Self-Storage Financing Phoenix AZ

Self-Storage Financing Phoenix AZ

What are Self-Storage Financing Loans?

Self-Storage is a storage facility or a system where some individual rents or buys space to store their inventory or possessions. This space may be in the form of containers, kiosks or units of space within a large warehouse. Ideally, a high-quality facility rented, bought or constructed by an experienced borrower is the best-case scenario to bring in the finance. Yet many lenders consider all types of locations depending upon its “story”.

For example, if the story is that the storage facility was being mismanaged and in the need of a new owner. An owner who aims to improve the maintenance, reduce expenses and bring in more occupants to the facility. Then the applicant may be able to gain the financial assistance that will be used to eliminate these negatives in this case.


Interest rates are at an all-time low, so this is the right time to fix them for the long term. Presently the loans are for a period of 10-year at a fixed-rate of 3.9%. For a minimum loan of $1 million and period of 10 – 15 years, the fixed rates with payments come with a 30-year amortisation schedule.

If the loan is for an acquisition or refinancing of high-quality facilities the lenders will even offer interest-only finance at a fixed rate for 3 – 10 years. The long-term fixed rate eliminates market risk lending stability during repayment. For loan amounts, less than a million for 5 – 7 years at fixed rates many lenders offer competitive pricing.


If you are looking for less than a million dollars than a conventional loan from a local or regional bank would serve you well. Another option to explore is the SBA loans. For loans, more than five million dollars larger commercial banks are a good option to explore.

How to qualify for these loans?

There are numerous aspects to self-storage real estate financing that sets it apart from the other kinds. The lender appraises the property and the applicant’s potential for a new loan or refinancing. The lenders evaluate two major components while reviewing the applications – the property and the guarantor. These loans are non-recourse, yet the lenders look for these as minimum requirements to decide the rates and terms.  The other requirements are;

  • From the applicant –
    • Acceptable credit scores are 600 or higher
    • A satisfactory personal financial statement
    • Their borrowing history/experience, liquidity and equity or net worth
    • Description of spending and use of the proceeds
    • Current profit and loss statement
    • A balance sheet of last 90 days
    • Three years business and personal tax returns
    • Rent roll and management reports for an existing facility
    • Feasibility study for a new construction
    • Business plans
  • About the Property
    • Its quality – description of the Infrastructure, should be paved with asphalt, other utilities, types of roofs, etc.
    • It’s history covering its occupancy trends and finances.
    • The loan to value (LTV) ratio
    • Requiring a loan amount of at least $500,000
    • With a minimum debt-service coverage ratio of 1.25x.

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