A self-storage enterprise, just like any other business, requires a well-planned and well-organized financial strategy to ensure long-term success and self-storage companies in USA are booming nowadays, due to it’s requirement. You can also check some of the top self- storage units companies from selfstorageunits.io. The setup usually costs less compared to other businesses, but they still require careful planning and execution.
Refinancing your self-storage loan becomes important when your present loan is coming to an end or you want to enhance your rate and lower your monthly interest. Lenders are always looking for new borrowers to get in on the market.
When the odds are on your side and the market is favorable, don’t be afraid to compare offers from several candidates and bargain for the finest terms.
The issue is that many owners are not aware of some of the most crucial requirements that commercial lenders look for. The following five factors can help you know when to refinance and receive a fantastic deal from the lender of your choice:
1) Matching Requirements-
There are numerous self-storage refinancing choices available, although minimum size requirements can change. Finding the best program to fit your particular needs and circumstances is the key.
There are different types of loans used for various reasons, they include:
- Conventional bank loan
- SBA 7 (a) loans for commercial real estate
- SBA 504 loan
- Bridge loan
- Lines of credit
- Hard money loans
They all have different features and are used for different purposes suited for your needs.
2) Lending request–
After deciding the type of loan you want to go for, the first document important for the lenders is the loan request. It is important to mention the amount of loan you need along with the borrower’s legal name, preferred rates, and terms of repayment.
The difference between an acceptance and a denial can be made by a loan request that is comprehensive, factual, short, and convincing. Consider this format as an example:
- Review of the property
- Loan amount requested and preferred terms
- A summary of ownership/management qualifications
- Operational highlights supporting the loan proposal
- Highlights and trends in occupancy
- Summary of current debt and the reason for applying for a new loan
3) Business finances-
Any lender would not go further without looking at the financial condition and loan repayment history. Make sure to mention a minimum of three years’ worth of all your financial records.
Additionally, you may mention that you were able to raise prices for a number of unit sizes or that you were able to retrieve a higher proportion of late fines. Whatever your figures are, include some notes that list the steps you’ve taken recently to better your facility’s financial position.
4) Personal finances –
A personal financial statement will likely need to be submitted together with your loan request. While some lenders, might not need a personal guarantee, they might still want to see your personal financial records and run a credit check on you.
Make an effort to settle any outstanding credit card debt and make sure all debts are current. Prior to the closure of your self-storage loan, wait at least three months before making any big purchases. Your objective is to demonstrate to the lender that you are in control of both your personal and business finances.
5) Other documentation –
Aside from the above factors, there are also some important documentation to submit before the appraisal of your loan. It may be less expensive to prepare new paperwork if you already have these ones from a previous financial package.
Here is a small list of some of the documents you’ll need:
- Profit and loss (P&L) statements for real estate for the previous three years
- Description of the property (kind of construction, number of internal and outside apartments per level, facilities, etc.)
- Pictures in color of the place
- Personal Financial Statement and Schedule of Real Estate of Borrower
- A debt schedule and current balance sheet
- Financial records (business and personal)
- Market research feasibility
- Business plan and borrower’s credentials with a focus on ownership experience in real estate and self-storage
Conclusion
Searching for self-storage refinancing should start at least 80 to 110 days before your goal funding date because finding the appropriate fit can take some time. Ensure you have up-to-date management summaries, occupancy statistics, property profit-and-loss accounts, a description of your property, and personal data available.
Consulting with a mortgage banker or broker before searching for the best self-storage loan options will ease some of your burdens.
Finally, don’t forget to bargain with your lender to get the best possible conditions, interest rate, and upfront loan points, as well as to get any prepayment penalties eliminated. These are significant areas where you may incur unnecessary additional charges.