Posted on September 21,2023
Financing an Acquisition, Development, and Construction (ADC) loan for a self-storage project involves a comprehensive set of requirements to ensure that the lender can assess the viability and risk associated with the project. Here's a detailed list of requirements you may need when seeking an ADC loan for a self-storage facility:
- Detailed Business Plan:Provide a comprehensive business plan outlining the project's scope, purpose, and objectives.
Include a market analysis that demonstrates demand for self-storage facilities in the chosen location.
Present a clear financial model, including revenue projections , expenses, and profit margins.
- Property Information:Specify the location and address of the self-storage facility.
Provide details on the size of the land or existing structures, zoning information, and any necessary permits.
- Legal Documentation:Present legal documents related to the property, including titles, deeds, and any environmental assessments or surveys.
Ensure the property complies with local zoning and land use regulations.
- Financial Documentation:Submit personal and business financial statements for all project stakeholders.
Provide tax returns for the past few years for all involved entities.
Detail the project's budget, construction costs, and funding requirements
- Creditworthiness:Demonstrate a strong credit history for the project sponsors and guarantors.
Highlight any relevant experience in real estate development, especially in the self-storage sector.
- Feasibility Study:Include a feasibility study that assesses the project's viability, including factors like construction costs, expected rental rates, and occupancy rates.
- Construction Plans and Drawings:Provide architectural and engineering plans, including site layout, floor plans, and elevation drawings.
Include construction schedules and timelines.
- Environmental Assessments:Conduct environmental studies to ensure there are no contamination issues on the property.
Comply with any environmental regulations and requirements.
- Insurance:Present insurance plans for the construction phase and future property operation.
Include liability insurance to cover any potential accidents on the construction site.
- Title Insurance:Obtain title insurance to protect against any title defects or disputes.
- Loan Request and Terms:Clearly define the loan amount, interest rate, repayment terms, and any collateral or guarantees.
Specify the loan-to-value (LTV) ratio and the loan-to-cost (LTC) ratio.
- Permitting and Approvals:Provide evidence of necessary permits and approvals from local authorities and regulatory bodies.
- Contractor Information:Share details about the general contractor, subcontractors, and their qualifications and experience.
- Market Analysis:Present a detailed market analysis, including demographics, competition, and demand factors.
Highlight the property's location advantages.
- Exit Strategy:Outline your plan for repaying the loan, whether through property sale, permanent financing, or other means.
- Personal Guarantees:Be prepared to provide personal guarantees if required by the lender.
- Appraisal:Obtain a professional appraisal of the property to determine its current and future value.
- Title Search and Survey:Conduct a title search and land survey to confirm property boundaries and ownership.
- Construction Oversight:Agree to allow the lender to monitor the construction progress and disburse funds accordingly.
- Legal Counsel:Consult with legal counsel experienced in commercial real estate transactions to review and assist with documentation.
- Environmental Compliance:Ensure compliance with environmental regulations, especially if the project involves site preparation or demolition.
It's essential to work closely with a qualified commercial real estate lender who specializes in self-storage projects, as they can guide you through the specific requirements and help you prepare a strong loan application package. Additionally, requirements may vary by lender and local regulations, so be sure to consult with professionals familiar with your specific jurisdiction.
Our team at MCS Capital is available to answer any questions you may have about our process, funding options, or how to get started. Don't hesitate to reach out to us for personalized assistance.
317-331-3529 or 1-866-919-3977