Construction to perm

Many of today’s clients are looking for construction-to-permanent loans for self-storage facilities that were completed in 2008 and 2009 but faced lease-up difficulties because of the struggling economy. Thanks to the opportunities offered by the shift in tenancy from homes to apartments over the past three years, a facility that previously sat dormant now may see a sudden resurgence in demand.

Although there may not be a full two-year lease up, a savvy mortgage broker may find lenders who are willing to make exceptions based on consistent upward trends in tenancy and overall net operating income. If your client has a strong overall portfolio, a lender may accept cross collateralization, as well.

Revenue streams

Income for self-storage operators comes from a number of sources outside of the storage spaces themselves — sales of packing materials, locks and packing services, for example. In addition, some self-storage projects cater to specific industries.

For example, there are specialized storage units for vintners in areas where wine production from vineyards is a key agricultural fixture in the economy. Many self- storage facilities in these areas offer packing and shipping services for wineries, and the service makes up a substantial portion of their annual revenue streams.

Another possible source of income comes from properties located near large bodies of water — lakes or coastline-resort areas. These facilities cater to the need for storing boats and other high-dollar recreational vehicles. One point that owners of these self-storage facilities must keep in mind is that the raw land at the back of their facility can be costing them money. A paved parking lot is sufficient for storage of these clients’ recreational vehicles, and if there is a cover over them it’s just another increase in the asking rent.

Military bases and college campuses also can be a source of clients with little storage space and a need for this property type’s services.

Self storage is one of the most overlooked property types in today’s marketplace, so self-storage investors looking for financing may find a receptive audience. Skilled mortgage brokers can only add to their bottom lines by investing time researching this market and providing solid solutions for interested parties. 

Anita Huedepohl is the founder and CEO of Liberty Funding, with a focus on providing self-storage financing nationwide. With more than 10 years invested in the industry, her company’s goal is to find equitable solutions to meet borrowers’ requirements for refinance and acquisition transactions from $2 million to $20 million and more. Liberty Funding’s website is libertynationwide.com. Reach Huedepohl at (615) 417-4710 or anita@libertynationwide.com.

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