Most types of investments won't support the use of high leverage using the securities themselves as a guarantee. This makes real estate investing moderately unique in its use of funding. The use of leverage in real estate investments is a proven approach to expedite returns and generate wealth. But one must be wary not to over-leverage. As we explore a few of the different types and roots of financing available for self-storage facilities, I will also point out the dangers that can emerge from the over-leverage and snares of different financing structures.

There is a broad array of financing vehicles accessible from a variety of institutions and intermediaries. There are trillions of dollars in real estate mortgages issued each year in the United States alone. It has also been estimated by the US Congressional Budget Office that approximately 76% of the nation's wealth is in some form of real estate ownership or securities supported by real estate. That overshadows the investment in all other industry sectors consolidated.

Seller Financing
A popular and oftentimes favored source for financing self-storage facilities is some kind of seller-held financing. There are many benefits to using seller financing to finance a part or perhaps even 100% of your investment. Typically this includes no points, no fees, no appraisal, no survey, and no need to educate the lender about the facility. Also, I can arrange directly with the seller (financier) to structure a loan that is engaging enough to convince them to hold some or all of the funding.

Private Lenders
Wealthy individuals, or what many in the business call "Country Club Money", are often used as sources of financing, but may be hard to come by. Low-interest rates as of late have created many wealthy individuals to consider lending money for real estate simply because the returns are much higher than CDs or bonds and the debt is bound by a tangible asset, the facility itself. The total loan amount will vary based upon the individual and his or her wherewithal. Typically, interest rates can vary from 6% to 20% depending on the transaction, current market rates, time frame, uncertainty, amount, etc.

Mortgage Bankers
Mortgage Bankers are discussed repeatedly, as this is a preferred funding source. It is necessary though to recognize that a mortgage banker is not identical to a mortgage broker. The easiest way to explain the difference is that a mortgage broker works with various banks, and the mortgage banker works solely for the bank in which they are operated.

There are dozens of ways to structure the funding on your Self Storage aguas claras facility that we could consider, but I'll just cut to the quick and present the popular ways people have used to structure nearly most deals, which is a combination of the 3 ways I just presented.