Let’s Do This Deal:

A Buyer’s Perspective

Like many of you, I am an owner-operator to the core; but for the last four years, my main job has been a buyer. I have bought properties from California to Georgia and have ripped apart hundreds of deals searching for the whiff of upside and, most of all, the true facts. Some of the deals I have pursued and closed have been seller direct, while others have been purchased through regional and national brokers. Regardless of how professional the representation is, from a real buyer’s perspective, most of the deals I have worked on could have been much smoother if all the loose ends were buttoned up before hand.

Aside from having a good handle on what a buyer is looking for, you, as an owner, may want to spend some time getting your loose ends tied up tight. So I am pulling back my kimono and spelling out what I believe a buyer needs to analyze the deal and avoid the dreaded “re-trade”. A quick note: Nobody goes in to buy a deal and intentionally asks for a change of terms or price reduction.

Delays, re-trades, and scrapped deals are often the result of inadequate or incorrect source data or general miscommunication. Does the moving truck come with the site? Are all permits and taxes current? Are your retail tenants willing to sign estoppels? We all want deals to move forward, but how smoothly they commence is up to the seller’s ability to provide accurate and forthcoming information as well as the buyer’s propensity to ask all the right questions.

As buyers, we need a few crucial bits of data to get started and additional data as we move forward to satisfy the banks, lawyers, escrow, and title. At minimum the following are needed: T12 P&L detail (trailing 12 months by month with the total for period); occupancy statistics report; management history report or last 12 full month’s individual management end-of-month reports; and specific notes about moving trucks, billboards, cell towers, etc. For the most part, a serious buyer can get a great deal of information through outside sources and a slick offer memorandum is not necessary; however, good source documents are required.

We closed on a seller direct property in December; it was honestly the smoothest deal we have ever done. The owner, who is not a storage guy, simply asked us what we needed. He provided the requested documents, and we were on our way. Since he had never done a storage transaction, he had no qualms about providing the information we requested, thus avoiding the delays and frustrations that plague our marketplace. Once we were under contract for this transaction, we provided a thorough due diligence checklist and set up an Internet cloud folder for him to drop the files into. Again, many of the documents a buyer requests are requirements of lenders, lawyers, and other third parties. Generally, these are not options; they are required.

Our group was fortunate to close 16 purchase transactions in 2016. Not all were super clean, but when one is it makes you wonder how we can all work better together to succeed in harmony. Communication, understanding, and providing reliable accurate information is the key. We are looking forward to a prosperous 2016 for all. Let’s make the deal, and make it simple!