How we structure a purchase.
Every facility we buy is paid for in one of three ways: all cash at closing, payments to the owner over time, or some of each. The owner picks. Here's how each one works on our side, and the standards we hold ourselves to.
The owner chooses the structure. We make it work.
All cash at closing
We bring the full price to the title company from our own capital and private lenders. There's no bank loan, so there's no appraisal or loan committee that can hold up closing at the last minute.
Seller financing
A down payment at closing, then monthly payments with interest for an agreed number of years. The owner holds a note secured by the facility, much like a bank would.
Some of each
A larger payment at closing to cover what the owner needs now, and a smaller note for steady income afterward. Many of the conversations we have end up here.
It's often the best fit for someone who has owned a facility for decades.
An owner who bought or built a facility twenty or thirty years ago usually has a low tax basis, so most of a sale price is gain. Paid all at once, that gain can land in a single tax year. Paid over time, it's generally treated as an installment sale and taxed as the money comes in. Depreciation recapture is a notable exception and usually isn't spread out.
For us, a seller-financed purchase means we don't have a bank setting the terms. It lets us buy facilities a lender would have trouble valuing, in towns a lender may never have seen. For the owner, it can mean monthly income without the work of running the place.
It isn't right for everyone. An owner who needs the full amount now, or who is doing a 1031 exchange, is usually better off with cash, and we'll say so.
General information only, not tax advice. Owners should always run any structure past their own CPA and attorney.
What an owner can expect when they carry the paper with us.
These are the terms we're open to on any seller-financed purchase. Final terms are always set in the written agreement for that facility.
- 1
A real down payment
Money the owner keeps at closing regardless of what happens later, and a meaningful stake on our side of the deal.
- 2
First position on the property
The note is secured by a deed of trust or mortgage on the facility, recorded with the county ahead of other liens.
- 3
A look at the numbers every year
The owner can see the facility's financials annually while the note is outstanding.
- 4
Plain terms, reviewed by their attorney
The rate, the schedule, any balloon and any prepayment terms are written out in plain language. We encourage every owner to have their own attorney read the note before signing.
Want the full, plain-English guide?
Our seller site, We Buy Self Storage, walks through a worked example, the tax questions and the four terms that matter most.