Commercial Facility Financing

[Matthew Rembish]

I've been recently looking into some storage facilities and although I have a good idea of my area's cap rates, average facility NOI for particular size facilities, etc., I'm still unsure of the costs associated with financing a building. I'm aware that you can get 75-80% financing through a 7A SBA loan, but what I still don't know is:

 a. How much would a monthly payment be on a million dollar property with 20% down? Are there any online calculators for that that are accurate?

b. How long do you have to wait before refinancing? Are there any additional costs when you do?

c. How much, approximately, are closing costs for a million dollar property?

[Scott Snow]

@Matthew Rembish 

First I would say do you have any experience in the self-storage industry because this is a major question that is reviewed heavily. 

 a. How much would a monthly payment be on a million dollar property with 20% down? Are there any online calculators for that that are accurate? No need for an online calculator, just do a loan payment calculation. Loan at $800k at X rate let say 5.5% for 25 years which is typical 7a term for real estate would be $4,912.70. Payment will be higher if you factor in closing costs

b. How long do you have to wait before refinancing? Are there any additional costs when you do? 7a loans have a 3 year prepay penalty  of 5%,3%,1% for the corresponding 3 years. There might be a small title fee for reconveying the deed but no other fees. You must give notice if you are going to pay it off like most loans.

c. How much, approximately, are closing costs for a million dollar property? The typical closing costs are appraisal, environmental, title, processing/packaging fee, and the SBA guaranty fee. A rough guess would be $35k

Self-storage is really an investment type property that is allowed under SBA lending which is usually for owner occupied loans. The SBA still looks at it as a business and expects a bank to review the various aspects of the request such as management/industry experience, cash flow, location the guarantor's living expenses, and other aspects of the request.