Storage Facility Purchase - 10% LTV Financing Requested

[Travis Rogers]

Hi Folks!

I have a few single family rentals (Oregon and Texas) and they're doing great, and I have a large amount of equity in each house. I live in Oregon and am purchasing a storage facility in Texas for $450k, the bank will finance 80%. I'm looking to use cash for 10% and maybe cash for the other 10% as well, or finance the other 10% with my HELOC at 3.99%, or a hard money lender. I'm considering looking for someone to finance that other 10%. If anyone can advise me on who I can reach out to, or if anyone is interested in financing the other 10% let me know. I have the cash, or the HELOC, but want to keep some capital for future purchases so I'm considering having a hard money lender cover 10%. This is a cash flowing business and I'll improve it by cutting expenses and increasing revenue, it's a 9% cap rate, my financial situation is solid and I can come in with the down but am thinking I would prefer a hard money lender. Thanks for any advice, referrals, or whatever you feel like writing in the comments.

-Travis

[Henry Clark]

1.  Do a 10% down with an SBA loan.  Get 20 to 25 year terms with current interest around 2.??%.

2.  I would not use any cash. Have the bank collateralize one of the houses for the 10% ($45k).

3. If there is another Covid government funding, you may get the 6 month free on the SBA side of the P/I.

4.  Find a bank that does Storage or Apartment buildings.

5..  Evaluate any improvements or expansions you want to do now and incorporate them into the loan.  Ask the bank you want a construction loan with interest only to make these happen.  Prior to rolling into the SBA loan.  That way you don't have to foot the repairs or expansions.

6. If you haven't closed yet, talk with your Tax person.  Do an Asset purchase versus buying the business.  Break out the roads, security, lighting, signs, etc.  Possibly do a non compete agreement with the owner.  Basically move as much away from Land and building as possible, so you can get a year one write off.  Carry forward loss if you can't use it this year.

See our Self service youtube on the website below.  Try to get away from an onsite manager.  You will still need someone to help you manage locally.  

Operations:

a.  Insurance- call Ponderosa insurance, part of Uhaul.  They have storage specific coverage.  Unless you already have insurance.  $450k coverage will probably cost around $1,500.  Over insure, its really cheap  $600k coverage will be around $1,700.  You want to cover clean up costs also and lost rent.

b.  Get on Sparefoot for advertising.

c.  If manual move to internet and web based storage software.  We use Web selfstorage with Uhaul for $44.95 per month.  Can see anywhere in the world.  Check out Storedge, I am not recommending them, but one of our local competitors used them, and got ranked real high and fast on Google. They have an SEO part of their business.

d.  Security- get web connection so you can see your operations and get notifications.  Example:  Anyone opens the door with the code, I get a text.  If someone breaks in, I get a phone call.  Have your security person check out Uniview systems.  They have motion sensors which you can dial up or down for size.  They have line sensors if you break a plane.  These events are color coded on the timeline to help you find activity.  Have them tie you in, so you can look at the cameras either on your cell or computer.

e.  Get a battery and surge protector unit for your computer and nvr system.

Good luck, great investment.