There are several exit strategies for self-storage facilities, including:
Sale of the Property: This is the most common exit strategy. The owner can sell the property to another investor or a REIT, or list it on the open market for sale. This strategy allows the owner to realize the appreciation in the property value and receive a lump sum of cash.
Refinance and Hold: This strategy involves refinancing the property at a lower interest rate or longer term, and then holding on to the property for the long term to continue to generate income. This can be a good option if the property is generating strong cash flow and is in a stable or appreciating market.
Joint Venture or Partnership: This strategy involves partnering with another investor or entity to share ownership of the property and the responsibilities of management. This can be a good option for owners who want to bring in additional capital or expertise to the property.
1031 Exchange: This strategy allows the owner to defer paying taxes on the sale of the property by using the proceeds to purchase a “like-kind” property. This can be a good option if the owner wants to continue to invest in real estate but wants to avoid paying taxes on the sale of the property.
Lease the property: This strategy allows the owner to lease the property to a third party. This can be a good option if the owner wants to continue to generate income from the property but doesn’t want to deal with the day-to-day management.
It’s important to note that the best exit strategy will depend on the individual investor’s goals and the specific characteristics of the property. It’s a good idea to consult with a real estate professional or financial advisor to determine the best strategy for a specific property and market.