Buyers & Sellers

COAST-TO-COAST STORAGE provides guidance in setting solid acquisitions strategies. Representing buyers and sellers, our goal is to align viable sellers with qualified buyers and ultimately consummate a successful deal that fully meets our clients' objectives. On an exclusive basis COAST-TO-COAST STORAGE is available to conduct focused searches on behalf of our clients. We utilize sophisticated and confidential techniques to identify and initiate discussions with acquisition candidates consistent with our clients' objectives. We remain as involved as the client prefers in deal negotiating, due diligence, structuring, and closing.

COAST-TO-COAST STORAGE is accustomed, as a part of its ongoing activities, to analyze and conduct research on properties. Examining market values, market trends and regional economic trends in various segments of the nation we are in a position to seek out special situations to meet specific investment requirements.

Once a property has been identified that suits the objectives of an investor, COAST-TO-COAST STORAGE conducts a comprehensive analysis, not only from the standpoint of the property as it relates to present income-producing capability, but also in terms of potential for future growth and appreciation. As an advisor, COAST-TO-COAST STORAGE frequently works on the basis of a negotiated fee from its clients. By having the client pay such a fee, COAST-TO-COAST STORAGE is in a position to negotiate the lowest possible price from the seller, on a net basis.

10 FACTS EVERY BUYER OF Self-Storage NEEDS TO KNOW
- By RK Kliebenstein

WHAT I NEED TO KNOW ABOUT BUYING EXISTING Self-Storage PROPERTIES

» FACT 1: 

THIS IS A SELLERS MARKET

There is tremendous demand in the marketplace to purchase existing Self-Storage properties. The large institutional players have a voracious appetite for Self-Storage cash flows, and exert tremendous pressure on regional and local buyers. This translates to one-off and regional investors whom will:

• Have to pay more for their properties
• Have to streamline their due diligence process
• Have to increase their buy price to entice a seller to accept a finance contingency
• Have to consider non institutional grade properties

» FACT 2:

MANY OF THE PROPERTIES LEFT IN THE MARKET HAVE BEEN PICKED OVER AND PASSED ON BY INSTITUTIONAL BUYERS

This means that you may be overpaying for a property or buying a property with a less than optimal exit strategy. Simply stated, you may not be able to sell your property as easily as you can now, if the demand should weaken for the acquisition of Self-Storage assets.
That does NOT mean that there aren’t many opportunities in the secondary or tertiary markets that can be quite profitable. You might expect:

• You may have to hold the property longer to gain enough value to create acceptable returns on your investment.
• You may have to buy properties in secondary or tertiary markets where capitalization rates are higher, but cash flows are weakened by less than robust rental rates and fewer rate increases.
• You may have to buy properties that are smaller than institutional requirements and you will have to operate “smarter”. You may not be able to bear all of the expenses such as:

• A well-paid management team—you may have to manage the property yourself!
• A well-placed, large yellow page ad, which may never be a problem in a low competition environment, but could be REAL TROUBLE if you have to compete with a larger property.
• Adequate reserves for replacements—you may have to refinance or borrow money when it comes time for major renovations or improvements.
• A professional management fee—not as much a problem as long as you can always fill this role. This may become problematic if you become ill, if you die, if you move, or if you need to devote your attention to other business matters.

• You may be saddled with an asset that has serious, uncorrectable market deficiencies. This is likely the most serious of problems.

» FACT 3:

SOME SELLERS RECOGNIZE THIS IS A GREAT TIME TO BE A SELLER,
AND THEY ARE DUMPING PROBLEM PROPERTIES

Let’s consider this scenario: The seller has an older store in an inferior location, for example in the back of an industrial park. New competitors, in state-of-the-art stores are building on main arterials or even worse, they know of plans to build Self-Storage stores in these types of locations THAT ARE NOT PUBLIC KNOWLEDGE. Therefore, these new competitors may not appear on the radar screen during due diligence. This may cause a locational obsolescence that may require competing on price points to buy occupancy, therefore reducing returns.

» FACT 4:

THERE ARE MORE PROPERTIES FOR SALE TODAY THAN EVER BEFORE

This is scary. Knowing that the institutions have strong buying appetites, that means they are passing on a number of acquisition opportunities. A prominent reason is that the prices are too high, and the returns are not available. Simply stated, you must be able to live with returns on a property less than a prudent investor would require.

» FACT 5:

THERE MAY BE HIDDEN OPPORTUNITIES IN BUYING PROPERTIES THAT ARE NOT ACTIVELY LISTED

This can create opportunities to buy properties on a principal to principal basis, or to pay commissions on your side of the table to get access to properties. Many owners would consider the sale of their property, especially true if you believe in the old adage that “everything is for sale at some price.” Some owners are not willing to list their properties and pay a commission for the sale. That creates an opportunity if you are willing to pay the commission or buy direct from the seller.

» FACT 6:

MANY BROKERS ARE TAKING LISTINGS WITH NO INTENTION OR PROVISIONS FOR SPLITTING COMMISSIONS WITH BUYERS BROKERS OR REPRESENTATIVES

In Self-Storage, many of the brokers have taken the position that they get all the commissions and will not cooperate with a buyer’s representative. THIS IS A GREAT DIS-SERVICE TO THEIR SELLERS. This greedy, introspective attitude is very short-sighted. It simply means that they are not willing to expose the properties for sale to a great number of prospective buyers, who, quite frankly, might be willing to over-pay for a property, but do not know where to look.

» FACT 7:

SELLERS ARE FOOLING THEMSELVES IF THEY THINK THEY ARE GETTING MORE MONEY FOR THEIR PROPERTY BY LISTING AT LOWER, SELLER REPRESENTED EXCLUSIVELY) COMMISSION RATES

If a buyer is going to pay their representative in the transaction, they are building that cost into the offer price. One way or another, it is coming out of seller proceeds. Sellers would do themselves well to negotiate a tiered commission structure so that the selling agent gets x% commission if he is a transaction broker and y% (more) if he has to split his/her commission.

» FACT 8:

BY PAYING LISTING ONLY COMMISSIONS, SELLERS MAY BE GETTING LESS MONEY FOR THEIR PROPERTIES.

A broker or agent who knows he is going to get paid the same if the buyer is unrepresented may make compromises to get the deal done as he/she no longer has a motivation to represent the seller only. This compromises their ability to truly represent the seller, and, as a transaction broker, may take less money to get a deal done. The traditional brokerage relationship of one agent for seller and one for buyer creates the best environment for each party to have their interests properly represented.

» FACT 9:

MANY SELLERS’ BROKERS ARE NOT PROPERLY PREPARING THEIR SELLERS FOR A SALE

Many sellers’ brokers are hoping for a sale to an unsophisticated buyer that does not want to verify the facts. Because there are a number of brokers in the marketplace, many brokers do not want to let a seller know how much work may be involved in a sale, and therefore they hope that they get an easy buyer instead of an informed buyer. If the selling broker has done their job properly, all due diligence materials will be gathered and available from the onset. The packages will be updated monthly (or weekly if the property is dynamic) and the broker will make the full package available to any buyer who is interested.

» FACT 10:

BUYERS ARE ONLY HURTING THEMSELVES IF THEY CHOOSE NOT TO CONDUCT THOROUGH DUE DILIGENCE

If every transaction perfectly modeled the brokers packages (often called investment memorandums), there will be little or no need for due diligence efforts. In fact, if ANY broker’s package was created to protect a buyer, little due diligence efforts would be required. The fact is that an offering memorandum prepared by a sellers’ broker, should be a “glass half full,” and be representative of the best possible scenario to get the highest price. You will often see brokers packages with underestimated expenses, overestimated revenues, and short-cut assumptions that ABSOLUTELY DO NOT REFLECT A TRUE EXPECTATION OF PERFORMANCE!

When reading these 10 facts, you might assume that I have an “axe” to grind with brokers. ABSOLUTELY NOT! In fact, we have brokers and agents on the Coast-To-Coast team. That is what Coast-To-Coast Realty Advisors is all about. The difference is, that we will ONLY represent sellers who are willing to make full disclosure, prepare their properties, books and records, for proper scrutiny, and cooperate with buying brokers to extend the marketing of the property to the widest audience. Simply stated- CREATE AN ENVIRONMENT THAT RESULTS IN A “WIN-WIN” FOR BOTH BUYER AND SELLER.
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To speak with a Coast to Coast Realty Advisors professional about your buying or selling needs, call 877-622-5508 ext.81