Last week we started a conversation about the skills it takes to be in the self storage business today.

Let’s take a look at the first skill: the ability to find deals. I wrote about this in Episode 129. 

In my opinion, there is a real art to finding good deal flow.

Given my background as a commercial real estate agent, my coaching is primarily geared around working with agents and developing those relationships.

So as I share my thoughts on this, understand that’s my background. However, what I do seems to work for our group as well as many others I have coached.

Basically, there are two primary ways to find deals. I will call them Active and Passive.

Active

I focus 90% of my time here.

I am focusing 90% of my time in the area where people who want to sell self storage are hanging out.

If you’re in the business of buying self storage you need to put your energy into the areas around people who are selling self storage.

It is great to develop strategies for finding off-market deals. We will even talk about that in this article. But 70% of the deals I’ve ever purchased were properties on the market.

Again, if you are in the business of buying self storage, it makes sense to be around people who are selling self storage.

What I teach people to do is to have a primary area to focus on. A state or, even better, a region.

This doesn’t mean you can’t buy somewhere else, but start with a part of the country you are going to know well and own self storage in.

That is your area! Claim it.

The first thing to do is to look at all the self storage for sale in that area. Go to the usual websites:

• LoopNet
• List
• Argus
• Marcus & Millichap
• CBRE
• Colliers

You’ll soon notice that the majority of self storage properties for sale are listed by certain real estate agents that focus on it.

Those are the people to get to know.

Call them up, talk to them. Ask them to send you packages on deals that somewhat fall into your acquisition criteria.

Tell then what you are looking for.

For example, if you are looking for deals under 40,000 square feet to run as unmanaged facilities with a kiosk and central office, talk to the agents for every property in your area that fits that criteria.  Get to know them and ask them for information on their listings.

Then, follow up with them.

Open an ongoing line of communication.

My coaching is to figure out what their needs are.

Most agents want two things. First, to sell their listings, and second, to look like they did a good job for their clients.

I try to help others achieve their goals. If I can help enough people do that, I will have anything in the world I am seeking.

If a deal doesn’t work for me and it falls in my acquisition criteria, I tell them why I can’t buy it. It is too expensive for me or I can’t seem to get the returns I need. I never say “overpriced”. It is just more than I can pay.

Or the rents in the market are not high enough. Or I can’t get enough additional income to get the income stream I need for the returns I have to get.

Give them feedback so they can share with their clients. If something is overpriced and enough people give the agent good feedback, that agent will share with the Seller. If the project doesn’t sell, at some point the price will most likely be reduced, and who do you think that agent will call?

Develop relationships with the agents that sell self storage in your target area.

These guys can have a big impact on your future business. Get to know them. Let them get to know you.

They are my biggest resource for finding good deal flow.

Then when one seems to work, don’t mess around. If you have your money and think you can get the loan, go for it.

You will never get the perfect deal. I don’t look for those. I want a deal that works and seems like it will hit our minimum return benchmarks. When I see that deal, I stop the action and go for it.

What happens is that when you buy one deal, who you are quickly changes.

You are no longer someone looking for self storage, you are a “Buyer”.

Buyers are treated differently in the market.

I promise you, there are a handful of agents that when they are looking at facilities to list they think of me and my group as they are talking to their clients and starting to put properties on the market.

How do I know?

They send me information before they list it. As soon as a package is put together, they send it to me. They tell me not to worry about the mistakes in it. You are seeing it first.

Why, because they know what we are after, and know we will buy it if the deal works. We have done it before.

If you have two or three agents like this in the marketplace, you will quickly have more deals in your inbox that you could possibly purchase.

These relationships are one of the most valuable relationships I have in the business.

A few tips:

• Follow back up with these agents if they send you something.
• Give them feedback.
• Let them know you appreciate them sending you deals.
• Thank them, and ask them to let you know about any deal that is within in your acquisition criteria.
• When you do put one under contract or LOI, always do your best to hit your timelines and do what you say you are going to do.

I never put a deal under contract at one price, knowing I am going to try to reduce it at a later date. Sometimes I have to with information that turned up during the due diligence, but I never go into a deal with that strategy.

My coaching is to do what you say you are going to do within the time frame you say you are going to do it.

If your first deal goes fairly smooth, you keep that agent in the loop and give them information so they can keep their client updated, they will go out of their way to do more deals with you.

Why?

You helped them achieve their goals: (1) sell property and (2) look good to their clients.

I’m telling you, if you have two to five real estate agents in the marketplace thinking about you, you are in front of a lot of deal flow in a year.

Mess over a few of these agents over time, you will have a hard time getting in front of a lot of deal flow in your target area.

These agents want to have good relationships with “Buyers”. That is their competitive edge. Sellers are only going to have one to three deals ever in an agent’s career. They are looking for the Buyers who will buy more than that.

Be that Buyer for enough agents and you will have good deal flow.

Passive

It is also a good strategy to begin to develop relationships directly with Owners of self storage in your target area.

One easy way to do this is to purchase a list of owners.

I am not sure how, but I get aggregators daily in my inbox who want to sell me a list of self storage owners.

I can buy these list by the city, state, region, or country.

Yes, there is a cost, but pay it.

Get the list of self storage owners, remove REITs and other larger players from the list, then use it.

You can develop any strategy you want. Mail cards, letters, or newsletters. I get them a lot.

I usually try to give some information, like most recent sales in the area or state. This lets them know I am on top of the market and could start to shape expatiations.

I always mention I am a Buyer and I can pay more to them if I buy directly from them.

Not sure if that’s true, but it could be.

My experience is if a self storage owner is going through a life change thinking about selling when my letter arrives, they may pick up the phone and call.

There are people who have other ways of “prospecting” directly with owners of self storage.

Share in the comments below how you do it.

If you take on these practices, or something close to them, and don’t get discouraged from no immediate results, you will do great in the business.

The reality is, like all businesses, at the end of the day, it always comes down to relationships.

If you have enough of the right relationships, and you are the kind of person that adds value to a relationship, you will have more deals than you can ever purchase coming at you.