What is the Debt Service Coverage Ratio (DSCR) and why is it critical for self-storage loans?

The Debt Service Coverage Ratio (DSCR) is the primary metric lenders use to assess cash flow sufficiency. A DSCR of 1.25x means the Net Operating Income (NOI) covers the annual debt service by 125%.

How does Subordinate Financing (Mezzanine/Preferred Equity) work in self-storage?

Subordinate financing fills the gap between senior debt and equity, often allowing leverage up to 85-90% LTV. It is more expensive than senior debt but reduces the equity requirement, boosting Cash-on-Cash returns.

Self Storage Investment Calculator & Underwriting Tool

Deal Inputs

PRO MODE

Acquisition & Revenue

Purchase Price ($)

Value-Add / Renovation

Reno Budget ($)

% Financed by Debt

Budget prior to stabilization.

Closing Costs (Fees) ($)

Gross Rev ($/yr)

Vacancy (%)

Annual Rev Growth (%)

Expenses

Opex Ratio (% of EGI)

Industry Standard: 35-40%

Prop Taxes ($)

Insurance ($)

Payroll ($)

Marketing/Ads ($)

Utilities ($)

R&M ($)

Software/Security ($)

Landscaping ($)

Mgmt Fee (%)

Admin/Other ($)

Custom Expense (Optional)

Annual Exp Growth (%)

Senior Debt

LTV (%)

Int Rate (%)

Amort (Yrs)

Loan Term (Yrs)

Interest Only Period (Months)

If > 0, Year 1 payments will be lower.

Mezz / Pref Equity

Enable

Addt'l LTV (%)

Current Pay (%)

Accrual/PIK (%)

Interest Only?

Exit Strategy

Hold Period (Yrs)

Exit Cap Rate (%)

Selling Costs (%)

IRR (Levered)

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Project Level

Equity Multiple

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Total Return

Cash on Cash

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Year 1 Yield

DSCR (Yr 1)

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Min Target: 1.25x

Year 1 Pro Forma

Effective Gross Income $0

Operating Expenses ($0)

Net Operating Income $0

Senior Debt Pmt ($0)

Mezz/Pref Pmt ($0)

Net Cash Flow $0

Sources & Uses

Total Project Cost: $0

Equity Required: $0

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Advanced Self Storage Underwriting

Deal Inputs

Acquisition & Revenue

Expenses

Senior Debt

Mezz / Pref Equity

Exit Strategy

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Year 1 Pro Forma

Sources & Uses

The Ultimate Guide to Self Storage Investment & Financing

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