This document discusses various options for funding self storage facility purchases and deals, including: mortgage brokers, community banks, SBA 7A loans, insurance companies, assumable loans, transactional funding, hedge funds, credit lines, equity in other properties, refinancing existing properties, seller carrybacks, selling existing or personal properties, borrowing against insurance, mezzanine lenders, bringing in a partner, and forming a syndicate. It emphasizes doing deals that still cash flow after funding and exploring many potential sources of capital.

1. Part 3 :
Where to Find The
Money
Self Storage Training Series

2. Self Storage Training Series
“How to Structure and
Fund your Deals in
today’s Economy -
It’s not as hard as
you think”
Where to Find The Money

3. Mortgage Brokers
Google: Self Storage Brokers

4. Community Banks
 Decision made by a local board
 Know the area and Facility
 Relationship with borrower
 Common Sense Underwriting
 Savings & Loans, Credit Unions

5. SBA 7A
 New Program – (not 504)
 80% LTV for Acquisition and Refi
 Will allow Cash out Refinance
 Will Allow Seller 2nd Mortgage with a 2 Year
Pay off
 Prime + 2.75, 25 year Amortization
 Debt Coverage Ratio of 1.30
 No Underwriting Fee

6. SBA 7A
 $5,000 Earnest – Refundable
 2 week Approval, 60 day Close
 Pre-pay Penalty in 1st 5 years, tiered
 650 Credit Score and Higher
 $500,000 to $5 Million

7. Insurance Companies
 $2 million in value and above
 Lower rates than even Community
banks or Savings & Loans
 Low fees
 Accessed through Mortgage Brokers

8. Assumable Loans
 “More than half of the commercial
transactions in 2010 involved assumable or
seller financing.” Marcus & Millichap
 Allows a new buyer to undertake the
obligation of the existing loan, sometimes
with no change in loan terms. May or may
not have to go through underwriting
 Combine with seller carry back.

9. Transactional Funding
 Quick Cash for Commercial “Flips”
 Need some money to use for earnest $, fees, etc,
and then to flip to another Investor

10. HEDGE FUNDS
 Groups that are comprised of individual
investors that collectively buy Real Estate
 More aggressive Underwriting
 80% Appraised Value
 Sometimes allow 100% Financing
 Google Real Estate Hedge Funds or contact
a Mortgage Broker

11. Ways to Find the Cash!
 Savings Accounts
 Sell CD’s – Higher Profits in Self Storage

12. Credit Lines
 Secured or Unsecured for $25,000 -
$100,000
 Low interest rates and payments
 The deal must be able to cover both
payments
 Establish BEFORE you need them

13. Equity in other properties
 Line backed by equity in other properties
 Akin to a home equity line of credit
 The deal must cash flow

14. Refinance Existing Properties
 Shift down payment from existing to new
projects
 Utilize value created to buy more

15. Other People’s IRA’s
 Many unhappy with stock market
 Teach how to invest with you
 Safer – see it and touch it
 Pre-Negotiated returns – PPM

16. Friends and Family
 Real Estate 401k’s
 Deferred interest and payments
 Avoid using on “Risky” deals

17. Seller Carryback
Sales Price$1,000,000
Cash $ 100,000
1st mortgage $ 700,000
Seller Carry $ 200,000
Seller and buyer execute a note and 2nd
mortgage with buyer making monthly
payments to seller for usually 3-5 years.

18. Sell Existing Properties
 Trade-in/trade-up to other value add facilities
 Quickest way to wealth
 Time is our friend and our enemy
 Review your portfolio at least once/year

19. Sell Personal Property
 Got a Boat, Motorcycle, RV, extra car……..?
 Jewelry, Collections, Othe Valuables………..
 Do they make you money?
 “Begin thinking more like an investor, not
the average consumer”

20. Borrow Against Insurance
 Can borrow up to a certain % of your policy
 Low Rates, and Flexible, Tax incentives
 Talk to your tax and financial Advisors
 Only use if the deal supports both
payments

21. Mezzanine Lenders
 “Bridge the gap”
 Loan 5-10% above 1st mortgage
 Rates are typically 2-4% higher than
1st mortgage
 High Fees and Closing Costs
 Only if deal Still Cash Flows

22. Bring in a Partner
 Caution when looking to friends & Family
 Multiple ways to structure
 Thorough Operations Document
Approved by each partners’ attorney
 Recommendation: Elephant & Mouse
 Private Equity Partner – negotiate for a %
of profits or return

23. Forming a Syndicate
 The Pooling of several investors Capital for
the purpose of purchasing Commercial Real
Estate
 $20,000 - $30,000 to form
 “Pools” made of investors usually
contributing a minimum of $25,000 to
$500,000 for purposes of collectively buying
real estate

24. Self Storage Training Series
Stick with me through all 7
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