The 4th Rule of Thumb & 5 keys to Talking with Self-Storage Lenders

You can never undo a first impression. When you are working with commercial lenders, you want them to have a great first impression. You want them to know that you are the real deal and that they want to take the time to find a loan for you and your next self-storage facility. If they don’t think that you are worth their time, you will have a hard time getting approved. Commercial loans are not like residential loans. Your lender has to sell your loan to the committee to get them to buy it. If they don’t believe in you, the committee won’t either.

There are 5 key areas where the lender is going to qualify you. You want to make sure that you have answers ready for their questions so that you sound professional. Everyone has to do their first deal, but you still need to sound confident.

First, the lender is going to look at your credit. If you have been in the business for a while, they will also look at your reputation. If you don’t have a reputation in self-storage, they will look in other places to see what your character is like. They are going to evaluate your ability to repay the loan, the same way that any lender would. However, they are also going to include the income from the property as part of that ability. They will look at how much you are putting into the deal out of your own pocket. They want to know what you are going to use as collateral, and they always look at the current market conditions in the industry. We will spend the next few blogs focusing on each of these areas so that you can feel confident talking to a lender.

The first key area that the lender is going to look at is your credit. This is a key indicator in whether or not you are going to pay back the loan even if the going gets tough. If they feel like you are willing to throw in the towel at the first sign of trouble, they may not be as excited to work with you. Make sure that you don’t have any late payments especially on your mortgage. If you have had a bankruptcy, you may find it very difficult to find a lender who has loan programs for you.

If you are worried about your credit, call a lender, and talk to them. See what you need to do to become credit worthy and how long it will take before you can get a commercial loan, if ever. If you can’t get a commercial loan, then you need to come up with an alternative. This is a time where you may end up working strictly with your partners’ credit.

Start practicing how you want to come across to your potential lender. You need to role play what you are going to say to their various questions about your credit history. As always, happy investing.