226. High Cost of Commercial Lending: What it means for Self Storage
Self Storage Income
AJ Osborne
4.9 • 591 Ratings
🗓️ 2 January 2024
⏱️ 47 minutes
🧾️ Download transcript
Summary
Commercial lending is a mess. Interest rates are up, deals aren’t getting done, and banks are becoming very selective with who they lend money to. And whether you’re a beginner or a veteran investor, you’re feeling the sting of struggling to find the money to make your next deal happen.
But what if we told you it wasn’t impossible to find funding even in 2024’s tough real estate market? What if you knew exactly what a bank wanted BEFORE you brought them your deal? How easy would funding be then?
In today’s show, we brought on Vice President of Capital Markets at Cedar Creek Capital, Ben Benditson, to share what investors NEED to know about today’s interest rates, predictions for 2024, and how to get a loan on your next self storage deal, even when everyone else is telling you it’s impossible.
What you’ll learn in today’s show:
- How rising interest rates destroyed demand and occupancy for many self storage operators
- “Semi-black swan” events that changed the real estate market forever
- What lenders want to see from you NOW to lend on your next deal
- DSCR explained, and the one metric banks NEED to see
- Alternative commercial lending products that’ll help you get a deal done WITHOUT the banks
Make self storage management easier than EVER with our podcast sponsor Tenant Inc. - https://www.tenantinc.com/
Ready to buy storage? Have your deals personally evaluated by AJ and our team!
https://www.selfstorageincome.com/feasibility
Take advantage of today’s market conditions and invest with us:
Transcript
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| 0:00.0 | What are the markets telling you? What are you seeing? The housing market, but also then the storage market, the debt that we're seeing and the pricing of that debt. |
| 0:09.3 | We had this huge, crazy, I don't know if we'd want to call it a black swan event, but we had this semi-black swan event take place. |
| 0:15.8 | And then the interest rates. So we had just like this perfect storm of multiple factors hitting all at the same time. The swing from going from 3% or sub and 8 destroyed the buying power completely. |
| 0:36.3 | Welcome to self-storage income, everybody. |
| 0:38.2 | And today we are so excited to have been back with us to do like an end of the year wrap up of the financial markets. |
| 0:47.9 | As we know, it has been a crazy 20, 23. |
| 0:54.0 | And the debt markets have been unpredictable, and that's made it |
| 1:00.5 | hard for everybody and planning. |
| 1:02.4 | So we want to take a look at where we've been, right, kind of how we got here now and how is |
| 1:08.5 | this year settling out and what that may mean towards the |
| 1:11.7 | future that has a lot to do with planning obviously uh both cap rates as well as uh cash flow |
| 1:19.8 | operations are affected by debt our debt stack how we're placing it how we're constructing it's |
| 1:26.0 | the difference between buying deals and not. |
| 1:28.2 | It's the difference between exiting what you were planning on and not. |
| 1:32.2 | So it's a really, really big deal that's changed the markets more than anything in the last year. |
| 1:38.5 | So thanks for coming on, Ben. |
| 1:39.7 | Appreciate having you. |
| 1:40.6 | Glad to be here. |
| 1:41.4 | Thanks, guys. |
| 1:42.2 | Yeah. |
| 1:42.4 | We got, you know, um, it's been really |
| 1:45.7 | boring for the last decade. It's like, oh, interest rates just go down. They stay down and free |
... |
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