Lower Payments, Higher Costs

A lower monthly payment doesn't mean you're paying less overall. So we need to analyze the trade-offs starting with the benefits of the 25-year option. 25-year amortization schedule is the standard for a reason, and primarily it's driven by cash flow. The significantly lower monthly payment is the biggest pro, freeing up capital for other uses. This improved cash flow is crucial for the early years of your self-storage facility. It also makes it easier to qualify for the loan as your debt service coverage ratio, or DSCR, will be higher than the same loan with a shorter term. A higher DSCR signals to the lender that you have a greater margin of safety to cover the debt. And this structure aligns well with the long-term hold strategy typically of commercial real estate.