Understanding Motivation Helps You Create Price & Terms

One of the first things that you need to determine about a self-storage seller is their motivation. The reason that they are selling a property will affect your offer. When you understand what their underlying reason for selling is, then you can put together an offer that will meet their needs. You cannot create an acceptable offer if you don’t know what the seller is looking for.

For example, if you have a seller that is tired and ready to retire, but they like the cashflow that their self-storage property is still bringing in. If that is the case, they may be willing to consider seller financing instead of being completely cashed out. There are a lot of sellers who are interested in seller financing, but no one asks them what they are going to do with the proceeds of the sale. If the buyer were to ask, they would find out that they don’t have to put as much money into the deal as they thought.

There are other situations where sellers will consider seller financing. For example, if the property is so poorly managed that they cannot bring in enough cash to cover their monthly payments, they may be willing to seller finance the property to you in order to afford those payments. You can lock in the lower price, turn the property around, and then refinance at the higher value.

Another type of seller is someone who has owned the property their entire life. It may be something that they inherited from their parents. In this case, there is a lot of emotional attachment to the property. For whatever reason, they have chosen to sell at this point. In this case, they want to know that you are going to take care of their baby. They want to know that not only are you going to take care of the property, but you are also going to take it to the next level. In these cases, you may be able to build a relationship with the sellers so that they want to work with you over other potential buyers.

Another type of buyer is one that is going through some type of financial hardship. They may have pulled money out of the property for capital improvements and now the balloon payment is due. However, if the property hasn’t increased enough in value, they may not be able to get a loan for enough to cover what they owe. They may be in a situation where they have to bring money that they don’t have to the closing table. In this case, they are working under a deadline. When this happens, you do not want to draw out the closing. You want to get your inspections done as quickly as possible so that you can close on the property before the bank does.

Finally, there are a myriad of reasons that a seller might be selling the property. They may be asking for top dollar or they may be willing to give the property away. Your job is to determine what their motivation is so that you can put together an offer that will appeal to their situation. Take the time to talk to the sellers and build a relationship. Ask them questions as you walk around the property. Get to know them so that you can create the winning offer. As always, happy investing.