Hello BP,

My background is in self storage (operations, development, acquisitions) but it’s been a while since I’ve been on the acquisitions side of things. My experience is at the corporate level so I’m hoping that you all can give me an idea of what a typical deal would look if I were to acquire something personally.

• LOI vs. Contract-ten years ago LOI's were prominent, is this still the case or are most buyers skipping straight to contract
• Financing structure-LTV, seller carry back (if any), rates
• Are most deals funded using conventional or SBA financing?
• Lending used to be so tight that you almost had to secure financing before isolating a property. Is this still the case or will I have a wide variety of options once I have a facility tied up?
• Will lenders consider funding a deal that is in a different state from my base of operations?
• I’m comfortable running the numbers, is it worthwhile to have a broker represent my side of the deal?

Any input is much appreciated.

Kim

Depends on how large the self storage is you are buying.

A small mom and pop property is more like running a business. Larger more expensive centers can have structure in place to be hands off and open yourself up to more non-bank lenders.

Running a smaller mom and pop storage from states away would be a concern for most lenders as that size lends itself to local "boots on the ground" owners.

LOI's are still typical on commercial. It gives a free look for due diligence before putting up the money. If you go straight to contract and the sellers attorney uses onerous terms and you haven't looked at any materials while under LOI you can be in a tough negotiating spot.

Also, I realize cap rates are highly area specific, but can anyone give me a general idea of how far properties are closing below the listed cap rate?