well-rounded business strategy includes planning for every eventuality, including an exit strategy. This is not a decision made impulsively upon acquiring assets, nor is it a simple task. Exit strategies evolve with market fluctuations and the company’s performance. There is no fixed time or place to create or execute an exit strategy; rather, success depends on having the right mindset, preparation, and composure to determine when it is the right time to sell—or to hold firm.

The self-storage industry has proven to be lucrative, particularly in recent years. As a desirable asset class, its profitability remains strong, but external factors inevitably influence decisions regarding the sale of assets.

Building a business with all possible outcomes in mind is crucial, whether the goal is long-term growth or eventual sale. Strategic planning should be an early consideration. “Any investment you make, you think about what it will look like on the way out,” says Neal Gussis, executive director of capital markets at SPMI Capital. “Every property is different. Each one sustains different cash flows and returns, so you have to modify the expense structure; there are different strategies for each property.”

Developing an exit strategy from the outset ensures clarity regarding acceptable sale prices and the desired state of assets at the time of sale. However, market conditions can shift. “The price you’re selling for isn’t necessarily what it’s going to be bought for,” says Jim DiNardo of J. DiNardo Consulting. “Then you might sell at the wrong time.”

Timing is everything, and exercising patience is key. “The timing swings like a pendulum,” DiNardo adds.

Each business, property, and unit type is unique. Factors such as property size, cash flow, and cap rates—both for acquisition and exit—must be considered. Property valuation may differ from its purchase price, making timing an integral aspect of exit strategy development. This ensures a sustainable profit.

“Every buyer has a different plan for their property; everyone has different visions,” says Gussis. Buying and selling are influenced by numerous factors, including fluctuating fiscal and personal timelines. A business opportunity may arise where selling is the best move, even if it was not originally planned.

Gussis points out that, “A few years back, properties were being sold at below 4 percent under the cap rates because valuations were so high, and they couldn’t miss out on that market.” With increasing pressure on rents, operating income has not always met projections. In some cases, selling now may be more ideal to avoid lower-than-expected returns.

The self-storage industry is a strong long-term investment, but no one can perfectly time the market. Success comes from balancing risk and opportunity. While an exit strategy should be considered from the start, it should also remain flexible. The market is unpredictable, so long-term thinking and adaptability are essential.

While every business owner should consider an exit strategy, it does not have to be the ultimate plan. For example, Chris Rudel, owner of the Rudel Company, has maintained a family business for 53 years. He receives multiple purchase offers weekly but has chosen to hold onto his assets. “These assets are almost free and clear,” he says. “If we sell, we have to pay a lot of taxes, and then we’re back in a position where we have to invest those dollars to achieve the same yields.”

Beyond financial considerations, some companies prioritize continuity and family legacy. “I’ve seen others sell their assets and retire, but in our situation, my son-in-law and daughter are actively managing and operating these facilities,” Rudel says. He emphasizes that, “It is very much an individual decision … I’m not looking to take on additional risks in buying or selling assets.”

Every exit strategy presents both advantages and disadvantages. Depending on a company’s stability, financial standing, and cap rates, selling may not always be the best choice. Many operators find that holding onto assets long term is more beneficial, allowing them to continue reaping the rewards of their hard work. While an exit strategy may not always be the best move, it should remain an option, especially if circumstances shift and make it the optimal choice.

From the outset of any business venture, owners should consider potential exit scenarios. Even if selling is not an immediate intention, it is wise to evaluate potential offers. DiNardo says, “Certain businesses have no intention to sell, but no one plans to sink their ship, so you have to be prepared.” However, he cautions against misleading potential buyers.

Exit strategies should be privately assessed and only discussed externally when the intent to sell is genuine. “If you never sell, you should at least know what the offers are; they may be something you cannot walk away from,” adds DiNardo.

An exit strategy is not always straightforward. There is no guarantee of selling to a Real Estate Investment Trust (REIT). “That is a common pitfall,” DiNardo says. “They’re not always buying or paying the best price. It depends; they might not meet another asset either. I talk to people who think they can sell, but it depends on the size and quality of their units.”

Nothing is guaranteed in this industry, but preparation significantly improves the odds of making the right move when opportunities arise. Factoring in fluctuating conditions is key to staying ahead in the self-storage business.

An exit strategy is an essential consideration when entering the self-storage industry. It should never be dismissed outright, as circumstances may change, making it a necessary course of action. Even if never executed, having an exit plan provides security in case of unforeseen challenges.

Confidence in one’s business is vital. Believe in long-term success, but remain realistic and adaptable. The key to longevity in this industry is balancing ambition with strategic foresight.