Within the strengthening commercial mortgage market, several industries are showing substantial growth. According to a recent Bloomberg report, one of these is the self-storage business. Between 1998 and 2012, the number of self-storage facilities in the U.S. doubled to 15,000, according to Census data. Last year self-storage companies generated $24 billion in revenue. It stands to reason, that with so many of these properties dotting our landscape, that there are owners looking to refinance their buildings or to purchase new facilities to expand. So, how does a commercial mortgage broker serve these borrowers?
Discuss the details of the collateral
Before submitting a commercial loan scenario, you’ll need to get to know your borrower’s property. You’ll need to ask your borrower about the size of the facility, where it’s located, how many storage units are on the property and the occupancy rate, among other things.
Talk to your commercial borrower about their credit history
Commercial lenders are always interested in a potential borrower’s credit. It’s important to have a recent credit report and to discuss any past financial issues with your commercial borrower before talking to a lender.
Find out their capacity to pay
Before a commercial lender will offer your borrower a mortgage, they’ll need to know it can be repaid. Provide any relevant financial information like a profit and loss report or an income and expense report so that they can calculate the property’s ability to cash flow.
Discuss their plans for the funds
Many small-balance commercial lenders will want to know how your borrower intends to use the money to benefit their business. Make sure to talk to your borrower about their plans, and include your findings in a brief loan summary when you submit the scenario.
As the self-storage industry grows, it’s important to be prepared to serve these borrowers. As a commercial mortgage broker, you need to develop an understanding of the self-storage business and the unique loan scenarios that these properties offer. By taking into account the above information and presenting it in a professional manner, you’ll be helping borrowers obtain the commercial mortgages they need and earn additional income.