Self Storage Property Financing
“Self Storage Property Financing Options”
Self storage facilities are a growing market as the population increases and retains more stuff in the process.
Because of the cash flow potential and resale market for these types of properties, there are several different types of commercial property financing sources available to property owners.
Perhaps the hardest type of self storage financing is the actual construction and development of a self storage facility. A new facility typically sees the borrower entering into a new market. Lenders may become very concerned about proper location and marketing strategy which can create some difficulty for the prospective borrower to find and secure construction funding.
For existing self storage properties with good capacity utilization and cash flow, the commercial mortgage market is very strong. Excellent rates can be obtained for well established and highly utilized properties.
Financing challenges can occur for self storage properties where there is a residence incorporated into the design and layout as the resale market will likely be significantly lower for this type of setup. Anything that complicates liquidation of the underlying security tends to directly impact a potential lender’s interest in the financing opportunity.
For self storage facilities that do not qualify with institutional lenders, there is an active private lender market for this type of property. Especially in larger centers, private lenders many times will look at these properties as good potential investments and in the event that the borrower is unable to repay the private loan, the private lender may decide to self purchase the property for its long term cash flow potential versus selling the property in the open market to recoup what’s still owing on the mortgage.
Like most commercial properties, the financing options are reduced for rural areas. Basically remote locations will see fewer lenders interested in providing a commercial property mortgage.
The key to more mortgage options and better rates is solid cash flow and high facility utilization. Locations that have room for expansion on site and are situated in markets that will allow for growth will also be garner a lot of interest from traditional lenders that typically provide the lower interest rates.
If you’re looking for self storage financing, I would suggest that you give me a call so I can quickly assess your options and work with you to determine the best course of action for finding and securing a commercial mortgage for the property in question.
Click Here To Speak With Joe Walsh, Commercial Mortgage Broker
About the Author Joe Walsh
I'm a Toronto Mortgage Broker that arranges mortgage solutions on residential and commercial real estate property. With over 30 years of mortgage financing experience, I'm able to quickly assess your financing requirements and provide relevant solutions for your immediate consideration. Joe Walsh Google+ YouTube Channel