With Interest Rates Climbing, how do You Buy Self-Storage?

As the Fed continues to raise interest rates, mortgage rates continue to rise. This means that your potential monthly mortgage payments are going up too. So how do you find a way to make your self-storage property profitable when you’re looking at payments that are substantially higher than what you expected?

You cannot make a property profitable if the payments are larger than the income the property produces. The math just doesn’t work. However, because the interest rates are rising, a lot of current owners are in a situation where it is time for them to refinance their properties and their payments are going to go up significantly. As a result, they may be more interested in selling than they were a few years ago.

You however have options. You don’t have to buy with traditional financing. There are so many people who have money that they want to invest, but they may not want to invest in the stock market. This gives you an opportunity to use other people’s money to finance your project. You can offer them a return on investment based on the property rather than based on current interest rates.

So how do you find this money? The first step is to make sure that you are talking to people who have money to invest or know people who have money to invest. Make sure that they know how educated and knowledgeable you are about the self-storage market. The more experienced you become; the more people will be willing to invest in you.

If you don’t feel you have enough experience at this point in your career, partner with someone. You can start by partnering with someone by bringing them deals and charging a finder’s fee. As you build that relationship you can eventually ask to partner with them. If you have money to bring to the table, find someone who can mentor you as your partner. You can work with them to learn more about the self-storage industry and build up relationships with people who would like to invest with you.

When traditional sources of financing dry up, it is time to get creative. Don’t let interest rates stop you from achieving your goals. Go out and find partners who will back you. Go out and find mentors who can partner with you and help you find investors. Whatever you do, don’t stop going after your dreams. As always, happy investing.