Self storage businesses are a hot commodity right now, and they are the dream of any new-age industrialist. They seem like an attainable business to run and maintain, but just like any real estate investment, financing is a key concern. Below are some tips to consider in regards to self storage financing.
Do Your Research!
What exactly do you need self storage financing for? Do you need it for construction or for other parts of your business model? In all likelihood, it will be for the construction, but you never know. You also need to understand everything that is in play for your company, as a lender will definitely want to make sure the investment is sound. Some things to consider in regards to this include:
- How fruitful is the market surrounding your business?
- Is the location top notch?
- How have other businesses in the same area been financed?
- How pricey is the rent?
- Who is the competition in your area?
- How much will construction cost?
- How long do you want your loan term to be?
- Can you demonstrate your project will be profitable?
- Will there be enough income to pay the mortgage?
- Will the lease-up be fast enough to replace the construction loan with a permanent loan before the end of the construction loan terms?
- What do you want your interest rate to be?
- How long will your holding period be? Or how long do you expect to own this investment?
- You should know information about who you’re borrowing from.
- You will need to include information about yourself as well.
- Including a clear plan for managing your self storage company would be good, too.
There are a lot of things to consider in regards to financing your self storage company. Most of it has to do with doing your research and being savvy in how you go about your business plan.