Acing the Interview with Your Self-Storage Realtor!

Realtors have a lot of clients, especially good commercial Realtors. They don’t want to spend time looking for the perfect property only to discover that you can’t actually afford the property. As a result, they are going to pre-qualify you before they start spending time helping you. If you don’t pass their interview, they are not going to work with you. So how do you prepare so that you ace that first impression?

The first thing that you need to do is you need to have an idea about your financing. You either need to have spoken with a commercial lender or you need to have partners with cash so that you can close quickly. It is best if you can do both. You need to be able to speak their language. If you have met with a commercial lender, they can go over the types of loans that are available for self-storage, including SBA loans. They can explain how much money you are going to need to put down with each type of loan. This can help you with your maximum purchase price. If you have to put 15% down with closing costs and you only have $150,000 between you and your investors, you can’t exceed a $1 million purchase price. On the other hand, if you have more than that, then you can look at more expensive properties.

This leads us to the next question the agent is going to ask you. They really want to understand what you are looking for. You can just say a good deal. That can be defined so differently for each person. You need to explain to them the minimum lot size that you are willing to consider. You should consider 3 to 5 acres unless you are in a densely populated area. They need to know the minimum square footage that you are interested in. If your business plan involves selling the property within a short period of time, you want to consider at least 50,000 square feet.

Next, you need to be able to explain to them what CAP rate you are interested in getting and what you are looking for in an upside potential. You need to know what the market will allow for a CAP rate in your location. In some parts of the country, you can get double digit CAP rates. While in other areas, you will be lucky to have cashflow. Explain that you are interested in properties that have the potential to improve their Cap rate or cashflow. You want properties that you can add to or improve or change the occupancy rate. This will increase your net operating income.

Finally, you need to be able to explain to your agent that you are willing to do a conversion if the right property comes along. In order to do this, you need to have spoken with your lender about a construction loan. You need to have found a builder to get a time frame. This will allow the Realtor to understand that you are a ready, willing, able, and flexible buyer.

If you don’t have any experience in self-storage, that is o.k. When the Realtor asks about your self-storage experience, tell them that you are just starting in self-storage and then explain to them what experience you do have. They need to know that you have a background in real estate and that you are the real deal. Everyone has to buy their first self-storage property at some point in their career. If this is you, make sure that you find a Realtor, who is very experienced in self-storage so they can help you avoid some of the basic pitfalls.

Unless you are really lucky, you won’t find the perfect Realtor on your first try. It is going to take some time to nurture a relationship. Invest the time to find someone who will invest their time in you. Look for a Realtor that specializes in self-storage. There are a lot of nuances to commercial self-storage that residential agents just don’t know. If you can’t find someone who specializes in self-storage because your market is too small, make sure that you work with a commercial agent. As always, happy investing.