Self-Storage Facility Loans from 6.50% - 9.20%

In our experience working with self-storage facilities across Australia, lenders typically require a minimum occupancy rate of 75% for standard approval, though we’ve seen requirements vary significantly depending on the lender and property quality.

For optimal commercial property finance terms with rates from % to %, you’ll want to demonstrate occupancy of 85% or higher. Here’s what we typically see:

High-occupancy facilities (85%+):

• Access to up to 70% LVR
• Premium interest rates from 6.8-7.5%
• Faster approval timeframes (7-14 days typical)
• More favourable terms across our 60+ lender panel

Developing occupancy (75-84%):

• Standard LVR around 65%
• Interest rates from 7.5-8.2%
• Additional scrutiny on business plan and growth trajectory

Lower occupancy (below 75%):

• May require specialist lenders or private capital
• Reduced LVR (typically 50-60%)
• Higher rates reflecting increased risk

What lenders actually assess: Beyond just the current occupancy percentage, lenders examine your 12-month occupancy trend (is it improving or declining?), average tenant retention rates, unit mix diversity (small, medium, large, specialty units), and your revenue per available square metre.

We’ve successfully arranged self-storage facility loans for properties with occupancy as low as 65%, but these require careful lender selection and strong supporting documentation. The key is demonstrating a clear path to improved occupancy.

Absolutely. Self-storage facilities are one of the more popular commercial property investments for SMSFs, and in our experience, they often outperform traditional office or retail investments for super funds focused on steady income.

Your SMSF can borrow up to 70% for a quality self-storage facility through a Limited Recourse Borrowing Arrangement (LRBA). For premium facilities with strong occupancy (85%+), climate-controlled units, and experienced management, we’ve secured 70% from specialist SMSF lenders.

Current SMSF self-storage facility loan terms:

• LVR: 50% – 70%
• Interest rates: 6.50% – 9.20% depending on facility quality and location
• Loan terms: Up to 1 – 25 years with interest-only periods available
• Minimum SMSF balance: Typically $400,000+ for most lenders

What makes self-storage ideal for SMSFs:

• Predictable monthly income from multiple tenants (diversified risk)
• Lower maintenance than traditional commercial property
• Growing demand driven by downsizing and business storage needs
• Strong yields (typically 6-9% gross rental yield)
• Easier property management through national operators

Key SMSF self-storage requirements: Your SMSF needs approximately 30% to 30% – 50% of the property value in available funds (deposit plus costs). The facility should be leased to an independent operator at market rent, or managed through a professional management agreement. The property must meet the sole purpose test and be maintained at arm’s length.

We arrange SMSF self-storage finance for trustees looking to diversify their retirement portfolios. The combination of solid yields, lower vacancy risk through multiple tenants, and growing market demand makes this an increasingly attractive SMSF investment strategy.

Pro tip from our 15+ years: Many trustees don’t realise their SMSF can purchase larger facilities (over $2 million) by partnering with other SMSFs or using rental income in serviceability calculations. We’ve helped structure deals up to $6 million using multiple SMSFs.

Related: Explore our complete guide to SMSF commercial property loans or learn more about SMSF commercial property rules.

This is a great question that comes up regularly in our consultations. Climate-controlled facilities typically receive more favourable lending terms than basic drive-up storage, and here’s why.

Climate-controlled facility advantages:

• Higher revenue per square metre (typically 20-35% premium pricing)
• Lower customer churn (average tenancy 18-24 months vs 12-16 months for drive-up)
• Premium positioning attracting more reliable tenants
• Better protection for stored goods means fewer disputes
• Access to up to 70% with competitive rates from 6.50%

Drive-up facility considerations:

• Standard LVR around 65% (still solid, but slightly more conservative)
• Interest rates typically 0.3-0.5% higher than climate-controlled
• More focus on location and competition analysis
• Still very financeable, just with slightly different parameters

What we’ve seen in practice: Last month, we arranged finance for two nearly identical facilities in similar Brisbane suburbs, one climate controlled, one not. Both approvals were straightforward, but the climate control premium was clear in terms of securing better rates and terms.

The revenue impact matters more than facility type: What lenders really care about is your revenue per square metre and occupancy stability. A well-located drive-up facility with strong occupancy and proven revenue can outperform a climate-controlled facility in a weaker location. 

Mixed facilities: Increasingly, we’re seeing hybrid facilities with both climate-controlled and drive-up units. These actually appeal well to lenders because they capture different market segments and provide revenue diversity. Lenders assess these based on the weighted average of premium and standard units.

Related: Review our commercial property investment loans to learn more about current commercial property interest rates and terms

The management structure significantly impacts your loan terms, and in our experience, this is one of the most underappreciated factors in self-storage finance.

National operator management (e.g., Storage King, National Storage, Kennards):

• LVR: Up to 70% (lenders love the brand recognition)
• Interest rates: From 6.50% 
• Approval speed: Faster due to lender familiarity with operators
• Documentation: Simpler – operator provides consistent reporting
• Management fees: Can be 7-12% of gross revenue but professional systems

Experienced independent manager:

• LVR: 65-70% (depends on track record)
• Approval focus: Heavy emphasis on manager’s history and systems
• Documentation: Need detailed management agreement and experience CV

Owner-managed facilities:

• LVR: 60-65% (more conservative due to key person risk)
• Approval requirements: Must demonstrate storage industry experience
• Documentation: Comprehensive business plan and backup management plan essential

What we advise our clients: If you’re purchasing as an investment and want maximum LVR with minimal hassle, facilities managed by national operators consistently get the best terms. We’ve seen quick approvals for national-operator facilities because lenders have standardised policies for them.

However, owner-managed facilities can be extremely profitable if you have the expertise. The key is matching your experience level with the right lender. We work with several lenders who specialise in owner-operator self-storage and understand the business model.

A recent example: Two clients purchased similar-sized facilities (600 units each) in regional Queensland. Client A with management secured 70% LVR. Client B as owner-operator (but with 8 years’ storage management experience) secured 65% LVR. Both were excellent outcomes, just structured differently.

The management premium calculation: National operators may charge 7-12% of revenue, but they often increase occupancy by 5-10% through professional marketing and systems. When we run the numbers, professionally managed facilities frequently generate higher net income despite the management fee, plus they’re more attractive to lenders and future buyers.

Related: Learn more about owner-occupier commercial property loans if you plan to operate yourself, or review our SMSF commercial property rules for super fund investments.

Unit mix is absolutely critical for self-storage financing, and it’s something we assess carefully with every client. Lenders prefer diversified unit sizes rather than facilities dominated by one type, and here’s the ideal breakdown we see get the best commercial loan terms.

Optimal unit mix for lending approval:

• Small units (0.5m² to 3m²): 30-40% of total units
• Medium units (3m² to 9m²): 35-45% of total units
• Large units (9m² to 20m²): 15-25% of total units
• Specialty units (vehicle, wine, document storage): 5-10% of total units

Why lenders care about unit mix:

Lenders see diversification as risk mitigation. A facility heavily weighted to large units (say 60% large format) makes them nervous because if the local business market softens, you could face multiple simultaneous vacancies. Conversely, too many small units means you’re competing primarily on price with minimal differentiation.

What we’ve learned over [sbp_years_experience]+ years: The sweet spot is approximately 35-40% medium units (the bread and butter), 35% small units (high turnover, consistent demand), 20% large units (premium pricing, sticky tenants), and 5-10% specialty units (highest margins, market differentiation).

Revenue optimisation matters more than unit count: A facility with 400 well-mixed units generating $55 per square metre will get better terms than one with 600 poorly mixed units generating $40 per square metre. Lenders increasingly focus on revenue per square metre as the key metric, and diverse unit sizing drives this up.

Container storage considerations: If you’re looking at container storage facilities (increasingly popular), lenders treat these differently. The unit “mix” becomes about container sizes (10ft, 20ft, 40ft) rather than traditional units. These typically require specialist lenders from our panel who understand this asset class.

Learn more about commercial property investment finance. 

This is a nuanced question we address regularly, and the answer is: yes, but with significant caveats depending on your situation.

Investment property scenario (straightforward): If you’re buying the self-storage facility purely as an investment, lenders use 70-80% of gross rental income in serviceability calculations. This is standard practice across our panel.

Owner-operator scenario (more complex): Here’s where it gets interesting. If you’re buying a self-storage facility to operate yourself as your primary business, different lenders take vastly different approaches:

Conservative lenders:

• Only assess your personal income (wages, distributions)
• Treat storage revenue as business income (not rental income)
• Require demonstrated ability to service without facility income
• Result: Lower borrowing capacity

Progressive lenders (where we excel):

• Assess your storage revenue as business income
• Use 50-70% of net profit (after operating expenses)
• May require 12-24 months of operational history
• Result: Significantly higher borrowing capacity

Best approach for new operators: If you’re buying an existing facility with 12+ months of stable revenue, we target lenders who will use a percentage of that historical net income in serviceability – even though you haven’t operated it yet. The key is presenting the acquisition with a robust business plan showing you can maintain or improve performance.

SMSF considerations: If your SMSF owns the facility and leases it to your operating business, this creates separation. Your business pays market rent (tax-deductible), and your SMSF receives rental income. This structure often provides optimal serviceability because both the business income AND the SMSF rental income can be used (subject to lender policies on related party arrangements).

Learn more about commercial property refinancing options if you need to restructure existing facilities to improve serviceability.

Tenant retention is increasingly important in self-storage lending assessment, and in our experience, it’s become one of the top three metrics lenders analyse alongside occupancy and revenue per square metre.

What lenders actually want to see:

Strong retention profile:

• Average tenancy duration: 16+ months
• Annual churn rate: Under 50%
• Tenant mix: 60%+ residential, 40% business (diversification)
• Month-to-month renewals: 70%+ of tenants beyond initial term

Weak retention profile (triggers lender concern):

• Average tenancy duration: Under 12 months
• Annual churn rate: Over 60%
• Heavy concentration: 80%+ in one tenant type
• High turnover in specific unit sizes (indicates pricing or competition issues)

Why retention matters to lenders:

High tenant turnover directly impacts revenue stability. Each departing tenant means lost income during re-let period (average 2-4 weeks), potential rent reductions to fill units, and marketing costs. Lenders model this risk into their serviceability calculations.

The retention-to-LVR relationship: A facility with 82% occupancy but 18-month average tenancy is more attractive than one with 88% occupancy but 11-month average tenancy. The first demonstrates sticky demand and pricing power. The second suggests constant customer acquisition struggle.

What we analyse in applications:

When preparing your self-storage loan application, we specifically pull these retention data points from your management reports:

1. Cohort analysis: What percentage of tenants from 12 months ago are still current?
2. Move-out reasons: Are tenants leaving due to price (bad), relocation (neutral), or downsizing after initial need (neutral)?
3. Unit-specific retention: Do certain unit sizes or types have poor retention (indicates market mismatch)?
4. Seasonal patterns: Is retention worse in specific months (normal) or constantly declining (concerning)?

How to improve retention for better loan terms:

If you’re acquiring a facility with marginal retention metrics (say 55% churn annually), we work backwards from target loan terms to calculate the retention improvement needed. For example:

Current state:

• 78% occupancy, 55% annual churn
• Can access 60% LVR at 8.1%

6-month improvement target:

• 82% occupancy, 45% annual churn
• Can access 65% LVR at 7.4%

The improvement strategy becomes part of your business plan supporting the loan application.

The retention-price trade-off: Interestingly, facilities with slightly lower occupancy but premium pricing and long tenancy often get better commercial loan terms than those with high occupancy achieved through deep discounting and resulting churn. Lenders recognise sustainable business models.

A concrete example from our recent files:

Facility A: 600 units, 86% occupancy, 60% annual churn, average tenancy 11 months, pricing 15% below market to fill units quickly. Lender assessment: 62% LVR at 7.9%.

Facility B: 580 units, 81% occupancy, 38% annual churn, average tenancy 19 months, pricing at market. Lender assessment: 70% LVR at 7.2%.

Facility B’s lower occupancy was actually viewed more favourably due to superior retention indicating genuine demand and pricing power.

Related: Learn about commercial property refinancing strategies to improve terms as you enhance retention metrics.

Lenders absolutely consider ancillary revenue beyond basic storage unit rental, and in our experience, facilities with strong non-rental income streams often access better loan terms by 0.3-0.5% in interest rate compared to pure rental-only operations.

High-value ancillary revenue (lenders love these):

Insurance programs (most valuable):

• Revenue: Typically 8-15% additional income
• Lender view: Very positive (protects their security, recurring income)
• Typical facility: $25K-60K annually from insurance commissions
• Impact on lending: Treated as stable recurring income in serviceability

Packing materials and moving supplies:

• Revenue: 3-8% additional income
• Lender view: Positive (demonstrates customer service, sticky revenue)
• Typical facility: $12K-35K annually from retail sales
• Impact on lending: Included in revenue assessment, proves operational sophistication

Truck and equipment rental:

• Revenue: 4-10% additional income
• Lender view: Positive (convenience drives customer retention)
• Typical facility: $18K-45K annually from vehicle/equipment hire
• Impact on lending: Strong signal of professional operation

Moderate-value ancillary revenue:

Late fees and administration charges:

• Revenue: 2-5% additional income
• Lender view: Neutral to slightly negative (high late fees suggest collection issues)
• Treated with 50% discount in serviceability calculations

Tenant access upgrades (24/7 access premiums):

• Revenue: 3-6% additional income
• Lender view: Positive (premium service commands higher pricing)
• Treated as part of base rental assessment

Lower-value ancillary revenue (limited lending impact):

One-off services (cleaning, disposal, organisation):

• Revenue: Variable, typically under 3%
• Lender view: Generally excluded from income calculations due to inconsistency

Advertising revenue (truck rental, moving companies):

• Revenue: Usually minimal (under 2%)
• Lender view: Excluded from serviceability (too volatile)

What percentage of revenue should be ancillary?

The optimal mix we see get the best loan terms is:

• Storage rental: 75-85% of gross revenue
• Insurance: 8-12% of gross revenue
• Retail/truck rental: 5-8% of gross revenue
• Other: 1-3% of gross revenue

Why lenders care about ancillary revenue:

It’s not just about the extra income (though that certainly helps serviceability). Lenders view strong ancillary revenue as proof of:

1. Professional management: Facilities maximising revenue per customer
2. Customer satisfaction: Only satisfied tenants buy your supplies and services
3. Competitive moat: Additional services make you less substitutable
4. Risk mitigation: Multiple revenue streams protect against rental market fluctuations

Example scenario demonstrating the impact:

Facility A: 450 units, 85% occupancy, $380K rental revenue, zero ancillary revenue. Total revenue: $380K. Lender assessment: 65% LVR at 7.5%.

Facility B: 440 units, 84% occupancy, $365K rental revenue, $48K insurance revenue, $21K retail/truck revenue. Total revenue: $434K. Lender assessment: 68% LVR at 7.1%.

Despite slightly lower unit count and occupancy, Facility B’s ancillary revenue added $54K to gross revenue (14% increase) and demonstrated superior management, resulting in meaningfully better loan terms worth approximately $105K in extra borrowing capacity.

The insurance revenue strategy: If you’re acquiring a facility with limited ancillary revenue, one of the fastest value-adds is implementing a comprehensive insurance program. Most customers willingly purchase coverage ($15-35/month typical), this revenue drops straight to bottom line with minimal operating cost, and lenders specifically ask about insurance program penetration rates in applications. We often recommend clients negotiate 3-6 months to implement insurance programs before formal loan application to improve serviceability calculations.

Container storage facilities: These typically have lower ancillary revenue potential (fewer customer touchpoints), which is one reason why lenders sometimes apply slightly more conservative LVRs to container storage versus traditional self-storage facilities.

Resources: Use our commercial property cash flow calculator to get a more accurate assessment of you financial projections