Ready, Fire, Aim: Why I Send LOIs Based on Rents Alone

[Kevin Rapport]

Most aspiring self-storage buyers spend 3-4 weeks underwriting a deal before sending an LOI. They build a model. They normalize the expenses. They stress-test the rents. They send it.

Then the seller counters at a number they could have arrived at in 30 minutes if they had sent the LOI on day one.

I send LOIs on rents alone. I refine in the counter-counter. I call this "ready, fire, aim."

The Framework

When a deal hits my inbox, I run a 90-minute first-pass underwrite that uses ONLY the rent roll.

I do not normalize expenses. I do not stress-test occupancy. I do not order title. I do nothing that requires more than the rent roll the seller already gave me.

From the rent roll: current monthly rent, total unit count, implied annual revenue, a market-expense-ratio assumption (35% stabilized, 45% value-add), implied NOI, target cap rate, target purchase price.

I add a 10% margin of safety. That is my LOI number. Total time from deal-in to LOI-out: 1 hour.

Why This Works

Sellers will not entertain a serious conversation until they see a number. Until you have an LOI in front of them, you are not a real buyer. You are a tire-kicker.

In a market where mom-and-pop owners are getting 5-15 LOIs in the first 30 days, being LOI #1 is a structural advantage worth more than a 2% better number on LOI #6.

The Counter-Counter Refinement

When the seller counters my LOI, I have a 7-14 day window to upgrade my underwriting: order property tax records (auto-pulled by my AI underwriting stack), request 3 years of P&Ls and bank statements, run rent-roll forensics, model the value-add NOI.

If the seller's counter is within 8% of my refined model, I send the counter-counter. If it's more than 15% away, I drop the deal and move on.

Why Most Buyers Get This Wrong

The signal they think they are sending — "I am a serious, sophisticated buyer with a polished model" - is actually a different signal: "I am slow, I am uncertain, and I am replaceable."

The seller does not need to see your model. The seller needs to see your number.

The Counter-Argument (Because BP Will Flag It)

Objection: "What if you LOI a number you can't deliver on after deeper DD?"

Answer: that is what contingency clauses are for. My LOIs include 30-day inspection, financial-condition contingency, title contingency, right to walk on material adverse finding.

In 4 years of running this strategy, I have walked from approximately 35% of deals after LOI. Brokers send me MORE deals because I close the ones I sign.

The Bigger Principle

Time is the scarcest input in deal sourcing. Every hour spent underwriting a deal you don't end up buying is an hour you didn't spend on the deal you do.

Send the LOI early. Refine on the counter. Walk if the math breaks. Repeat 30-50 times a year.

What's your current LOI-to-close ratio - and how many hours per dead deal would you save if you sent on rents alone?