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Your Guide to Refinancing Self Storage

Today’s lending climate offers numerous low rates. If you’re wondering if refinancing a self-storage facility is worth it, keep reading to learn how refinancing could benefit your business. You can find the right fit for your needs from many options.

Should You Refinance a Self-Storage Facility?

Timing plays a prominent role when deciding when to refinance. Knowing what to expect helps you plan accordingly with your business expenses. When creating your loan strategy, consider these factors:

  • Trapped equity: Increased self-storage value may provide an opportunity for you to get a significant profit if you sell your facility. Refinancing with a maximized loan-to-value may create a similar effect with tax advantages.
  • Return on invested capital: Financing your facility through more lenders provides you with a higher cash-on-cash return.
  • Low interest rates: Short- and long-term rates have begun increasing, and the time might be suitable to lock in a fixed-rate loan.

Types of Loans for a Self-Storage Facility

Owners often consider refinancing for a fixed rate with a longer term or when they want lower payments. The benefits of refinancing a self-storage facility depend on your loan type. See if any of these options suit your goals:

  • Conventional: A traditional bank loan offers high loan amounts, low interest rates and years-long terms.
  • Conduit: These loans work well for older properties with stable occupancy. Your debt coverage and loan size determine your interest rate.
  • Small Business Administration (SBA): This type of loan can offer over 25 years for construction and typically includes lower down payments.
  • United States Department of Agriculture (USDA): These loans range from half a million to $10 million and can come in 30-year terms.

8 Steps for Refinancing Your Self-Storage

Borrowers can obtain loans in many ways. Local and regional opportunities allow you to meet in person with a loan officer or complete the process online. Follow this checklist when you want to refinance your facilities:

  1. Do the math: See how much you’ll save.
  2. Decide your loan: Pick your desired loan.
  3. Get estimates: Gather three to five quotes from different lenders.
  4. Fill out an application: Apply for the best price and rate.
  5. Lock your interest rate: Make your current rates unchangeable for the next 30 to 90 days.
  6. Submit documents: Turn in the required financial forms.
  7. Check statements: Assess your quote and papers to ensure the numbers match.
  8. Sign the paperwork: Finalize the refinancing.

Trust the Experts at Investment Real Estate, LLC

The professionals at Investment Real Estate, LLC stay up to date with self-storage trends to provide you with strategies for your business. If you decide you want to buy or sell facilities, our brokers can help. To learn more, contact our team today.

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