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Posted over 1 year ago

The First Rule of Thumb – Finding Properties – Realtor Dialogs

When you talk to a Realtor, there are going to be some questions that you want to ask the agent and that the agent is going to ask you. If you have practiced some variation of those questions, you will come across more professional.

How long have you been in Real Estate? – You want to find someone with experience. You don’t want to train someone on your nickel. They will make a mistake that will cost you money. Find someone who has already made those mistakes and can protect you.

What area do you focus in? – The best agent to work with is someone who specializes in self-storage. You may not be able to find someone who just does self-storage if you are in a smaller community. At least find someone who has experience in self-storage and focuses on commercial real estate.

How many self-storage units have you sold? – Don’t be the first.

How many have you sold in the last 12 months? – You want to make sure that they know the current market, not the market 20 years ago.

What is the self-storage market doing right now? – Every market is different. You need to know what is happening in this market today. This will help you when you are making offers and running numbers. If you don’t know what the current market is doing and how it is trending, it will make it harder for you to make decisions about potential properties.

In this area, what is a typical Cap rate for a self-storage property? - You need to know what the current cap rate is so that you know if you are getting a good deal or not. You also need to know what the average cap rate is so that you can anticipate what the value of the property will be once you have it up at occupancy.

What are the current occupancy rates for self-storage in this area? If the average self-storage occupancy rate is 30% you know that the market is over saturated and you might want to look elsewhere. On the other hand, if the occupancy rate is 99% with a waiting list, this is a good market to consider.

I am looking for a property that is a good opportunity, are you willing to offer less than list price in this market? You don’t want to work with an agent that is unwilling to make offers. If they are only willing to offer full price or higher, then you want to find a different agent.

Tell me about the lenders that you work with? You always want lender referrals. You may find a lender with a loan program that you don’t know about. Most of the time you want to work with partners, but that doesn’t mean that you won’t need financing at some point.

Do any of the lenders that you work with do small business loans? Are you familiar with those and how they work with self-storage? You can combine SBA loans with self-storage properties to help you get in with only 10% down and a lower fixed interest rate. These are a great way to finance a property.

Do you have any properties that you can think of right now that would work for me? Even if you don’t think that you are going to work with this agent, be sure to ask if they have any properties that might work for you.

They are going to ask you questions like:

How long have you been investing in self-storage? How many self-storage properties do you own? If you are new to self-storage, make sure that you have experience somewhere. They will not take you seriously if you don’t even own your own home.

Where are you getting your financing/funds? How quickly can you close? If you say that you are a cash buyer, they want to know how fast you can close. You don’t have to close immediately just because you have cash. You still need to have a feasibility study done on the property to make sure that it works for you. However, you don’t have to wait months for your financing to be approved.

What do you want in a property? You need to have a pretty good idea of what you want in a property before you start talking to an agent. They are going to want to know what size you are interested in. What CAP rate you are looking for and what your maximum price range is. They are going to want to know the areas that you are willing to consider. Make sure that you have thought about these things.

Don’t be afraid of agents. They are there to help you through the process. It is o.k. to be new, just make sure that you don’t pretend to be experienced when you aren’t. If you are honest with the agent up front, they can help you better then if you constantly change your story. They want to make money. If they believe that you can close on a transaction, then they will work with you. As always, happy investing.



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