Can I buy a self-storage facility with little money down?

Storage deals involve land and buildings, so they tend to be large compared with a typical small business. For a general discussion, see whether you can buy a business with no money down. Here the focus is the way storage deals are built, and which of those routes buyers consider when they have little cash.

How lenders see a storage facility

A lender will weigh the property as security and the business as the source of repayment. It will look at your experience, your own money in the deal and the facility’s history. Each lender sets its own terms, so speak to more than one. Expect questions about how you would run the site and how you would handle a weak year.

Splitting the land from the operating business

Some sellers own the land through one company and run the storage business through another. A buyer may be able to buy the business and lease the land, which lowers the cash needed at the start but leaves you a tenant. Ask your lawyer and accountant how the split would work, and what the lease says about term, rent changes and your right to renew.

Seller financing and partners

A seller may agree to be paid part of the price over time, which is called a vendor take-back. The seller’s terms, security and what happens if payments stop all need to be written carefully. A partner can add cash or experience, but the partnership agreement should settle who decides, who works and how someone leaves. Ask a lawyer to draft both.