How to Pick a Trusted Financing Advisor

Many business owners and financial executives want to ensure they can rely on an independent ‘trusted’ financing advisor when it comes to their business finances. How does one pick such an advisor? Naturally in today’s environment business owners don’t have time to waste, and if they have financial or growth challenges they are looking for someone that can bring expertise and solutions to their business.

We are constantly told that business owners are looking for a firm they can trust, respect, and has, of course, credentials.

We believe this whole area of developing a trust between the advisor and the company is a two way street. It is incumbent on the business owner to make sure the goals and needs of the company are made very clear. Business owners or financial managers should not blur the issues to the point that each party does not understand the goals and the respective roles.

When a trusted financing advisor is chosen he or she needs to be given access to the reins and information on the business and its challenges.

Business owners need to ensure that the specialist firm they are dealing with has experience either with the challenges they are facing, or the particular industry the customer is in. Many business financing challenges are industry specific, so this is not the time to be training and advisor on your business! Most people realize though that many financing challenges are somewhat generic in nature, so although an industry expertise is often helpful, it is clearly not always 100% required.

The business owner and financing advisor need to be able to have effective dialogue and communication on what the operational and financing issues are. Many times there are what we call ‘ warning signs ‘, yet in other cases companies are already clearly in trouble.

A financing advisor needs to be given information and clarification on issues related to:

- Sales
- Profits
- Currenet lenders
- Working capital issues
- Asset issues
- Future goals of the company

Naturally the above list is hardly all inclusive, but it is a solid start to the dialogue. The business absolutely has to have a handle on what the intermediate term goals are. Management needs to have a strong sense that the business advisor can assist in the recovery, and the advisor must be given the tools that he or she needs.

Both the business owner and advisor should have frank discussions around the probabilities of success and the timelines associated with that success. What’s realistic, what isn’t.

Business owners and financial executives should clearly check the background and experience of the advisor. References are of course highly recommended. Professional affiliations are of course important, but not critical. References from lawyers, bankers, and accountants are often excellent sources of information. The business advisor should clearly be indicating they have the right attitude and credentials around the business owners financing needs. It is certainly not unrealistic to have solid discussions around timelines and action items responsibility.

Ultimately business is of course people, so chemistry is important, and the business owner should have a sense they could work with the financing advisor. However, at the end of the day you don’t have to like people to get the job done ( it certainly helps though!). Credibility and experience are ultimately always at the top of the list.

All engagements should of course be documented properly re success, work fees, etc. A credible business financing advisor will of course be willing to sign any required non-disclosure document.

In summary, a trusted business financing advisor is a valuable ‘ out of the company ‘ asset to any firm. Business owners and financial mangers should choose such an advisor carefully, and pay important attention to the qualities and capabilities that advisor can bring to the table, and ultimately, the firms success.

Financing Your Self Storage Facility

Most types of investments won’t allow the use of high leverage using the securities themselves as collateral. This makes real estate investing somewhat unique in its use of financing. The use of leverage in real estate investments is a proven method to accelerate returns and create wealth. But one must be careful not to over-leverage. As we examine a few of the various types and sources of financing available for self storage facilities, I will also point out the dangers that can result from over-leverage and pitfalls of various financing structures.

There is a wide array of financing vehicles available from an assortment of institutions and intermediaries. What was once a short order menu in the financing arena is now a smorgasbord of products that can be mixed and matched to accommodate almost any project. There are trillions of dollars in real estate mortgages issued each year in the United States alone. It has 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 backed by real estate. That dwarfs the investment in all other industry sectors combined.

In the past twenty five years, the financial industry has rolled out a myriad of mortgage products designed to make real estate ownership available to all segments of the population, and in recent years, it has repealed a few.


Seller Financing

A common and often times preferred source for financing self storage facilities is some form of seller-held financing. There are many advantages to using seller financing to fund a portion or perhaps 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. In addition, I can negotiate directly with the seller (financier) to structure a loan that is attractive enough to convince them to hold some or all of the financing. The most common use of this technique, and one I try to utilize on each and every one of my deals, is to get the seller to hold back a second mortgage to fill the gap between the sales price and the first lien being provided by the lender. Seller financing can be either short or long term, interest only or amortizing, with or without a balloon. In many cases, seller carry backs can be sold on the private market to create cash at closing to the seller if the structure and terms of the note are marketable with standard commercial terms.

Private Lenders

Wealthy individuals, or what many in the industry 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 caused 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 secured by a tangible asset, the facility. The total loan amount will vary based upon the individual and his or her wherewithal. Typically, interest rates can range from 6% to 20% depending on the deal, current market rates, time frame, risk, amount, etc. There is no governmental or regulatory oversight of private lending so rates and terms are negotiable between the parties involved in the transaction. As with seller financing, the terms are generally more flexible than other lending sources and may not require extensive third party documentation and fees, and are relatively quick to close. Most private lenders prefer a short time frame to be paid back, typically one to three years, with the loan being amortized or interest-only with provisions for rate adjustments if interest rates begin to rise.

Mortgage Bankers

Mortgage Bankers are mentioned frequently throughout my home study system, “The Complete Guide to Finding, Evaluating, and Purchasing Self Storage Facilities”, as this is my preferred funding source. It is important though to remember that a mortgage banker is not synonymous with a mortgage broker. The simplest way to describe the difference is that a mortgage broker works with multiple banks, and the mortgage banker works solely for the bank in which they are employed. The benefit to a mortgage banker is that they typically possess years of experience and education required to represent a firm as a mortgage banker. In comparison, a mortgage broker can get started with no experience whatsoever. The mortgage banker may have outside relationships with additional sources of funds such as life insurance companies, pension funds, and private investors, and may bring them in to participate on a loan to complete the deal, but this is the exception not the norm.

In practice, both the mortgage banker and the broker fill the same role to the borrower. They specialize in mortgages and only mortgages. The mortgage banker has a small advantage in being able to warehouse a loan, meaning they can close the loan by advancing the banks own funds, and wait for the security of the facility until a later date. This can make all the difference in funding a particular loan for your time sensitive deals. Once you have proven yourself to these banks, you will have access to some of the most flexible financing available anywhere.

There are literally Dozens of ways to structure the financing on your Self Storage Facility that we could discuss, but I’ll just cut to the quick and present the way I have structured nearly all my deals, which is a combination of the 3 ways I just presented. Lenders Love Self Storage, and given the system I have created to find the real sweet deals, my banks have no problem approving an 80% LTV Loan. I will then combine that with the aid of either a seller Carrying Back the remaining 20%, thereby making 2 payments to him, or by partnering with some of the “Country Club Money” we discussed earlier in this article.

Why Early-Stage Startup Companies Should Hire a Lawyer

Many startup companies believe that they do not need a lawyer to help them with their business dealings. In the early stages, this may be true. However, as time goes on and your company grows, you will find yourself in situations where it is necessary to hire a business lawyer and begin to understand all the many benefits that come with hiring a lawyer for your legal needs.

The most straightforward approach to avoid any future legal issues is to employ a startup lawyer who is well-versed in your state’s company regulations and best practices. In addition, working with an attorney can help you better understand small company law. So, how can a startup lawyer help you in ensuring that your company’s launch runs smoothly?

They Know What’s Best for You

Lawyers that have experience with startups usually have worked in prestigious law firms, and as general counsel for significant corporations.

Their strategy creates more efficient, responsive, and, ultimately, more successful solutions – relies heavily on this high degree of broad legal and commercial knowledge.

They prioritize learning about a clients’ businesses and interests and obtaining the necessary outcomes as quickly as feasible.

Also, they provide an insider’s viewpoint and an intelligent methodology to produce agile, creative solutions for their clients, based on their many years of expertise as attorneys and experience dealing with corporations.

They Contribute to the Increase in the Value of Your Business

Startup attorneys help represent a wide range of entrepreneurs, operating companies, venture capital firms, and financiers in the education, fashion, finance, health care, internet, social media, technology, real estate, and television sectors.

They specialize in mergers and acquisitions as well as working with companies that have newly entered a market. They also can manage real estate, securities offerings, and SEC compliance, technology transactions, financing, employment, entertainment and media, and commercial contracts, among other things.

Focusing on success must include delivering the highest levels of representation in resolving the legal and business difficulties confronting clients now, tomorrow, and in the future, based on an unwavering dedication to the firm’s fundamental principles of quality, responsiveness, and business-centric service.

Wrapping Up

All in all, introducing a startup business can be overwhelming. You’re already charged with a host of responsibilities in which you’re untrained as a business owner. Legal problems are notoriously difficult to solve, and interpreting “legalese” is sometimes required. Experienced business lawyers know these complexities and can help you navigate them to avoid stumbling blocks.

Although many company owners wait until the last minute to deal with legal issues, they would benefit or profit greatly from hiring an experienced startup lawyer even before they begin. Reputable startup lawyers can give essential legal guidance, assist entrepreneurs in avoiding legal hazards, and improve their prospects of becoming a successful company.