Sometimes what’s best for one self-storage owner may not work for another. Let’s say an owner has a 100 percent occupancy and a waiting list trigged by the new XYZ apartment building that leased up 60 days ago less than three blocks away. Rather than see those customers go to his closest competitor, he would like to add that third building he planned to build in 2008, right before the recession went full tilt. He has the cash flow already, not to mention the architect’s plans and city approvals in the back office, now covered in cobwebs thanks to the market crash. The same 30-year amortized product will allow him the $800,000 cash out necessary to complete his new building and yet provide a cushion of time with lowered payments to lease up.
Since he’s not tied to a traditional 15-year bank amortization at 60 percent loan-to-value that was virtually the only product available in the last few years, he can not only hire the backhoe to break ground, he can afford the time necessary without the stress of the much higher payment. Additionally, his overall bottom line benefits because he now can have full occupancy on the new building with an increased cash flow that supersedes the need for “the lowest rate.”
It really is simple—don’t just look at loan interest rates. Sometimes rate is only the most modest piece of the puzzle, and the search for the lowest one can rob you of a better product, much like “robbing Peter to pay Paul.”
Anita Huedepohl brings more than 25 years entrepreneurial experience to her current position as owner of Liberty Funding. She’s worked in the financial sector for more than 10 years and is experienced in all types of mortgage financing. She launched Liberty with the goal of providing market expertise to underserved sectors, namely the self-storage industry. To reach her, call 615.417.4710; visit www.libertynationwide.com.