Self Storage Financing
Member since 2025 · 25 posts · 6 votes
Self Storage Financing
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Nicholas FloydBusiness Member
NY · Member since 2026 · 322 posts · 104 votesGreat breakdown, Kasing. I especially agree with your point about capital call terms. Having a clear plan for future capital needs can make a big difference in keeping a partnership financially stable.
I specialize in business funding, and one thing I focus on is helping business owners access additional capital through business lines of credit and other financing options without necessarily bringing in additional equity partners.
I also believe CPAs play an important role in helping business owners structure their finances properly before seeking funding.
I’m curious, in your experience working with business owners and investors, do you find that access to capital is a common challenge, or is properly structuring that capital the bigger issue?
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As a CPA rather than a lender or syndicator, I look at self-storage partnerships purely through an underwriting and capital structuring lens.
Self-storage deals require substantial equity, so operators typically pair their deal flow with outside capital partners. When structuring these partnerships, three items need clear definition upfront:
Waterfalls and Promote: Define preferred returns, hurdles, and sponsor promote before funding.
Capital Call Terms: Outline exact remedies or dilution formulas if a partner fails to fund future capital requirements.
Tax Allocations: Ensure the operating agreement handles K-1 reporting and tax distributions correctly for mixed investor classes.
- 3wNicholas FloydBusiness MemberNY · Member since 2026 · 322 posts · 104 votes
Great breakdown, Kasing. I especially agree with your point about capital call terms. Having a clear plan for future capital needs can make a big difference in keeping a partnership financially stable.
I specialize in business funding, and one thing I focus on is helping business owners access additional capital through business lines of credit and other financing options without necessarily bringing in additional equity partners.
I also believe CPAs play an important role in helping business owners structure their finances properly before seeking funding.
I’m curious, in your experience working with business owners and investors, do you find that access to capital is a common challenge, or is properly structuring that capital the bigger issue?
Good question, @Nicholas Floyd . I would lean structure, but yeah, capital calls are hard to predict and nobody wants cash sitting idle either. From the audit side, the deals that got in trouble usually didn't fail because a call happened, they failed because it was unplanned, no reserve for a stress case, floating debt with no rate cap, vague capital-call terms in the operating agreement (The macro environment also play a huge role too). And to your point, access you can tap only when you need it, a standby line or facility, is often time better than parking cash as reserve and collecting dust. No one can engineer calls away, you just make sure one doesn't sink the deal.
- 1wQuetzaly TorresPro MemberInvestor · Jacksonville, FL · Member since 2026 · 51 posts · 7 votes
I've been coming across more investors exploring seller carrybacks as a way to structure acquisitions without bringing in additional equity partners. Wondering if you're seeing that overlap with the clients you work with, particularly on commercial acquisitions.
- 2moAshish AcharyaBusiness MemberCPA, CFP®, PFS · Sarasota, FL · Member since 2017 · 5k+ posts · 3k+ votes
Charlie, if you’re going into a self-storage deal with partners, I’d spend just as much time on the partnership structure and capital stack as the property itself.
Before anyone funds the deal, I’d want the agreement to clearly spell out who contributes what, ownership percentages, whether any capital is preferred, how cash distributions work, who guarantees debt, who controls major decisions, what happens if additional capital is needed, and how someone exits later. Those details tend to matter a lot more once the deal is operating than they do while everyone is excited about acquiring it.
From the tax side, self-storage can also create some interesting planning opportunities. The building itself is generally commercial real estate, but a cost segregation study may identify shorter-life components that can be depreciated faster. With multiple partners, you also want the tax allocations and K-1 treatment aligned with the economics of the deal rather than assuming everything should automatically be split evenly.
If there’s a mix of investor equity, sponsor equity, and outside debt, I’d get the CPA and attorney involved before the structure is finalized so you’re not trying to fix the allocations after closing.
Happy to connect!
INVESTOR FRIENDLY CPA®4.9242 Reviews Charlie,
Yes. Partners and outside capital are very common in self-storage, but I'd be careful about starting with the question, “How do I find the money?”
I'd start with, “Why should someone else's money want to be in my deal?”
Those are two very different questions.
Self-storage can be attractive because the operating model is relatively simple compared with many other real estate assets. But simple doesn't mean easy. You're still buying an income stream, and the value of that income stream depends on occupancy, achieved rents, expenses, competition, supply, management and the basis you're paying for the facility.
The capital structure comes after you've established that you actually have something worth financing.
For a first acquisition, I'd think about the capital stack in three buckets: debt, your own equity, and outside equity.
The outside equity partner doesn't necessarily need you to have 50% of the purchase price sitting in your checking account. They need to understand what you're bringing to the table.
Maybe it's the deal.
Maybe it's the sourcing.
Maybe it's the local market knowledge.
Maybe it's the operating plan.
Maybe it's the ability to execute the business plan.
Ideally, it's several of those.
What I wouldn't do is show up with, “I found a storage facility. You bring the money and we'll split it.”
That's not a partnership. That's a financial hostage situation with nicer stationery.
If you're bringing the operating expertise and your partner is bringing most of the equity, there are plenty of ways to structure that relationship. But the economics should reflect the actual contribution and the risk each party is taking.
And before you worry too much about finding partners, I'd get very good at underwriting the facilities yourself.
I'd want to know:
What is the current physical and economic occupancy?
What are the actual achieved rents—not the asking rents?
How much competing supply is coming?
What's the historical move-in/move-out activity?
What does the expense structure really look like?
How much capital expenditure is coming?
What does the facility look like operationally if your projected rent growth doesn't happen?
And perhaps most importantly:
What has to be true for this deal to produce the return you're promising your equity partner?
That's the question I'd spend a lot of time with.
Because if the answer is, “Occupancy needs to go from 72% to 92%, rents need to increase 15%, expenses need to stay flat, and the market needs to support my exit cap,” you've got a story.
If the deal still works when some of those things don't happen, you've got an investment.
There's also nothing wrong with starting smaller than you think you need to.
A smaller facility where you can learn the business, establish a track record and demonstrate that you can actually execute may be worth considerably more to your career than jumping into a larger acquisition because the larger one looked impressive on the offering memorandum.
Your first deal isn't just an investment.
It's your résumé for the second one.
And that's particularly important when you're asking somebody else to put meaningful capital beside yours.
I'd spend less time worrying about whether there are people willing to invest in self-storage.
There are.
I'd spend more time becoming the person those investors would be comfortable investing with.
That's the part of the capital stack nobody puts in Excel.
-DC Dobbs
Gulf Coast Emerald, LLC
- 1wQuetzaly TorresPro MemberInvestor · Jacksonville, FL · Member since 2026 · 51 posts · 7 votes
DC, your “financial hostage situation” comment made me laugh 😂 - but you made a good point about what each partner actually brings to the table.
I'm working on a mobile home park acquisition in north FL. I know it's not self-storage, but it might be within your wheelhouse.
It's roughly 19 sites, with 13 park-owned rental homes, plus a separate house. The property generated about $129K in collections in 2025, and we're currently working through due diligence and negotiating a seller-financing component.
What interests me most is the upside.
I've been exploring a 50/50 operating partnership where both parties bring something meaningful to the table, participate in major decisions, and share in the upside. Capital contributions and their repayment would be addressed separately.
Would a value-add MHP with that kind of partnership structure be something you'd consider, or are you primarily focused on self-storage?
Happy to share more of the numbers and the proposed structure if it's of interest.
- Lender · Washington DC · Member since 2026 · 84 posts · 23 votes1mo
Charlie, I’d definitely be interested in exploring this with you. I’m open to investing alongside the right partner on self-storage acquisitions, particularly where the numbers and financing structure make sense. If you’re currently looking at a specific facility or have a deal in the pipeline, I’d be happy to connect and go over it with you. Feel free to DM me.
- Member since 2025 · 25 posts · 6 votes1w
Hi LaTarence. I’m not currently looking at any specific deals. Would be interested in this in the future however. I would need to be taught how to go about finding and underwriting one of these deals as I do not have experience at the moment.
- 1wQuetzaly TorresPro MemberInvestor · Jacksonville, FL · Member since 2026 · 51 posts · 7 votes
LaTarence, when you partner on self-storage acquisitions, are you typically coming in as an equity partner, or do you also provide acquisition financing? Do you consider partnerships where the seller is carrying a substantial portion of the purchase price?
Also, are you focused exclusively on self-storage, or are you exploring other asset classes like mobile home parks? I've been looking at some interesting opportunities in that space myself.
- 1moHenry ClarkPro MemberDeveloper · Member since 2020 · 4k+ posts · 4k+ votes
OP. Start small and Make Your Big Mistakes Early.
Don't do partners.
How much money can you invest? Don’t
Answer.
What is your financing mechanism? 10% down SBA loan? 25% commercial loan?
Deal size- use the two above to determine your deal size. If you have $100,000 and do a 10% down, then a $1mm deal. If 25% down then a $400k deal. This will narrow down your deal search and approach so you don’t waste your time.
What city or state are you near. Lots of options depending on locale.
- 2wErik EstradaBusiness MemberLender · Member since 2022 · 6k+ posts · 1k+ votes
What kind of financing are you looking for? As others mentioned, SBA can be a good fit if you qualify.
LuxePrivate Investments LLC 570 Reviews - 6dNoah WrightBusiness MemberUSA, Nationwide · Member since 2024 · 312 posts · 117 votes
Saying up front that you'd need to learn the underwriting is a good instinct, and it points to something a partner can bring besides money. On commercial storage loans, most lenders look hard at the people behind the deal, their experience running a facility and their liquidity, along with the property's own operating history. So for a newer investor, a partner with a track record can cover the experience gap as well as the cash. One low risk way to learn is to come in as a passive investor in an experienced operator's deal first. Read their underwriting, follow the monthly reports, and watch how occupancy and expenses actually move. Then the first deal you sponsor yourself starts from real knowledge. Do you picture yourself as the money in a deal or the one running it?
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