Janover Secures Financing for Self-Storage Acquisitions
A Texan investor purchased the two properties encompassing 168 units in Canton, N.C. The portfolio will operate under the Iron Self Storage brand.
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54 Gold St. in Canton, N.C. Image from Google Street View.
Janover has closed $820,000 in financing for the acquisition of two self-storage facilities totaling 20,900 square feet in Canton, N.C. A North Carolina-based credit union provided the five-year, fixed-rate loan with interest-only payments in the first 12 months. The loan terms include a balloon payment and a 25-year amortization period.
Tyler Pepper, capital markets associate with Janover, arranged the deal between the lender and the borrower through the Janover financing platform. The buyer, a Texas-based investor, paid nearly $1.3 million for a total of 168 units across the two properties and will operate them under the Iron Self Storage brand.
Built in 1999 and 2006, the facilities are located at 54 Gold St. and 674 Thompson St., within 2 miles of each other and roughly 3 miles from downtown Canton. The facilities feature non-climate-controlled units ranging from 50 to 200 square feet. Property amenities include online rental options, gated entry, and video surveillance. At the time of the sale, the facilities were around 85% occupied.
“Despite the properties’ relatively low occupancy rates, we were able to secure a fixed-rate term within a short period,” said Pepper. “The buyer plans to implement capital improvements to upgrade the units, bring up occupancy, and ultimately increase rents.”
North Carolina Remains a Competitive Storage Market
Although self-storage rent growth has slowed over the past couple of months, rates are still high by historical standards. Nationwide, the overall average street rate, including all unit sizes and types, increased by 1.4% year-over-year in August, down 130 basis points compared to July’s annual growth rate, according to Yardi Matrix data.
Secondary markets with positive demographic trends continue to experience the highest growth. Top Millennial destinations in North Carolina, such as Raleigh-Durham and Charlotte, saw their rates increase by 9% and 4% for the average 10x10 non-climate-controlled units year-over-year in August, Yardi Matrix data revealed. Overall, Raleigh-Durham recorded the highest rate growth across all unit types nationwide.
Related Questions
What are the benefits of self-storage acquisitions?
Self-storage acquisitions can be a great investment for many reasons. One key benefit is that they can generate strong cash flow and ROI. Self-storage facilities are also relatively easy to manage compared to other types of investment properties, as most are fully automated and tenants typically stay for a few months at a time. Additionally, self-storage is a recession-resistant investment, meaning that it will not be dramatically impacted by economic downturns or market fluctuations. This makes self storage a reliable asset class and an attractive option for investors who are looking to safeguard their investments over the long term. Furthermore, self-storage has low operational costs, as you don't always need on-site staff and the costs of operating self-storage facilities are remarkably low. As a result, self-storage net operating incomes are easier to keep in the black.
What are the risks associated with self-storage acquisitions?
When considering investing in self storage, there are a few risks to consider. The first is the risk of oversupply in the market. If there are already a lot of self-storage facilities nearby, it may be harder to attract new tenants than if there were very few options available. It’s also important to consider whether there are any facilities under construction or in the planning stages, as those can affect your property in the future. The saturation level of an area is measured by the gross square feet of storage space available per person. Currently, the average self-storage inventory per capita across the country is around 7 to 8 net square feet.
Another risk to consider is the potential for tenant turnover. Self-storage facilities are typically leased on a month-to-month basis, so tenants can move out at any time. This means that you need to be prepared to fill vacancies quickly in order to maintain a steady income stream. Additionally, you should also consider the potential for tenant default, as this can lead to lost income and additional costs.
Finally, it’s important to consider the potential for natural disasters or other unforeseen events that could damage the property or disrupt operations. It’s important to have a plan in place to mitigate these risks, such as insurance, emergency funds, and a backup plan for operations.
What are the best financing options for self-storage acquisitions?
The best financing options for self-storage acquisitions are conventional loans from a bank, credit union, or other financial institution. These loans tend to have the lowest interest rates and the longest terms, making them a good option for investors who are looking for stability. Other financing options to consider include SBA loans, bridge loans, and hard money loans.
Conventional loans typically have the following terms:
Term Description Interest Rate Typically the lowest available Loan Term Typically the longest available Down Payment Typically 20-30% of the purchase price Loan Amount Typically up to 80-90% of the purchase price SBA loans typically have the following terms:
Term Description Interest Rate Typically lower than conventional loans Loan Term Typically up to 25 years Down Payment Typically 10-20% of the purchase price Loan Amount Typically up to 90% of the purchase price Bridge loans typically have the following terms:
Term Description Interest Rate Typically higher than conventional loans Loan Term Typically up to 12 months Down Payment Typically 0-20% of the purchase price Loan Amount Typically up to 90% of the purchase price Hard money loans typically have the following terms:
Term Description Interest Rate Typically higher than conventional loans Loan Term Typically up to 12 months Down Payment Typically 0-20% of the purchase price Loan Amount Typically up to 90% of the purchase price What are the most important considerations when financing self-storage acquisitions?
When financing self-storage acquisitions, the most important considerations are the loan terms, the loan amount, the loan type, and the loan structure. Loan terms typically range from 5-30 years, with the loan amount typically ranging from $1 million to $50 million. The loan type can be either conventional or SBA, and the loan structure can be either fixed-rate or adjustable-rate. Additionally, it's important to consider the local market conditions when investing in self-storage, such as population and job growth, the number of homeowners or renters in the area, and the proximity to university campuses, residential areas, or businesses.
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What are the advantages of working with Janover for self-storage acquisitions?
Janover Ventures is a highly experienced capital markets advisory firm with nearly two decades of expertise sourcing debt for multifamily and commercial properties across the United States. Working with Janover Ventures for self-storage acquisitions offers a number of advantages, including:
- Access to a wide range of lenders, including banks, life companies, CMBS lenders, Fannie Mae, and Freddie Mac.
- Non-recourse, 10-40 year fixed rate debt with LTVs up to 80%.
- Hands-on, personalized service from experienced advisors.
- Educational resources to help investors understand their financing options.
For more information, please visit Multifamily Loans Video Library and Commercial Real Estate Finance Video Library.