Yen and Yang: A Lesson in Self-Storage Refinancing 101
By Anita Huedepohl
A couple of self-storage owners who are refinancing their facility loans have been contacting me over the past few days, and their approaches to the task are at polar opposites. Their experiences are a great lesson in what to do and what not to do when it comes to refinancing a self-storage loan.
Yen is looking to refinance on a newer facility with a really tight cash flow because the leaseup was hampered by a less than stellar economy since the project’s completion in 2009, and he has virtually no marketing. Yen has great credit but borderline property income and financials that leave the file at the bottom of the underwriter’s to-do list. One reason is the numbers on the owner-generated profit and loss statements are worlds apart from what was on the property’s 2011 tax returns. Lesson No. 1: Whatever you do, don’t fudge on income because the tax returns are the ultimate confirmation.
Yang has a significant loan size and a 10- out of 5-star property with an attitude equally as good. He can’t produce the requested financials fast enough for us and almost anticipates what we need. The client is a seasoned investor with a resume of experience and a PFS (personal financial statement) to back it up. Not only is the client’s property cash flowing on relatively new construction but leaseup is continuing to climb at record levels due to great marketing. Yang has come to the table prepared to close and asks what he can do to aid the process without being demanding. Lesson No. 2: Be prepared.
Yen has known of a maturity date on the loan for more than a year and had asked his lender for an extension, which it granted. The client just completed the tax returns for us a day ago and expects us to close tomorrow due to the looming deadline. Yen forwarded me an e-mail from his lender telling him he would not get another extension, so he’d best go with the financing the bank is offering and start the appraisal process. Now the client wants us to close yesterday since he did not contact us far enough in advance of his self-imposed deadline dilemma. Lesson No. 3: When it comes to refinancing your self-storage loan, start early!
Who do you think will be the faster to fund? It all comes down to your readiness to make the process flow and provide what’s requested rather than combating what the underwriter needs to plaster the paper “approved.” What’s your lending approach, Yen or Yang?
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.
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