A positive contribution to your self-storage operation's bottom line can come from many sources, such as a revenue-management system, additional services and retail products, and collections, to name a few. But beyond these income streams, there’s a crucial make-or-break moment when you submit a property financing request, as it will have huge bearing on your net cash flow. When that time comes, among managing daily activity, you must make your financing a top priority.
A complete, accurate, concise and compelling loan-request package can make the difference. Make the lender's decision easy. Make or break? The result is in your hands.
Starting 2014 With New Perspectives
As we kick off the new year, there are three fundamental reasons why now is a great time to consider seeking self-storage financing:
- More lenders have embraced self-storage as a preferred property type.
- Today’s interest rates are still near historic lows.
- Most lenders are more eager to originate new business in 2014 than in the past several prior years.
Given the ever-changing financing environment, you may want to expand your horizons beyond your current lenders. Working with a mortgage broker to prepare and market a professionally prepared loan-request package allows you to maximize exposure, obtain competitive quotes and minimize your efforts in finding potential lending sources.
A well-constructed package presents five primary information categories. Let's examine each.
The overview is the package’s foundation and paints a picture for the lender that entices him to read further and, ultimately, provide you with competitive financing. In the overview, you’ll want to define the desired type of loan and terms that form the basis for what you believe is a reasonable request. Be sure to include:
- Property overview
- Requested loan amount and desired terms
- Overview of ownership/management credentials
- Salient operating results that support the loan request
- Occupancy highlights and trends
- Summary of existing debt and purpose of seeking a new loan
Property Details and Location Attributes
In this section, your goal is to make the lender comfortable about the storage property’s attributes and location. Make the impression that it is competitively located with features that will attract and sustain new and existing customers. Photos—especially those taken on a sunny day—also speak a thousand words. At a minimum, this section should include:
- Property address
- Gross and net square footage
- Year(s) built and renovated
- Total number of units (traditional, climate-controlled, parking, other)
- Construction attributes (masonry, metal, asphalt vs. concrete driveways, etc.)
- Security attributes (fencing, gate access, cameras, door alarms, etc.)
- Onsite management office and applicable apartment information
- Amenities, unique attributes and competitive advantages
- Photos (property layout, office, location, visibility signage, etc.)