How Do I Grow My Self-Storage Empire Through Marketing? FSBO'S

When you are in the self-storage business, you have to be proactive about finding people who are selling their properties themselves. You don’t want to just rely on your local Realtor to find you all of the opportunities that are available because sometimes people want to sell their property themselves.

One of the great things about working with For Sale by Owners, is that a lot of them know their property, but they don’t know a lot about the Real Estate Market. As an investor, you know a lot about the market. If you can explain to the seller the way that the market drives properties value, then you can get them to sell you their property for a reasonable price.

Another thing to remember is that time and circumstances change. Someone who is insistent on getting a high price for their property today, may be willing to come down in the future. Be consistent in following up if you are unable to put together a deal right away.

You should be looking for new FSBO listings every day. You should look anywhere you can think of that a seller might advertise from online chat groups to Facebook to Loopnet. Check local advertising media. Check FSBO websites. Check Crexi.com or selfstorages.com Look anywhere that someone might think to advertise their property. There are a lot of websites that you can choose from. Look for the properties that have come on the market in the last 24 hours and make an easy to track spreadsheet. Is this a new listing or is it someone who has just rephrased their ad or lowered their price? If you are using a spreadsheet, then you will know.

When you are talking to a seller, the first thing that you want to do is check their cap rate. Are they asking a realistic price for the current market? In order to do this, you need to find out what their net operating income is. When you look at their net operating income, make sure that there are not going to be some major changes. For example, they may not have budgeted anything for management, while you are going to be hiring someone to manage the property for you. They may have a lot of renters that are family and friends. Look at the rental contracts to see if a lot of the last names match those of the seller. These are tenants that might be renting at a significant discount. They may move when you decide to charge them market rates. Once you have verified that the net operating income is correct, then you are going to divide that by the purchase price. This will give you the cap rate.

In order to know whether or not the property is a good deal, you need to know what the cap rate is for your area. If you don’t already know this, you can ask a commercial Realtor in your area. A cap rate can change from area to area so make sure that you do your homework. If the cap rate for your area is 6% and the cap rate that your seller is asking is 5% then the property price is top dollar. If on the other hand the cap rate is 9% then the property is a great opportunity for that area. You always want to get as high a cap rate as possible when you are buying a property. For your information, you want to keep it as low as possible when you are selling. This is where your negotiating skills will come in handy.

While there may not be a lot of FSBO’s in your area, you don’t want to miss out on the ones that are available. Set up a system so that you can reach out to those sellers. Follow up with them so that when they are motivated, you are in the right place to purchase their property. You should follow up at least every 3 weeks until they sell the property or list with an agent. If they list with a Realtor, have your agent continue to follow up with their agent. As always, happy investing.