfolio would not be as valuable as me selling three of them. That is our goal. For instance, we put Leesburg under contract or we bought Leesburg. I’m like, “What other facilities in that area can I buy so that I can create a mini portfolio?” I bought something in Clarksville, Tennessee. “Are there any facilities in that area that I can buy where I can create a mini portfolio so that when I do sell I can make more money?” That’s why we create mini portfolios.
I have fifteen storage facilities we own. One is in Tennessee. That’s the first one outside of Georgia, Florida. In Georgia, we have North Georgia, the Atlanta portfolio, the South Georgia portfolio and then the Florida portfolio. If you envision, we have four different mini portfolios where we have one boots-on-the-ground person that manages all of them.
We have a guy, Chris, that manages these facilities for us. His job is to manage all three of them. That’s a full-time job to walk through the properties every week, look at the properties and take care of the properties. He’s at these properties one day a week every week to pick up trash, do walkthroughs and whatever it is that needs to get done.
Data Organization: Executive Summary, Management Summary, And General Ledger
I’m going to open up one of these folders. Let’s go with the Fairburn one. Inside this folder, it looks so pretty. Everything’s so named properly. You could tell where everything is. This is one thing that I started years ago. For everybody that works for me, the rule is my Google Drive folders have to be perfect because when I search for something, I want to be able to find it. I hate it when you can’t tell what it is. You have to open everything and stuff is not organized. That’s how we do it.
What are the things that you need to determine if the deal is good or not? It’s all right here for you. We go to Regrid. Regrid is free. That’s why our virtual assistants go there and that’s where we pull all the property information. Remember, this is what we showed you of Fairburn. This is coming off of Regrid. It has also the data and stuff on it. The information, the parcel number and the owner’s information are all there. That’s why we use Regrid.
We have all the photos of the facility. Those were all on the executive summary. All this information that you see us going through is put onto the executive summary because I was looking at so many deals and I’d have to open up all the folders. I was like, “I can’t do that anymore. Can you please put everything onto an executive summary?” We started doing executive summaries. You saw how nice that executive summary is. That’s what our VAs do for executive summaries, aren’t those so nice? They get into it and stuff. I love our VAs. They’re awesome.
We have a 3, 5 and 10-mile radius. These are the demographics in the executive summary of the population and the household income. We put those into the folder. I make them do Google Maps and show me on the map where the facilities are located. They do screenshots and put them in so that we know. Remember, you have all the competition. He put all the competitors. For this one, he put it on the deal analyzer and what all of the competitors are charging for all of the facilities that we own.
This facility has a lot of different sizes. This owner, I’m telling you, when he built this facility, he was like, “I got this much space. Let me put storage in that.” He planned it out. That’s how it worked. He’s like, “I have this much space. I need this much turnaround. Let me try to figure out what I can configure.” He built this with concrete blocks. He didn’t build it himself but he planned it out himself. Competition is there and then we have demographics. This is the JPEG that we hold with the Fairburn population.
That’s all the general stuff that you would get for a deal. What we did is put in our P&L and management summaries. The management summary is what you pull from storage. The management summary came directly from storage and it shows that we’ve made $61,588. It shows you all of our leads, allowances, occupancy and economic occupancy. There are all kinds of stuff in here. We put those in there for everybody so everybody could see our true numbers. That goes to December 31st, 2022. We put “Last Year’s” in it.
For the P&L, we put in for 2020, 2021, 2022 and 2023. On the P&L, you can see how we set up our chart of accounts and everything. Here are all of our management processes and management expenses. Here’s the merchant fee. Here’s the mortgage. Here are our office expenses. Here are our repairs and maintenance. That’s total expenses. Total income, total expenses. This is for 2023 but this is how our P&L is set up internally in our company.
It’s super organized. You have every year that you need because that’s what the bank is going to do. Remember, I stabilized these properties so I took them from not making any money to making money. I borrowed money from private lenders to buy them. I get to sell them as income-producing property. As an income-producing property, you should be able to go to a bank and get a loan on the property. To go to a bank and get a loan, then you need to be able to show P&Ls, balance sheets and all kinds of stuff.
In every facility that we’ve ever bought, we never got any of that. A whole lot of nothing. The Leesburg one and the Clarksville one, we didn’t get anything at all. We got a rent roll and some spreadsheet is what we got for both of them. That’s why we got those. We bought those $0.50 on the dollar for both of those facilities. We bought both of those facilities for $2.5 million. In 2 to 3 years, we’ll be able to stabilize those properties and make them worth well over $5 million.
For mismanaged properties, you should be buying $0.50 on the dollar but for income-producing properties, you’re not going to be buying $0.50 on the dollar. You’re going to be buying them for the top amount of money. I want to get the most amount of money that I can possibly get. With that, I am thinking about what I need to show that these properties are worth what I’m saying that they’re worth. That’s what I’m showing you.
Eighty percent of all owners do not do this. I got 20,000 storage facilities on my list and 80% of those would not be able to show this at all. Your goal when you buy a storage facility is to do what I’m doing here. This is the P&L, that’s the management summary. We also put in our general ledger for all four years, 2020, 2021, 2022 and 2023. Why would we do that? It’s because we want to show the banks and the buyers that we took it from making this much income to this much income.
A general ledger will show you what your credit card fees are and what your late fee revenue is. You got to remember that you’re paying credit cards and then you’re also getting a lot of revenue from your late fees. Also, your security deposits or office space revenue. We haven’t gotten in May 2023 but in January, February, March and April 2023, we got $1,000 a month so we have $4,000 of revenue from the office base.
It is the mechanic but we just call it an office base. You can see our rental revenue and all the information there. We’ve got a balance sheet. I did the 2023 balance sheet. I did the 2022 balance sheet. This shows you what your liability is, how much you owe and how much you have in assets. I’m not going to pull that up but that’s what that is. You have to have the balance sheet all nice, beautiful-looking and everything.
Deal Analyzer
Finally, the deal analyzer. That’s the last thing. You guys all know that I use my deal analyzer and everybody should be using some deal analyzer, if not mine. If you want to use mine, you can go to my website and buy it. I did not put my deal analyzer into the folder because when I share my folder with everybody that wants to buy this, I’m not going to share my deal analyzer. I take screenshots and pull up the numbers. This way is what I do.
This one has 55 doors. It’s 65, 68 square feet. We did a whole bunch of auctions on this one and cleaned it up. It’s making $48,000 and it’s 35% vacant. We’re at $0.94 a square foot. $0.98 is coming from the competition. We’re where everybody else is in the area. We should be at $0.98. There’s a little room to add. I should be making $70,000 on this property but we’ve only made $50,000.
Remember, this is only storage. This office space is not included. We made it very clear that this is Q2, Q3 and Q4 of 2022 and Q1 of 2023. We took one year and that’s how we ran our numbers. This is what we’ve done. We have our property taxes. The property is valued at $568,000. We put the number purchase price at $600,000. That’s how we ran our numbers. The potential, if you can raise the rents, is coming out to around $900,000 to $950,000.
We put all the unit mix in. We have 56 including the office space and then 83, 92 including the office space. 65, 68 is the space for the facility and then 83, 92 is our total with the mechanic in all this area. We’re making an average, including this, of $10,000 a month with the office space if we were full. If you raised the rent, you’d be making around $12,000 a month. These numbers are our actual numbers. I want it to be as real as possible because I’m tired of owners lying to you. I wanted to not be that person.
We have what we call after-updates or opportunities. This is the opportunity of the deal. We put the $12,000 for the income. Once we get it full, we increase the rates to $0.98 a square foot. We add the $12,000. We did not increase the price of the rental. You could probably get out of him without leaving I bet $1,200 to $1,400. He’s due for a raise but we never did honestly because the pitch is too nice. You could probably increase the number to $15,000, $16,000 or $17,000 but we just left it.
You could see here that our effective gross income is $83,000 and our expenses run $25,000. I’ll go over our expenses fast but the net operating income is $57,000 once you increase it and get it up to date. We show the current numbers. Our NOI is $34,000 on this deal and then we show the after updates as well. I showed all the numbers to everybody so they could see that.
If I go into Franklin, which is one of the other facilities, it’s the same concept. Everything will be the same for Franklin. In Newnan, you could see the same concept and folders. Everything’s there. It’s super organized for somebody to get in there and find what they need. We’ve had several lenders look at this deal. Within a couple of hours, they say yes or no. It can take some that long to look. That’s what you want.
For all three of them, we put everything together. The executive summary is here and then we have the P&L for all three of them. All four years are here, combined. You can see the same format on the P&L. We’ve made $48,000 to $49,000 in 2023. You see how many expenses we have. All of our expenses are here. We have the P&Ls available for all three of them. We have the balance sheet available for all three years. We also have the deal analyzer. It’s the same concept but you don’t have to put the competition and everything into this one because it’s in the other ones.
We have our total annual income for storage. Remember, you can’t include boat and RV parking, which we have at Newnan. You can’t include the commercial space in the store because that will screw your price per square foot up. You want to evaluate every income separately. We make $139,000. It’s 168 units. It’s 18,600 square feet. We’re at $0.82 a square foot. We’re 24% vacant because we did a lot of auctions. We’re starting to lease up already. The average price per square foot should be at $0.97 so we are not where we should be on the prices. We haven’t increased the rents because we’ve been vacant, trying to fill up after these.
In one month, we did 150 auctions. You have to remember that we have 1,500 doors but now, we have 2,000 doors. Do an auction once every couple of months. Bonnie only does auctions for us and she is always busy. Our expenses are all here. These are the actual expenses that we took from our P&L and put into here. These are the expenses that we took from the property, taxes, utilities and insurance. We combined them all into one deal analyzer. You could see the valuation. The $139,000 should be $199,000. It’s there at $1.6 million. If you get it to $0.97, then you’ll have it at $2.5 million. We ran the numbers at 1.8 million. I ran it on a $6.5 but it’s a good number for that area. We’ll see what we get. I don’t know but that’s what I ran the numbers at. I thought that was fair.
Let me go back to the current. You can see here where we added the income. Parking Newnan and then Mechanic Fairburn is $12,000. We then put our expenses in. It costs us $54,000 a year to manage these facilities. Your NOI is at $106,000. After updates, we did not increase the rent for the parking. We did not add that in as extra income. You can do that. We didn’t add any more units to Newnan or wherever you can find space to add units or parking. We did not put that in what we have. The other income is $12,000 and that is for the mechanic. We didn’t increase that rent as well too.
Summary Of The Selling Process
As is, if you kept it exactly the way it was, got it to 92% or 90% full and increased the rates, this is what the value of the property would be. You can look at all of our numbers inside this folder to verify that what we’re saying is correct. That’s how we put our properties together to sell. I’m not listing it on Crexi. I’m pitching it out to my list and seeing if somebody wants to buy it. I hope that you guys saw what you need to run the deal analysis. If you want to liquidate your properties, the more information, the more organized you can be in managing your properties, being more systematic and staying up to date on your P&Ls, balance sheets and all the numbers and stuff, the easier it’s going to be for you to be able to sell your properties. That was what I wanted to show in this episode.
Somebody said, “I’m interested in looking at this deal.” Email me at Questions@StacyRossetti.com. I could talk to you and share the information with you. “Is the analyzer you showed the latest version?” Yes. The deal analyzer, all the numbers and everything is up to date. You can buy my deal analyzer on my website. Go to StacyRossetti.com. There are also 6 or 7 videos that go with it to show you how to run numbers and stuff. If you’re needing help running numbers, I highly recommend looking at the deal analyzer. We have the course on the website as well too if you want to go through the course and educate yourself on this.
Eric is saying, “Just wondering, since commercial real estate is value-based on the income they generate, how can a portfolio of individual properties cause you to make more money?” Let’s say you run $40,000 by itself and you run it out a 7% cap, it’s valued at a certain number. When you run $140,000 together and you run it at a cap rate, you can have a better cap rate because you have three facilities together, which creates a better value. Plus, more people want to buy more facilities or bigger facilities than somebody that wants to buy 1 facility with 60 units in it. Putting a mini portfolio together will help you obtain a better cap rate and selling price.
Putting a mini portfolio together will help you obtain a better cap rate and a better selling price. Click To Tweet“I only buy distressed because I like to buy stuff $0.50 on the dollar and I like to stabilize them.” We don’t build, develop or anything like that. We stabilize our properties. It took us three years to stabilize these and then we’ll sell them off. That’s what we do personally. My students do income-producing properties. I have building, conversions and mismanaged facilities. I got it all. You can do any type of facility but we do mismanage.
“Is there a concern of the big boys pushing out the small guys pricing you out?” No. The thing is that there is a market for everything. Keep that in mind. How many people can afford $250 to $300 a month for storage? Not a lot of people. It’s only going to get worse over the next few years. We tend to stay in the $50 to $150 a month. It’s where we’re at on our properties because we know that that’s what people can afford.
I was talking to Bonnie and she manages our office. We’re trying to fill up Fairburn and she’s like, “I have somebody that has one unit and they want to have a second unit. Should I give them a discount?” I was like, “Yes. Fill things up. Give them a 10% discount. Start at 10%. If they don’t want to do 10%, go up to 20%.” I talked to my phone about this as well too. “It is negotiation time. You’ve got to get these filled. Once you get them filled, you can increase the rates. Every six months, you can a little bit increase the rates.” 6 to 9 months typically is what we do but you want to get them filled.
We’re selling these three facilities. Whoever’s going to buy this, I have a property I’m closing on in June 2023 and another one in July 2023 so I need money. That’s why I’m selling these properties. We’re going to probably end up over the course of 2024 selling more properties. Make sure you stay tuned for that too. I appreciate you hanging out with me. I will see you guys at the next session. Take care.
