Are you looking at investing in a self storage property?
Did you know there are several different ways to raise the cash for the down payment on your self storage facility?
Don’t Over Leverage Yourself With Too Much Financing
One of which I will caution: I DO NOT recommend or approve of 100% financing or the “No Money Down” deals that you have seen on TV or heard of by other authors and speakers.
I have seen investors who have almost lost everything as a result of their single family houses, self storage, or apartment complexes being purchased with no money down. Their portfolio’s reach high Loan To Value ratio’s and as a result, cash flow can get very tight if the market changes even a little bit.
So use financing as a tool to help a project where needed, but always remember that markets change… and keep a safety net on every property so if rents are hit hard, you’re still in a safe position.
I do not recommend that your portfolio ever rise above a level of 80% Loan to Value, especially if you are making regular payments on any down payment capital that has been borrowed.
Using A Self-Directed IRA For Your Self Storage Projects
As you are already aware, there are several ways to raise cash for the down payment on your Illinois self storage deals.
One of our favorites here at Strovo Properties, Self-Directed IRA’s, are a great vehicle for allowing me to invest the money in my IRA, tax free, in the business I love; Real Estate.
In addition, I can set the terms surrounding how the funds are to be borrowed from my IRA, allowing me the utmost flexibility. I purposely structure the loan from my self directed IRA so that the interest accrues, and there are no monthly payments made until I sell a property, and ultimately pay back my IRA.
There are several companies that can act as the custodian of your self-directed IRA. I suggest you talk to several before choosing one that meets your needs. In addition, there are several transactions that are prohibited, so be sure to ask your custodian about the current laws regarding the use of your Self-Directed IRA for the purpose of investing in your own properties.
If you have retirement funds lying around underperforming and you want to diversify some of it into real estate… in particular self storage, talk to a reputable SD IRA custodian or give us a call at 630-608-2573 and we can guide you in the right direction. We’ll help you avoid the common mistakes people make when setting up their SD IRA.
We’d also love to walk you through our proven process for finding, purchasing, and adding value to already profitable self storage properties. Just fill out the quick form on our “Investors” tab and lets chat.
We’ll show you past projects, any projects we’re currently working on, and answer any and all questions you have.
Head over to the Investors tab to connect with us or call us at 630-608-2573 today!