Day 36: Working with Commercial Brokers to Find Self Storage Deals: The Unwritten Rules

Well, good evening and welcome to day 36 of the Storage 100. I am Joe Downs, and before we get started today, I want to share a quick story about a student who once told me a broker was ignoring him, and it went on for like 6 months where he would email or call him periodically and never get a response. Until one day he sent him a screenshot of his bank account, which I thought was odd, but the broker called him back in 5 minutes, which I did not think was odd. Brokers, right? What can you do? And that's who we're talking about today, commercial brokers, the people you love to hate but absolutely cannot ignore. They are the gatekeepers. And if you don't learn to work with them, you're going to starve of this business. This isn't a feel-good session. It's about how to navigate the system that controls 90% of the inventory. So we are going to break down exactly, uh, what they, uh, want and how to talk to them so they bring you the deals and not the trash. So get ready to swallow your pride and learn to play the game. All right, let's dive in, uh, into what these gatekeepers hold all the power to. So Reality check is brutal, right? You can't skip the broker. Some people try to avoid them because they're annoying, slow, or frankly, some are just plain bad at their job. I'm not speaking about every broker. But if you're in any business, and this is true of any business, but if you're in real estate, residential, commercial, you know what I'm talking about. You're going to come across a bad broker. But so it's not all of them. There's some good ones out there too. But here's the math you have to accept whether you like it or not. Over 90% of all commercial deals that transact are listed with a broker. So it's just part of the business. Only a tiny 10% are truly off-market deals that transact and you can do, you can find them on your own. If you ignore the broker, you're ignoring a very large part of the market. So you're voluntarily cutting yourself off from the inventory you need if you're going to grow in this business. You don't need to work with brokers if you're only buying 1 or 2, but if you're trying to grow, you're going to be doing broker deals. So you have to learn to deal with them because they control most of the flow. So are you leaving 90% of the deals on the table if you try to go around them? Yeah. All right. So let's look at the 3 types of brokers that you could encounter along the way and how to handle each one. All right. So you're going to meet 3 types of brokers and you need a different strategy for each one. First, you got the pro, the self-storage specialist who knows cap rates and NOI and, you know, economic occupancy, you know, like a real pro. Right? You want to build a relationship with that person. They're going to be your best source for quality deals. Then you got the resi-commercial broker, usually a residential agent who listed a facility for a family friend, or sometimes actually they're the kind of resi/commercial agent who deals with like the retail You know, bottom floor and residential on top. You've all seen that, right? A lot of times you'll even find them— I don't know if this is true, and I'm complimenting Coldwell Banker. This is not a knock against them. I think a lot of times though, that's in my experience, that's where I've found those brokers are typically with Coldwell Banker. They can be pretty good resources. But They're not usually, even then, if they know they do some commercial, they're not usually storage specialists, right? So a lot of times they're pricing based on feelings and not financials or really understanding the business. You can educate them, you can lowball them. This one goes either way. Sometimes they price it too low, sometimes it's priced too high, and there's no way to get them down. But it's definitely worth Exploring that space and their listings and getting to know them as well because they might have their finger on the pulse of what's going on. And then you got the pretender, the one who says, I have a buyer, but is just fishing for a listing. Then got the listing because they overpromised on price execution. They're a commercial real estate broker, but they don't know the space. So they promised the world to the seller and they don't even understand the facility or the business. So And they're not adding any value. They will definitely waste the seller's time, your time. Just tread lightly here. It's, it's, it could be he switches time, but track that deal because the broker will fail eventually and you'll probably see that back on the market someday. So knowing which one you're talking to saves you months of wasted effort. But do it all the Good brokers actually want you to do. Want from you? Sorry, what do all the good brokers want from you? Here's what they don't want. They don't want you to be their friend. So forget trying to cozy up to them, take them to lunch. They don't usually want the small talk. They want 3 things: speed, certainty, and commission. So speed means you can close fast without dragging your feet and not wasting anybody's time. Certainty means you're not going to retrade that deal. or back out at the last minute. And commission means they get paid. That's what they're in the business for. They have a fiduciary responsibility to their seller, of course they do. But at the end of the day, they also wanna get paid. So your job is to prove you deliver speed and certainty better than anyone else. If you can do that, they will bring you the deals before anyone else sees them. This is really the only currency that matters to them. So how do you communicate that you are the real deal? Yeah. In 30 seconds or less. All right, well, 30-second script is your weapon. It cuts through the noise and establishes you as a buyer. So lead with the fact that you're a principal buyer, not a wholesaler or a middleman. This tells them that you are the end user and you're not going to waste their time. Next thing you can do is give them very specific criteria, like, I am looking for $20,000+ square feet in this specific city. This proves you know your market and you're not just tire kicking. And it also says, you know, you know, how big of a facility you can buy. And then the magic words, proof of funds ready to go. That removes their biggest fear that you're, you know, you're broke and you can't close. So put together a script like that for the gatekeeper. And you will start to see the deal flow. All right. So what does your proof of funds need to look like? Let's talk about that. So because without that, your script is going to be useless. So if you don't have that golden ticket, the proof of funds— so brokers don't get paid to talk. Remember that they get paid to close. So if you can't prove you have the money, you might be looking like you're a tire kicker and will likely get ignored. And then I don't know if we'll blacklist you, but you know, you're not going to see deals. So proof of funds instantly elevates you as a serious buyer who deserves priority. Send it before they even ask for it. This is going to show them you're professional, you understand the game. What can you send? They typically will accept copies of bank statements, HELOC approval, a liquid portfolio, stock, crypto, anything like that, as long as it's liquid. If you want access to deals, you got to prove that you can perform when they show them to you. So All right. And by the way, now that you've proven to them that you're a serious buyer, how do you keep the relationship going without being a pain in the ass? Well, you, you don't want to be the person that is calling all the time and just checking in. You know, did you get my email? Or, hey, anything new? Any hot deals coming? You don't want to be that person. They're going to get ghosted. Brokers, again, they don't need friends, but they do want— here's a great way. They do want a feedback loop. So if they send you a deal, analyze it fast, like 24 hours or less. And then if when you reject it, tell them why. Be very specific, not just a simple no or a lowball offer or whatever. Tell them exactly why it doesn't work for you. If the broker put a price on a property and they put that property out to the public, that is them saying, I believe this is worth this. When you come in lower than that or not interested or whatever, you're telling them, I don't like your baby. Even though it's not technically their baby, it is in this moment. So give them reasons why or ask them questions. Asking them questions really demonstrates that you're a student of this game and that you understand Enough about what's going on and you just need a little help with this specific deal, but it shows them you know storage. So, you know, example, cap rate is 5% and you need 7% for this market. You know, tell them, tell them why you think it's 7%, or ask them why they think it's 5%. Tell them why it doesn't work for you if it's, if it's another reason, right? And then And then tell them what to send you. So say, this deal doesn't work for me because of this reason, but if you send me this kind of deal, it will work for me. Shows them you're smart, you're fast, you respect their time, you know what you're talking about. This is how you train them. You will actually train them to send you the deals that you want, right? The process is also the key to unlocking what people think are the secret deals. So the very mention of secret deals then leads us directly to the pocket listing myth. And that myth is the— or the myth is that brokers are hiding the best deals in a secret vault and only selling them to their golf buddies. And that's just not— that's nonsense. A pocket listing is not actually secret. It's a filter. So brokers want a sure thing closing, not a headache. So they use the off-market deals as a test when they're allowed to, you know, if the seller wants them to put on the market. They'll put on the market, but oftentimes they don't. So they'll use those to test you. If you pass the test, meaning you have the proof of funds ready to go, you can analyze and commit with speed, you'll get to see the deal. If you fail the test, they're going to move on to the next buyer can perform. So it's not about who you know; it's about being the easiest person to to close a deal with. And you know, it's brutally honest, but that's the business. So, and by the way, sometimes these secret deals or pocket listings are at seller's discretion, as I mentioned. So oftentimes the sellers don't want it to be known, public knowledge, that they're selling their facilities. That's where the pocket listing comes from. But again, they could use that to test you. So again, it's not about the broker not representing the seller the right way or saving the best deals for their buddies. It's just a normal part of the business, and you definitely want to prove yourself up to brokers to be able to see the less competitive deals. All right, so let's wrap this up with a final thought on, um, Why this tough love approach works, and it's because we covered the cold call, proof of funds, feedback feedback loop, and the pocket listing myth. And this is the playbook for getting access to the best deals because of that. So you might not think this approach is too aggressive or too demanding, but trust me, it's not. Brokers are drowning in noise and tire kickers, and the more quote unquote gurus that are out there educating, quote unquote educating folks, the more tire kickers and noise there are because— and it's happening because storage is hot. But you're here learning the Storage 100, so you're not going to be one of those tire kickers. So don't look like noise, look like a buyer. When you show up prepared, professional, ready to perform, you make their job easier. So All right, I think that's enough for today. Tonight, please, if I may ask you, like and subscribe if this was helpful so you don't miss any of the daily drops, of course. And share this with a friend who is scared to pick up the phone and call a broker. They will thank you later. Good night.