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Self Storage Talk: Live Oak Bank

April 3, 2018

“I still don’t consider myself a banker,” laughs Terry Campbell, General Manager Self-Storage Lending at Live Oak Bank.
8 min

On this edition of Self Storage Talk: Terry Campbell, General Manager Live Oak Bank Self-Storage spoke with me about the passion he has for his work.

For someone who doesn’t think he’s a banker Terry knows plenty about it. Last year, he and his team helped Live Oak Bank grant more than $200,000,000 in self-storage loan.

“I still don’t consider myself a banker,” laughs Terry Campbell, General Manager Self-Storage Lending at Live Oak Bank.

Terry Campbell, General Manager Live Oak Bank Self-Storage dSelf Storage Talk: Terry Campbell, General Manager Live Oak Bank Self-Storage spoke with me recently about the passion he has for his work.


“The majority of those [loans for self storage facilities] were for people who couldn’t have received a loan otherwise,” says Terry.

So if he’s not a banker then what his he?

“I’m just a self-storage guy who works at a bank,” answers Terry.

If you strip away Terry’s modesty it turns out he’s more like something of a self-storage renaissance man.

Terry began his career working for a self-storage building manufacturer. He worked his way up from a drafter to Vice President of Operations and Vice President of Sales and Marketing.

In addition to being the General Manager of the Self-Storage lending team, he speaks and presents at trade shows and round tables frequently, and is a regular speaker at Scott Meyers Self-Storage Investing Academy.

Terry also participates in webinars with other vendors across the industry. He will be co-hosting a webinar this Spring with StoragePug COO, Tommy Nguyen.

If you get the chance to listen to him present, you’re going to get some powerful self-storage insight. Just be sure to bring plenty of paper and ink and backup batteries for your recorder.

Terry was the first hire for Live Oak Bank’s Self-Storage Team.

“At first, the team was - uh - me,” laughs Terry.

Now there are 14 team members who help to make dreams of owning self-storage come true for a lot of folks who might not have been able to otherwise.

Live Oak’s strategy has been to find industry experts to lead its small business lending teams. Since 2008, they have added 16 industries to their lending portfolio.

In Q4 of 2017, Live Oak became the number one SBA (Small Business Administration) lender in the country.


SBA Lending for the Self-Storage Industry

Traditionally, people seeking financing for self-storage loans have used conventional lenders.

However, there are many benefits of the SBA 7(a) loan program. Terry says with a conventional loan it can be difficult for someone to get started without hundreds of thousands of dollars to put down. SBA loans are based on the cash flow of the project.

On a typical $2 million acquisition or new construction, this is the difference between needing as much as $700,000 initial down payment to receive a loan versus $200,000.

SBA lenders look at self-storage from a business standpoint. Terry says the project should carry itself and you should know ahead of time what it takes to get there. These loans are designed so you can pay back the loan with the revenues of the business.

Conventional loans quite often expect you to make payments while your business is leasing up. Live Oak can often use the SBA program to include these payments in the loan so you aren’t trying to grow the business and feed it at the same time.

Terry and his team are able to mitigate some of the risks associated with conventional lending because their feet are on the ground - quite literally.

“We visit every single project before we make a recommendation for a loan. We are getting up on rooftops, and I’m dragging my clients up there with me sometimes. I look at the type of screws. When I’m there I’m not just looking at things like a banker. If i did, I’d miss out on some vital information.”


A Testimonial of Terry's Self Storage Expertise

One of Terry’s favorite parts of his job is visiting acquisition sites with his clients. This is when he’s really in his element and he’s back to his roots.

Terry recently visited a site in South Carolina for a potential client. When they got to the site the client had a quote to replace all exterior doors on the building.

“As soon as I opened it and got inside, I knew the (exterior unit) was a climate-controlled unit. They typically have an insulated back wall from floor to ceiling if they’re not insulated exterior units, but for this one the whole building was technically climate-controlled,” Terry remarked.

“If he had replaced those units with exterior doors and left this building as climate-controlled, he would have been heating and cooling all of North Charleston,” said Terry.

He would have also had to consider the income loss of having to designate all the interior rooms as “non-climate-controlled” if they installed new incompatible doors.

Terry caught this mistake before his client installed the wrong doors, saving him $75,000 and untold headaches and hassle.

“I wouldn’t say that I’m the only person who would have spotted this, but my team and I are probably the only people who work at a bank that would.”


Planning Your Self Storage Business 

What’s the biggest thing people don’t understand when they start a new storage business?

“How much money it’s going to take to break even,” answers Terry.

“It’s not going to happen overnight. You’ve got to know what to expect from construction and always aim for a spring opening. You have to expect it is going to take longer than you expect - so plan on it.”

He also says to remember it is a business. Terry is adamant that everyone needs to do their research and have a solid plan before getting started.

“We require you to get a feasibility plan from one of the third-party experts out there that we are familiar with and trust before we look at your loan request.”

Terry says some of his competitors don’t require this, but it’s incredibly risky for them and their clients.

Another key is having a solid business plan.

“This doesn’t mean you copy and past your feasibility report,” warns Terry.

He says it helps to put yourself in the lender’s role - If someone were to come up to you and ask to borrow $2 million, what would you want to know about their plans for that money?

Live Oak also wants to know which professional vendors you’re going to use for your business.

“Who’s building your website? If you know things like the borrower’s marketing plan ahead of time, it goes a long way in not only helping you get a loan, but running a successful business,” he says.


Get the most out of your self storage investment or learn how to get started  today with our Free Self Storage Investing Playbook


Things to Research and Include in Your Initial Business Plan

Terry mentioned the importance of doing your research before you break ground on the construction of your facility, let alone before you apply for a loan.

He mentioned researching the proper self storage aspects to bring to a lender like Live Oak Bank, and also give yourself more than enough time to conduct research, make your business plans, apply, and then schedule plenty of time for construction so to have a facility launch in Spring. 

However, we can enumerate clearly the types of things you should be researching so that you can spend your time effectively and come to a lender more than prepared.

  • Have a "Feasibility Report" conduct by an unbiased industry expert. 
  • Use that report to create a business plan, specific to your area. 
  • Use your business plan to create some "Break Even" calculations.
  • Do some Competitor, Pricing, and Vendor research. 
  • Use your vendor research to reach out to who may supply your lighting, gates, technology, software, and who will make your website and how many people it will take to run your business successfully

These considerations will make a lender feel confident to proceed and can also allow for someone like Terry to look at the details and give pertinent advice to make even better decisions or perceive problems before they happen. These are all valuable resources. 


Self Storage Tips for Success

“I’m almost scared to say it because last year I was expecting it to slow down, and we did $63 million more in loans than the year before. New construction is going to slow down some time this year. Of course, interest rates slow things down. One thing we may see more of is acquisitions,” says Terry.

He predicts units with the tenants who moved in during the demand peak o the last two years may not be filled as easily when they vacate. You can’t assume that the occupant who moved in during 2016 and early 2017 will be replaced at the same cost it took to acquire them, but it is all market driven.

Your micro-market is what you need to focus on.

Self Storage is a national trend, but the pricing and available business is hyper localized and based on your area and local competition. 

Terry says there are some innovative projects and build designs that are saving money and time for self storage owners.

Some innovative projects include best practices for online websites and fully integrated facility website so to meet tenants where they actually are. More tenants are doing their own research about you online. 

Also, new build designs include utilizing portable containers or versatile group units so to make a facility more space efficient. Increasing the rentable space without having to acquire new land will make the most out of the money you are awarded with any loan.

“Some owners are focusing on remodeling, refurbishing, and facelifts, with all this competition that’s come into new markets. They have to make their place look good to compete,” says Terry.

You have to level the playing field.

Still, he feels there’s plenty of reason to be optimistic if you’ve got a solid business model and are making moves to be competitive.



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