All Forum Posts by: Cason Acor

No where in my original response did I say he should "dive in and learn on the fly". The implication of my post is that he should start getting his ducks in a row before pursuing deals, and networking with people who know more than him about commercial lending should be one of the first things to do. I also said he should look into investing with partners who have self storage experience.

As a commercial broker, I work with plenty of first time investors who want to start with commercial properties instead of working their way up through SFRs and small residential deals. Everybody has their own investment path to take, and simply writing someone off because they don't have self storage experience without showing them what they can do to be successful is stupid.

@Nicolai Grebencio definitely start networking with commercial lenders and mortgage brokers. Whether you do self storage or not, they'll be connections that can make or break deals for you in the future. They'll also be able to help you with any other product types you may want to invest in. Set some meetings with a few in your market, and give them the layout of your current financial situation. Most will be able to tell you pretty quick what your lending options are. That information will be the foundation that you need in order to make informed decisions about which deals to pursue. They can also tell you what you need to do to make yourself a more attractive borrower. Investing with experienced partners will be the biggest one out of the gate.

Don't just talk to one lender or mortgage broker either. Talk to like 5+. Not only will that give you multiple opinions on your situation, but you'll also generate relationships you'll need to get lending on future deals. The more connections you have, the better lending terms you can get because you can get quotes from multiple sources. They also might be able to put you in touch with other clients of theirs that can invest with you.

I mean yes he has a point, but why should that stop you? If self storage is what you want to do, then figure out how to do self storage. Don’t just take the word of one agent. Start talking to lenders and mortgage brokers, share with them your background and goals, and ask them what you need to do to qualify for a loan. You can get an SBA loan for self storage, which means a lot less money down. You can also find partners with self storage experience who can help you on your first deals. 

There are definitely ways to make it work. 

Virtually every commercial loan will have a prepayment penalty. I’d be surprised if the bank was willing the drop that, especially on a first time refinance. I’m assuming it’s 5% year 1, 4% year 2, etc? That’s the most common structure. 

Half a point commitment fee is also normal. 

Can you not afford the down payment on an SBA 504 loan? This exact scenario is what that loan is made for. 

Also, if you need to partner in order to make the purchase now, how are you going to qualify for the refinance and pay everyone off once the project is completed? The property will be worth a lot more than your original acquisition price and depending on your build and tenants, the pro forma income might not be enough to qualify for the refinance yourself. 

Are you starting this for a specific area, or will this be a national group?

To my knowledge there aren’t networking events exclusively for sharing off market deals. But almost every market will have real estate investment groups that you can get involved in. Most will be attended by both brokers and other investors. 

With cold calling, you have to make your own lists. Pick your market and start searching for properties that you think you’d want to buy. Once you have a good list of those properties, start researching their owners and finding contact information. Then start calling. 

@Brady Hastings not exclusively. But your three best resources to find off market deals are brokers, networking, and cold calling. 

@Brady Hastings I’d also add, if deals within that criteria are transacting, more than likely they’re going to be off market. 

Deals that fit that criteria are going to be very rare, specifically at the $5 to $15 million price point. Sub $5 million will be more common, but a cap rate that high will only be in very tertiary markets.