Fast Lane Financing

[White8]

I'm about 30 days out on starting a mini storage project and have a bridge loan in place for it. I've since found a couple of additional properties that I think I can get for next to nothing to develop another mini storage facility and a tiny home village. Since I would have a low equity position in the other properties what would be my best options for financing the property acquisition provided I can't talk the owners into seller financing and developing them. Partnerships and syndication make me nervous...

 

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[BizyDad]

Tagging @tpuffer

 

[Kak]

Big angel investor mixed with a conforming loan is an option.

So you give away some equity, just build more units to make up for it.

 

[Antifragile]

I'm about 30 days out on starting a mini storage project and have a bridge loan in place for it. I've since found a couple of additional properties that I think I can get for next to nothing to develop another mini storage facility and a tiny home village. Since I would have a low equity position in the other properties what would be my best options for financing the property acquisition provided I can't talk the owners into seller financing and developing them. Partnerships and syndication make me nervous...

a) if you were able to get a bridge loan from a bank, how are you taking them out?
B) the next site land cost being as you put it “next to nothing” - are you looking for money to buy storage units and then rent them out?

 

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[White8]

a) if you were able to get a bridge loan from a bank, how are you taking them out?
B) the next site land cost being as you put it “next to nothing” - are you looking for money to buy storage units and then rent them out?

A) Hard bridge with bank lined up after the stabilization period. Should be 12-18 months max based the the appraisal for the first project. There is enough fluff in the loan to put downs on the next two properties. (Thank you volatile lumber market)
B) I'm looking for money to build the units and then I'll rent them out. My intent is to shoot for two or three phases as this property is large enough to hold between 700-800 units.

 

[Antifragile]

I assume these are metal drive up storage units and not a vertical structure somewhere urban. That’s because you said land is cheap.

Based on that many good options exist:

• Ask the supplier of self storage if they can finance their own product with you. You’ll pay them when you lease up and get a take out loan from the bank. Probably a year after completion.
• pre-sell the project to the “next owners” and have the PSA in hand when you talk to the bank to get a loan. You won’t own it, but you can get 100% financing this way as the bank only cares to know how they get their money and interest paid back to them. You can use your own cash for the next deal.
• Get a few friends who are interested in being invested in income producing RE. Create a GP/LP structure and you control it but own less.