One of the best sources for finding storage properties to buy are brokers. So how can you work with them to get access to their best listings? In this Self-Storage University podcast we’re going to review the methods utilized to forge successful relationships with industry brokers and to find good deals to make offers on.
Episode 24: All About Working With Brokers Transcript
There are many different ways to find a self storage facility for sale. Cold calling, direct mail, but perhaps one of the best, one of the strongest, is from a self storage facility broker. This is Frank Rolfe, the Self Storage University Podcast. We're going to be talking about finding the right self storage facility to buy, utilizing one of the strongest forces out there which are brokers.
When we look back on our real estate career, more than 50% of every deal we've ever purchased has come from a broker. So how do you forge a successful relationship with these brokers? How do you get on the top of the list? How do you find good deals using the brokerage community?
The first thing you have to do is build your list of brokers. So how do you do that? If you go to websites such as Loop Net, you will be able to find on there many self storage facilities for sale and you can start marking down the names and contact information of the brokers. In fact, if you glean the internet you'll find different websites which contain lists of brokers. So that's a good starting spot is to build your entire list of these most important contacts.
Once you've built that list, the next thing you have to do is you have to get out there and talk to them. Now, when you talk to a broker what you don't want to do is say, "Hey, I'm looking to buy a self storage facility." They could care less. That means nothing. You've got to have some kind of narrative. You have to have an elevator speech that tells people what exactly you are trying to achieve. Most of the brokers, what they want to hear are a few items. Number one, they want to hear your budget, what size deal you're looking for, how much money you have to put down. But also they want to know regionally, locationally, where you want to be. Remember, real estate is all about location, location, location. So what is your location? What are you shooting for? Where are you trying to have that storage facility located at?
Now if you call them up and tell them, "I'm looking for a self storage facility somewhere in the southwest. I've got $200,000. I'd like to buy something roughly around $1 million or so," that's the kind of information that they want to hear. Now, they may still ask you further questions because yeah, sure, they want to put you in different boxes of immediate buyer, future buyer, not a buyer at all. But you don't want to come across to them as a tire kicker. If they think you're a tire kicker, some of them will waste time talking about storage facilities but never being willing to actually pull the trigger and buy one. Then you're going to be on their list of folks who are never, ever, ever going to call. You don't want to be on that list. You want to be on the list of people that they think actually might move forward and buy something.
But then how often do you interact with them? Even if you make that list of a potential buyer, how often do you talk to them? Well, I would contact those brokers probably at least once a month. Maybe not always in the same manner. Maybe one time you call them, one time you email them. You could even send them a letter here and there. When you vary it like that, it tends to stick in their brain more that you are a potential buyer and you really have the gusto and the enthusiasm to do something.
Now, when the broker calls you with that listing, there's some important things you need to do also to make them feel that they're not wasting their time. Number one, you have to move quickly. When the broker says, "Hey, I've got a deal that might work for you. Take a look at this," you want to do that immediately. You want to call them back no later than the next day and say, "Yeah, I read all through the listing last night and I'm definitely a player," or "that one doesn't work for me for the following reasons." If you are not all over it when they contact you, they think you don't have enough enthusiasm. And an unenthusiastic buyer won't buy anything. Warren Buffet once said, "Without enthusiasm there's no energy. Without energy, you have nothing." That's pretty much true, particularly when you're looking at it from the perspective of a broker that those buyers that actually will go out there and do something are the same exact people who were so fast to move, and so energetic, and so very enthusiastic on the phone.
Also, you always want to give the broker the straight truth on your thoughts. Tell them your thoughts on that market or why you're not interested in that property, and don't sugar coat it. The more they know that you're thinking about it factually, the more they are believing that you actually are someone who will ultimately buy something. So appear knowledgeable. Don't just say, "Well, you know I don't like that park because I hear bad things about it on TV or that part of America." No, don't tell them stuff like that. Tell them, "No, that property isn't going to work for me for the following reasons. It’s not large enough. Don't like the location. There's too much self storage built there." So feel free to be honest. They love honesty. They love that kind of raw emotion. That actually is a big turn-on for brokers.
You're also going to find when you work with brokers that it isn't just those listings that they have out there to the public that you're really after. There's a much more powerful force with brokers and that's called pocket listings. So what is a pocket listing exactly? Well, let's assume you've got a storage facility and you want to sell it, but you don't want anyone to know that it is for sale. How would you accomplish that? Well, you tell industry brokers, "I'm willing to sell but here is the deal. You can't advertise it online, you can't put a sign in front of it, but if you ever meet someone who might be a buyer I'd sell it." That is a pocket listing. What a pocket listing does then is when they find somebody who they think meets the profile of a real buyer, they will then and only then tell you the magical parts about that property. If you're very lucky, that property will meet the exact specifics that you truly were looking for and a deal can be forged. What's great a pocket listings are they're not shop worn. Typically, they're in a much more attractive price point.
Now, one word of warning if you want to get those pocket listings, you can never be represented with a buyer's broker. A buyer's broker is a turnoff to the broker because they'll then have to split their commission. They don't want to do that. They only want to sell to somebody who does not have a broker represent them so they get 100% of the commission. I think that only makes sense. Since pocket listings are such an important, powerful force of finding that correct storage property, the bottom line is you would never want to let a broker represent you to the outside world. So when a broker says to you, "Hey, I'll find you a self storage facility. Let me represent you. Here, sign this agreement," don't do that. Because if you do that, you'll be blocked forever from seeing those pocket listings, and those are among the best of anything that you are going to find.
Now, we all have horror stories of working with brokers. We've got many. Almost everyone has got a few. But the issue with the broker is once you get that broker, and once you get that deal, you need to understand the broker is just trying to sell you something. So the broker is not where you should be getting your due diligence facts. The broker is not the person you would look to for confidence of whether to go forward or not and buy the property, because he's not working for your interest. He's working for his interest, which is to get you to close. So don't look at brokers as being a source of honest information. The broker serves a very important capacity and that is simply to try and act like a matchmaker between you and the seller, but don't look at them also as your authority, as your consultant. That will only get you in a world of trouble.
There's many, many, many cases of brokers who convinced certain buyers to buy storage facilities and it has been a catastrophe. If you really look back at them using scientific method what really happened, there was a cross over at some point where the buyer thought the broker was not only the matchmaker, but was also the authority on the industry and in many cases even thought they were their personal friend. Brokers can be nice people, but let's understand their l imitations. You don't want that broker making the final decision for you, because the only one who has any skin in the game at closing is you. The broker is getting paid, you're writing the check, so don't confuse the roles.
The bottom line to it all is that brokers are very, very important part of your future if you're trying to buy a self storage facility. More than likely, over 50% of the deals you look at that are worth of buying are going to come from brokers. It's very important since brokers are such a vital part of your future that you understand them, you appreciate them. You understand the relationship, you forge that very necessary elevator speech, the rules of contact, the rules of engagement. Brokering and working with brokers is in some ways almost an art form, and it's very important that you as a buyer understand how to create and forge really great, lasting, working relationships with this super important part of the process of buying the self storage facility that works for you. This is Frank Rolfe, the Self Storage University Podcast. Hope you enjoyed this. Talk to you again soon.