Is It A Deal? My Quick Guide…

No matter where your real estate business is located, there are great deals to be had.

There’s a logical downside to that, though, and the simple truth is, no matter where you are, there are terrible deals, too. How can an investor, especially a new one, learn to pick the wheat from the chaff? There are as many opinions about that as there are investors!

For our purposes in this blog, I’m ONLY talking about a facility or site I’ve just heard about – maybe online, or from a advertisement or flyer. What should you look for before you really start to get your team fired up; your broker, building inspector, and banker looking up information, and a title company chasing paper?

One of the first things I do, whether I’m looking at an existing facility or a site for a potential redevelopment, is grab my mouse and start with some basic online sleuthing. I’d say 95% of the deals I see, I can rule out by simply following the next few steps – in no particular order…

1. Look up the property on the county or city tax assessor’s website. Different states handle this in different ways, but most, if not all of them will have the relevant data you can use to make a quick inspection of the site’s values and age. With this information in hand, I can immediately understand the relation of the site and the asking price to the tax data – remember, there are lots of ways to value a business, and if you see the asking price is dangerously close to the assessed value, then you might have a deal in the works. Of course, there are TONS of ways this might be skewed, but you’ll have your first look into “real” data to help you.
2. While you’re on the tax assessor’s website, check their comps. Now, this information is generally buried in a tab somewhere, but if you can locate it, you can see other facilities that were used in the assessment. Not only can this give you insight into the relative density of the area, but also, where “your” facility is in the grand scheme of things.
3. Understand the demographics of the area. For many communities, you can find a tremendous amount of data by simply looking at the Wikipedia page for the town and county. Is the population growing or declining? Who are the major employers in the area? Are they expanding? Is that industry stable? Are people moving into or out of the area in droves? (It’s important to remember that even if the population is declining, self storage is still a very viable business there, but you need to know why – and where – they are moving.)   The “sweet spot” for self storage is a local median income of at least $45,000 annually, but that can vary slightly depending on what part of the country this potential facility is located in.
4. Still at our computer, my next move is to look at traffic patterns and car counts. This can be accomplished in a couple different ways – you state may have last year’s data on many of the major thoroughfares in the state, but a review of Google Earth can tell you a lot about how hard it might be for people to get there. Do they have to take a series of left turns across heavy traffic? Is the site hidden in the back of an industrial park? Would I feel comfortable letting my wife and daughter go to the facility by themselves?
5. If my research thus far has kept the facility in my “maybe” box, my next move is to try to determine what the market looks like for self storage in the area. A quick Google search for “self storage in (that town)” will give me a snapshot of most – not all- of the facilities consumers have available to them in the area and I can begin to assess how saturated the market is. Are the “big” names in town? Are all the facilities “C” level sites? If the market isn’t overwhelmed, I always look on the maps to locate where these other facilities are in relation to the target facility and note what challenges they have (or don’t have).

Each one of these steps may only take a few minutes but can eliminate TONS of work and chasing opportunities that really aren’t good deals. On the other hand, if a facility makes it past this initial research, then I know it might be worth a harder look. By using my knowledge and technology to quickly assess a potential deal, I can save me and my team valuable time.