Financing for Storage

With the economy of today it is very important to take a good look at all different financing options.  Find something that suits your needs and a bank or finance company you can trust.  Maybe it is better to go to a company that has already established his name, because lots of banks and finance companies may disappear in the near future or go bankrupt.  Find an advisor that can help you to make the decision about a loan.  He will be able to find the appropriate source of financing for your particular situation.

A construction loan

Do you pay a serious amount of money on your credit card each month? Well,  the amount due for a construction loan will be smaller.  Most of this type of loans are being used by owners that are building a new facility or expanding.  They are mostly provided by commercial banks and you'll get a good chance at your own bank, because they will already now your files and background.

The lender will analyze everything than can be analyzed about you: expense ratios, months to lease up... All of this will be compared to the market and you will have to come up with arguments to persuade them that you are more aggressive than the market.  Your estimated costs will also be compared to other recent constructions.  If all the requirements are met, you will probably get a variable-rate loan with an overall interest rate between 7 to 8 percent loan-to-cost.

A bridge loan

This is a short-term loan with a variable rate.  It is used when your construction loan ends and the the property is not yet fully leased.  It can also be used to replace a construction loan, so that you will be at a lower interest rate.  A bridge loan is often non-resource with an overall interest rate between 6 and 7 percent.

The bridge loans are very flexible and will, in most cases, have a floor interest rate.  The percentages are often based on a 75 percent loan-to-value, in which it is different from the construction loan.

A permanent loan

If you are planning on keeping the property for the length of the loan term, you can look into a permanent loan.  It gives low, fixed interest rates over a long period, for example 10 years.  Permanent loans are non-resource and because of this your relationship with the lender is not that important.  The lender will objectively look into the figures,market dynamics... and will pay less attention to your background. 

You can choose between two types of permanent loans: a commercial mortgage-backed securities lender or a portfolio lender.  A portfolio lender will offer you more flexibility, but the fixed interest range will be higher.  A commercial mortgage-backed securities lender or CMBS lender will give you the low fix interest rate, but will have restrictive prepayment penalties and other demands.