Storage Unit Loan

Will lenders accept loan applications for storage units?

Banks and non-bank lenders have varying reservations for storage units since they consider these properties as purpose-built or specialised units.

That means you cannot easily convert a storage unit into a retail store or another commercial business establishment.

Moreover, they’ll also consider the level of competition in your area since oversupply and a high vacancy rate may indicate a failing business strategy.

What are storage units?

There are large-scale storage facilities that house over 1000 storage units in Australia. Each unit can have up to 60 square metres of floor area and up to six metres of vertical clearance.

Many tenants on storage units only lease for the short term, and the size of every unit will depend on local demand and demographics. That depends on whether they’re for commercial or domestic use.

Why do people need storage units?

For domestic purposes

• Vehicle storage: Motorbikes, vintage cars, speedboats/canoes, and other vehicles that people will use a few times annually
• Musical instruments and audio devices: Sound engineers, musicians, and recording labels may need extra space to store their equipment and instruments. Some also use storage units as rehearsal studios.
• Wine/beverage storage: Local restaurants and wineries may need a space to store and age their wine. Some units have climate control and thermostats that maintain an ideal atmosphere to age wine and other liquors.
• Anything else: Whether old clothing, garage tools, sports equipment, and toys/collections, you can rent a storage unit for extra space.

For commercial use

Businesses rely on storage units as easy solutions for a convenient and easy-access storage facility.

• Paperwork and office stocks for inventory
• Seasonal sale: Retail shops may need a storage unit to prepare more products for the holidays or occasions where demand is the highest.
• Moving/Expansion: If you’re moving or expanding your business to another location, a storage unit may come in handy.
• Company records backup: Over time, your office’s storage space may fill up with accounting records and files. Storage space may help give more room for your important documents.
• Other business solutions: You can make the most out of storage spaces for business use, whether for extra storage space, working area, or anything else in between.

A few points when picking a storage unit

Different tenants have various needs and purposes for a storage unit.

But if you’re looking to purchase a freehold storage unit under strong brands, you’ll have less work to do since they should’ve done most of the work.

That said, keep the following factors in mind since these will help you land on your preferred tenants and attract more customers along the way:

• Ideal vertical clearance
• Driveways to storage units for faster logistics and unloading bulky items
• Utilities in the storage space: Electricity, telephone line, lighting, and fibre points
• Surveillance and security alarm systems
• Location and demographics (storage units located near Sydney CBD have higher tenancy rates and quality tenants)

How much amount can I loan?

Storage units loans fall under banks’ warehouses and specialised commercial lending policies. That said, you can avail of the following features and loan amounts:

• Freehold Storage Units: Loan up to 70% of warehouse property value or have a guarantor and loan security to loan up to 100% of property value.
• Maximum storage unit loan term: Up to 25 years on a case-by-case basis
• Interest-only storage unit loan term: Maximum of 5 years on a case-by-case basis
• Get bad credit and low doc loan on a case-by-case basis, depending on if you’re only acquiring the freehold property.
• Lowest interest rates: Our commercial mortgage broker can help build a strong case and negotiate the best rates.

You can also avoid credit enquiries with Plan A Mortgage. Discuss your financial position and loan application with us, and we’ll give an indicative approval. Call us at 1300 052 055 today.

Will I get a storage unit loan on a leasehold unit?

Banks and non-bank lenders will most of the time only approve loans under leading self-storage companies to ensure stability and long-term lease.

That’s because storage units are specialised commercial properties and will only target a very specific audience with a relatively high vacancy rate.

To strengthen your loan application for storage units not under major operators, seek expert help to establish a strong strategy and management plan.

Moreover, some banks also look at leasehold storage loan applications on a case-by-case basis. In that case, you still need to present a reliable business plan to show your lender how you can make this venture successful.

You may also need your accountant to help you develop a robust business strategy and forecast your cash flow accurately. On the other hand, a commercial mortgage broker will help you find the best lender for the best rates.

How can I strengthen my financial position?

Most banks and lenders prefer applicants with an income of up to 1.4 times the interest cost of the storage unit loan. In the industry, we call this the serviceability ratio.

You can also provide financial statements and other proof to indicate your income. The more document you can provide, the stronger your application becomes.

Entrepreneurs and businessmen may also need to provide the following:

• Business Activity Statement for three years prior
• Tax statement from the Australian Taxation Office (ATO) for the last three years
• Bank statement for the last six months

But if those are too much to wrap your head into, we at Plan A Mortgage can help organise your application so you can focus more on what matters.

Why do I need a mortgage broker?

Our mortgage brokers at Plan A Mortgage have worked in the lending industry, particularly in major lending companies’ commercial and residential arms.

That said, we already have an extensive panel of lenders and banks, and our relationship with them allows us to negotiate the most competitive and lowest rates for your loan.

We can also improve your application strength to get the maximum loan to value ratio (LVR). Contact us on 1300 052 055 to discover whether you qualify today!