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Compiling Your Loan Package

Tom Walsh Comments

There is a direct correlation between the reliability of the loan quote from your lender and the quality of the information you provided in your loan package. If you want a quote you can “take to the bank,” take the time and effort to give your source sufficient, accurate and timely information to make an informed judgment.

A well-constructed loan package contains information that falls into five categories:

1. Summation and request
2. Property’s physical aspects
3. Property’s economic aspects
4. Market analysis
5. Borrower/manager

Summation and Request

This section is your lender’s first exposure to the transaction. Everyone wants to make a good first impression, so along with the salient facts about your property, make it clear what you are looking for in terms of your financing request. This can save a lot of time, especially if the loan structure you desire does not fit the lending programs your source offers.

In your request, let the lender know whether you desire a fixed or floating interest rate, the length of the loan term, your desired prepayment scenario, and any other special needs or requirements. If you are not sure what you want and would like the lender to provide options, say so. And don’t be afraid to be aggressive. Keep in mind, however, that if your lender perceives you to be unrealistic, your deal may not get the level of attention you want.

In terms of factual information, this section should include:

  • Property name and address
  • Year constructed, year expanded, year renovated (whichever applies)
  • Size of property (gross and net rentable square feet)
  • Size of site
  • Current occupancy of property
  • Name of owner
  • Name of key individuals
  • Name of management company
  • Current property debt (how much? with whom? maturity?)
  • Reason financing is needed
  • Development cost for property (if newly constructed or proposed)

Property’s Physical Aspects

This is the section in which you tell your lender everything he needs to know about the asset that will secure the loan. If your request is for a refinance and you have a copy of a previous appraisal, the “Property Description” section might be the best source for this information. In this section, you want to include a brief description of the site, addressing size, shape, topography, frontage and ingress/egress. specifically, the description should include:

  • Gross size
  • Net rentable size
  • Number of buildings
  • Number of stories
  • Unit mix
  • Climate-control area size
  • Construction attributes (metal? masonry? asphalt? concrete?)
  • Yard storage (boats, RVs, etc.)
  • Any unique aspects about the property
  • Pictures

A simple way to be sure you have provided enough information is to ask yourself whether you would feel comfortable deciding to buy the property if you were given the same details. Pictures are an extremely potent way to get your lender’s attention and put your loan package “in play” quickly. Take several photos of the property as well as the surrounding area. An aerial photograph is an added bonus if available.

Property’s Economic Aspects

While the other sections of the loan package help your lender determine whether to offer you a loan, this section determines the size of the loan he is willing to make and under what terms. There are not a lot of items in this section, but they are extremely important.

They include:

1. Current rent roll
2. Current operating or income statement
3. Historical operating statements
4. Budget
5. Tax and insurance records

The rent roll should show every unit in the property, including unit number and type (for example, 5-by-10 or 12-by-20 CC, with “CC” meaning climate-controlled). It should also indicate whether each unit is leased or vacant, the current applicable rental rate, the actual rent you are receiving, and how long the current tenant has leased the space. Include rented and vacant units so your lender can use the rent roll as a tool to determine gross potential income.

The operating statement should include the longest possible portion of the current year. For example, if you are compiling your package in August, include at least a June 30th year-to-date statement and maybe even a July 31st version if available. Historical statements should include the two full years prior to the current. In the self-storage industry, it is beneficial if the statements can be shown on a monthly basis. This allows your lender to accumulate his own operating statement for any period of time he wants, which will lead to a more accurate loan quote.

Your operating statements should segregate the rent income generated from renting units from the other possible sources, such as sales of packing materials and boxes, truck rental, late-payment fees, etc. In the expense section, use summary line items to keep the operating statement more manageable. A good operating statement can have as few as 10 to 12 expense line items vs. the hundreds found in many accounting systems. In preparing the statement, eliminate noncash expenses such as depreciation and amortization. You may also eliminate the interest you pay on current debt. If your statement includes these items, don’t worry, your lender can eliminate them manually.

Before you submit your loan package, go through the operating statements and look for unusual fluctuations or items that appear out of sync with the rest of the statement. If you find any, add a footnote explaining the issue. This will help the lender understand the operating statement and avoid unnecessary questions and answers.

If you prepare a budget for your property, include it in the loan package as your estimate of the property’s operations for the foreseeable future. One caution: If the budget was prepared more than six months ago, review it carefully to be sure the estimates are in-keeping with current market conditions. Whether it has improved or declined, an accurate budget is more valuable to you and your loan source.

Finally, include a copy of your latest actual property-tax and insurance-premium bills. Because these are material and sometimes volatile expenses, your lender will inevitably ask for these items as part of their underwriting process. Save yourself some time and include them in the package.

Market Analysis

Your lender will want the same type of market information you would if you were considering buying the property. This datawill take two forms: macro-market information and comparable-property information.

Macro-market information deals with the entire market in which your property is located, such as the San Diego Metropolitan Statistical Area. It will include how broad the total market is in terms of numbers of properties and rental units, average rental rates across the market for different unit types, and average occupancy rates in the market. Access to this information is not always easy and varies greatly from city to city. One of the best sources is your local self-storage association. You may also call a local appraiser familiar with the industry.

Comparable-property information deals with the properties that compete directly with your own for tenants. Your lender will want to compare the unit types offered as well as their rental rates, and the occupancy rates of the applicable facilities. If you do not do so on a regular basis, you will have to “shop” the competition to accumulate this data. Market information is not only important for the purpose of estimating future rental and occupancy rates, but also for anticipating how an appraiser will view the market and make his assumptions.


Whether you are looking for a recourse loan from a local bank or a nonrecourse loan from a national CMBS lender, the borrower—and those individuals who make up the borrower—will be an important underwriting factor. Assume any person who has decision-making authority or a 20 percent or larger ownership interest in your property will be important to your lender. Include a resume and recent financial statement for each individual.

The resumes should include as much information as is practical but should be specific about self-storage experience. This includes how many years in the industry and how many properties owned or managed. If you have owners with a wealth of industry experience, don’t be shy about making your lender know about it.

If you don’t have personal financial statements on hand, they can be easily obtained from your accountant or you can pick up a form at a local bank branch and prepare it yourself. Provide an accurate account of your current liquid and real estate assets as well as the offsetting debt for those assets. Financial statements require you to estimate the value of your real estate. Be as realistic as possible in this exercise without being overly conservative.

In some cases, the owners of a facility do not have a wealth of experience in the industry. In other cases, they may have none at all. This does not make financing impossible, but it makes the role of the property manager much more important to your lender. Include a full resume for your manager or management company, highlighting self-storage experience along with experience in your specific market. Include the number of years in the industry, the total number of properties owned or managed, and the number of properties currently managed. Include it all—don’t leave anything out.

What you want from your lender is a timely response to your loan package and a reliable quote that will stand the test of detailed underwriting. To achieve this, take the time and effort to make your package as complete and accurate as possible. Doing so will make it the best on the desk; and the best package on the desk ends up at the top of the pile every time.

Tom Walsh is a director for Collateral Mortgage Capital LLC and office manager of the company’s Atlanta commercial loan-origination office. He has worked in commercial real estate finance for 20 years. Collateral is a national mortgage-banking firm founded in 1933. It represents several national and local institutional loan sources that serve the self-storage industry. For more information, call 770.817.1600; visit

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