Investing in storage units can be a lucrative venture, but when it comes to arranging funding, there are some unique considerations to keep in mind. In this blog post, we'll explore the ins and outs of financing your storage unit investment, covering everything from bank limitations to available options.
1. Bank Limitations:
Traditionally, banks require security over an asset to provide a mortgage. However, when it comes to storage units, most banks are unable to accept them as collateral. This limitation can make securing a traditional mortgage for a storage unit challenging.
2. Using Home Equity:
One of the most common ways to fund a storage unit investment is by utilizing your home equity. If you have built up equity in your home, you can leverage it to finance your storage unit purchase. This method can be an effective way to access the capital you need, especially when storage units typically range in price from 100,000 NZD to 180,000 NZD.
3. Business Loans:
Many individuals invest in storage units for business purposes. If you plan to use the storage unit as part of your business operations, you might consider a business loan. Business loans can be used to finance the purchase of storage units and equipment needed for your storage business.
4. Affordability Matters:
Whether you choose to use home equity or explore business loans, affordability is a critical factor. Lenders will assess your ability to repay the loan, so having a stable income and a clear plan for generating revenue from your storage unit investment is essential.
5. Storage Units as Investments:
Storage units are considered investments and can offer attractive returns over time. As an investor, it's crucial to evaluate the potential rental income, ongoing expenses, and overall profitability of your storage unit investment.
While traditional banks may not readily provide mortgages for storage units due to collateral limitations, there are alternative funding options available. Leveraging your home equity, exploring business loans, and ensuring affordability are key steps in securing the necessary funds for your storage unit investment. Remember that storage units can be lucrative investments, and with the right financing strategy, you can capitalize on this opportunity for financial growth.
As the lending landscape for storage unit investments can vary, consulting with a qualified mortgage adviser who specializes in such investments is advisable. At NZ Mortgages, we have the expertise to guide you through the funding process, helping you make informed decisions for your storage unit investment goals.