Sometimes You Need an Agent to Help you Buy a Self-Storage FSBO

In order to be a successful self-storage investor, you need to be marketing. If you don’t know where to start, pick up the phone, send out some mailers. Your marketing is the fuel that keeps your business going. However, there will be times, when you find a seller through your marketing and the best option is going to be to bring in a real estate agent.

Many sellers have unrealistic expectations about how much their property is worth. When they think that it is worth significantly more than it is, they just see you as the greedy investor who wants to get a great deal. As a result, you need someone to go in and help them adjust their thinking. Typically, it is better if it isn’t you. You want a real estate agent to go in and break the ice and talk to them about what a realistic price for the property actually is.

Sellers believe that the agent is on their side as far as pricing goes. They know that the agent gets paid more if they make more. As a result, they trust the agent when the agent gives out pricing. They know that the agent wants to make as much as possible.

The agent can show the seller all the information about the property and the current market conditions. Then they can show them what the property is worth based on that information. This way the agent can manage the unrealistic expectations of the seller without it being an adversarial relationship.

The agent can explain that there is no way to get financing on an overpriced property because the debt coverage ratios won’t work, or the cap rate is to low. They can show them that if they want that price, then they have to bring up the net operating income. They can show them what the last 5 self-storage properties have sold for and how they compare to their property.

Now obviously, these are things that you can do too. However, if you are working with a seller that doesn’t seem to believe you or doesn’t want to negotiate, have them bring in an experienced commercial real estate agent. This way the agent can explain to the sellers why their numbers are unrealistic in the current market without them thinking that the agent has an ulterior motive.

Agents can also help by putting together realistic projections and proformas on the property based on how it is currently performing. Not all agents do this, but the good agents do because they know that those projections and proformas help sell the property.

A lot of agents have relationships with great banks. They take their properties to the banks and have them vetted to see if they can be financed. This way you can reach out to those banks to get more information on what programs they have available to you.

Bringing in an agent isn’t always the right thing to do. However, there are some circumstances where they may be more likely to get the seller to be realistic than you can. Keep that in mind when you run into really stubborn sellers. As always, happy investing.