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Updated 3 days ago on . Most recent reply

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72
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Xavier A. Malave
  • Brackettville, TX
18
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72
Posts

Seller Financing my first self Storage

Xavier A. Malave
  • Brackettville, TX
Posted

Hey!

Just wanted to see if there’s someone out there with plenty of experience doing seller financing deals. I’m looking for someone to help me figure
out if I’m putting a good deal together. I have some numbers and some offers in mind but I’m not sure if I’m making a good deal. Is only for 3 years and they are asking $595k for the Self Storage property. I’m trying to do a low monthly payment which they are willing to take and a low interest rate of 6%. What worries me the most is not having enough equity at the end of those 3 years to be able to refinance. I’m trying to run the numbers but I’m worried about doing the math wrong and getting myself into a deal that don't make sense. 

I’m a professional home inspector in Texas doing business as Xa Inspect. I’ll like to provide value to whoever provides me value and I’ll be more than happy to work something out as thank you for any help!

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Replied

I currently have two facilities in Alabama that are seller financed.  Original terms were 2 years on one and 3 years on the other - I renegotiated both of them out to 2029 (total of 8 years) - and really glad I did!  3 years is the minimum you want, try to get at least 5 years - Think of it this way - you probably need 1 year to get it running like you want, and 1 year to 'get it ready' to sell or refinance.  This is not a passive investment either, you will be busy.  Additionally, what is the amortization, or period of years the loan is based on 20?, 25? 30? - The more years, the smaller the payment but the less principal paydown of course.  Also, if you go to refinance you better be above 80% occupancy.   And I'd check out how much the bank will tend to loan - it probably won't be much more the 70% of value - if they like the property.  Self-Storage, being an actual business - can qualify for SBA loans - you may want to check that out.  Think about the end game before you go in - how are you going to get out of the deal later?  I see you are in Brackettville, population 1,360 - is the SS facility in this area?  If so, you will likely be buying and holding it 'forever' - not many buyers for something like that - typically the only folks that want something in a rural area are those looking for a retirement project with a little income - which is a good thing if that is what you want.  Good luck!  

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