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Updated over 3 years ago on . Most recent reply

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98
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Peter Lee
  • Developer
  • Los Angeles, CA
13
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98
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Self storage financing terms these days?

Peter Lee
  • Developer
  • Los Angeles, CA
Posted

Anyone have an idea of what conventional financing terms (rates, term, LTV) are available these days for refis? We have a facility in Southern Cal that we are looking to refi out our SBA tranche (long story on why we want to explore taking this out).

Any bank suggestions appreciated too!

​​​​​​​TIA

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Henry Clark
#1 Commercial Real Estate Investing Contributor
  • Developer
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Henry Clark
#1 Commercial Real Estate Investing Contributor
  • Developer
Replied

You need to check local and also have the current bank put a package together.  Ask them what their Loan Cap rate is, see if that is the issue.  

We are in Iowa and I have noticed the market is different by state.  We can do 25% down conventional LTC loan to cost, 5 year with 20 year amort, Interest rate x.xx%.

Helping out on a deal in Texas.  They won't do a construction loan.  Won't do SBA.  Want to wait till 70% occupancy.  Three banks want 40% LTC, 5 year with 20 year amort.  Didn't discuss interest %.  Since this doesn't work for us.

Your market looks tight already and sounds like you won't have an existing banking relationship to work from.  You will have to check locally.  Each person will be different based on years in that RE class, personal wealth statement and existing Storage cash flow.

Back to refi out of an SBA loan. The only reasons to refi out are: A. You want to use the property for collateral on another Non-SBA type project, B. Your needing short term personal cash flow. If you move to a Conventional Loan, you have to pay in more LTV and/or LTC; higher interest rate; no 20 to 25 year fixed term loan; and you have to pay in new mortgage costs (appraisals) and effort. If you took Covid relief SBA 6 month funding, you will probably need to repay that.

We are just closing on an SBA loan for one of our Storage locations and filing for two other locations.  I'm interested, what is your justification?  If its just to pull out Personal money, I don't need to know the situation.

  • Henry Clark
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