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If any of you haven't heard about our “Offer Range” strategy yet, you’re in for some excitement in your future conversations with owners. Let me explain why we give out a 7% and 9% cap calculator to our VA teams who cold call owners for us.
I developed this strategy when I was wholesaling single-family homes, and now I use it in self storage.
If you give a storage owner a single number offer, it often turns into a do-or-die situation. They're either going to say yes or no, and you might offend, etc. The offer range simply gets the conversation started, without entering the do-or-die territory. Let me give you a specific example.
I recently talked to an 81-year-old owner who was a tough negotiator. He said, "Look, I've been doing this for a long time. I'm in my 80s, I'm an investor. I'm not telling you how much I want for my property. It's either my price on your terms or your price on my terms." My colleague Michael was on the other line thinking, "Holy crap."
We persisted and asked for the gross revenue. After some coaxing, he finally gave us the rough numbers. Michael was on the other line, and he texted me what the 7 to 9 cap numbers were based on the revenue. I replied, "We're looking at about 3 to 4 million based on your revenue. Are we within striking distance?" He said, "You're pretty close. It definitely needs a '4' in front of it."
The same savvy owner/investor, in just five minutes, went from refusing to reveal his asking price, to practically telling us what he wanted for the facility. That's why we use the range.
So, we came back to him with an offer starting with a low 4 million, and he responded positively, saying, "This looks really good."
Hope this technique is helpful for your future conversations!