I'm starting to look at self storage facilities and need some basic questions addressed that pertain to the MN market:
1. Are there Local/community MN banks that lend for self storage purchases? What are the typical LTVs, loans types, interest rates, amortization people are seeing?
2. What are the typical CAP rates for secondary and tertiary markets around MSP? Lets say for 20-40k sq ft size self storage facilities?
3. Any recommendations on lawyers that have experience with and have helped purchase self storage facilities?
Thanks in advance!
@Bilal A. I'm not in Minnesota but I think I can help with some of this:
-You will find plenty of banks interested. Somewhat typical commercial terms/rates with the exception that Storage qualifies for SBA financing which can be 25 year fixed with 15ish% down.
-I'd assume anything from 5-8 CAP's if you're going looking for listed properties. Storage is a hot asset class, even in 2nd and tertiary markets right now.
Get up with me and I can give you details of what is available. There are different loans and depending on your individual circumstances, we can determine what is best. You can get SBA for as low as 10% equity.
@Terry Campbell I will get in touch with you soon. Thank you!
@Bilal A. - so far, you've gotten some great advice and, in my opinion, there's no excuse not to "press the flesh" with bankers local to your area and real estate attorneys. Personally, I'd network with my personal attorney to see who he would recommend.
As far as CAP rates, many times, in the deals we've done, the information you get from the sellers is ... how can I say this? "Optimistic" at best. We've found all manner of discrepancies in P&L statements, rent rolls, and the subsequent NOI, but rather than managing for a number, can I recommend you concentrate on the value add you'll bring to the deal?
As always, there are tons of experienced folks here on BP to help you out!
@Scott Meyers Thanks for the advice, much appreciated.
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