self-storage, getting a loan for more than appraised value
I have an opportunity to buy a small self storage unit but may have an issue with financing. The seller stated several other people have gone to the bank and been turned down because the property appraises for less than the asking price. Here are the general details
Asking price $325,000
Appraised $260,000
Gross profit 44,000 / yr
Expenses 11,000 / yr
What I'd like to do is get a loan for the 80% of the asking price (260,000) but if banks will only loan on a percentage of the appraisal price I would have to find ~120,000 instead of 65,000.
A loan on 80% of asking still provides $1000 per month After debt services. So, I'd be interested if anyone has gotten a loan approved over the appraised value and any special way to setup the deal to make it a success. I thought of creating a business plan to take to banks that would lay out the NOI to show the last 3 years of actuals and projected 3 years with a bank loan but it sounds like most banks only see this as property not as a business.
I know there are many other options with seller financing which *might* be an option. Just trying to keep my options open in case they aren't in favor of that.
Thanks,
James