Let’s talk about due diligence. Let's say someone's found this piece of property and it's a decent location and so forth. What would be the suggestion for someone who is looking for, and walk us through a process that you go through?
Assuming that you've found a property that you think might be an attractive acquisition opportunity. The main thing to look at is the income stream. What's the seller's income stream? And then more importantly, what is your income stream going to be as the buyer? Because more often than not the seller, certainly, when you get to smaller, tertiary markets, oftentimes you have owners who are running the property themselves. If you're a real estate investor, as opposed to a self-storage operator, you may not be running the property yourself. You may be employing somebody, maybe appointing a third-party management company. You have to take their income expenses and then adjust them and make those appropriate adjustments to understand what your net operating income is going to be. If you want to take a look at third-party management reserves for capital improvements, what real estate tax is going to do on an acquisition.
So understanding the income stream is the primary thing. If you get a handle on, we have a comfort level with your income stream, then you have to take a look at some questions such as, what's the accessibility? How easy is it for a tenant to get to the property? How much visibility do they have from the street? How much drive-by traffic does that street have? What does the competitive marketplace look like from a supply perspective? Is it over eight square feet per capita, within a three-mile radius? Is it under, right? What is the demographic profile? How are rates, where our rates are compared to the competition? Do you have an opportunity to raise those rates when you take over the facility? What is the management like? Has the existing owner operated to its full capacity, or is there room to improve in terms of, the daily management?
So as brokers we start with the income stream. We get a handle on the NOI and then we take into consideration all the other ancillary factors. That includes the physical construction facility. Does it need to be repaired et cetera, et cetera? And after taking those items into consideration, we then come up with what we think would be a market price that ultimately as brokers, what we're trying to do is we represent the seller and we try to get them, ultimately the most of the market could possibly bear. And we try to price our property within 95% of what that ultimate best-case scenario is. And we have historically been able to transact our deals within that 95% range of where we list our deals. But all those ancillary factors come into consideration because what if you can make $500,000 on a property in the middle of downtown Dallas, we'll go for a lot higher pricing, same amount of money in the secondary market.