Storage is an essential element of an organized life. Even though a storage unit business is often downplayed as being something that is optional, an increase in technological awareness, rising income levels, and population movements create the need to keep items accessible. Storage units help to make this happen.
Storage units help households find ways to free up more space at home or their place of business. It can be a place of temporary shelter after moving into an apartment or new home. Some people use this business to keep their valuables stored off-site as an extra layer of protection.
It is a place where your possessions are stored until you find a more suitable location for them. Owning a storage unit business gives you the opportunity to provide this needed service to your entire community.
If you’re thinking about jumping into this industry, then here are the pros and cons of owning storage units to review first.
List of the Pros of Owning Storage Units
1. Storage units offer convenience.
Many households have time-restricted commitments which they must meet. Having access to a storage unit makes this possible for all their belongings. Whether you’re helping a college student move away from home for the first time, or you’re helping a family move into their first house, the extra storage you offer makes this process more convenient for them. They can access local storage units to maintain their items until they’re ready to use them.
2. The pricing is affordable within this industry.
The monthly cost of rent for a storage unit is extremely affordable for most households. There are various factors which influence the price, including its location, the amount of time you reserve, and any add-ons you choose to purchase. Full-service facilities are usually more expensive than self-service businesses. You’ll discover pricing in most communities is between $12 to $50 per unit, per month.
That cost includes insurance that the customer must purchase to protect their belongings. Most renters and homeowners plans only offer $1,000 or 10% of the total limit for personal property stored off-site, whichever amount is greater. If someone stores something expensive, or doesn’t hold an insurance policy, then this mandate protects everyone involved.
3. You can run multiple businesses at once from a storage unit facility.
There are several storage unit businesses across the United States who are also U-Haul or Public Storage affiliates. They will rent moving trucks or vans to you, either one-way or in-town, allowing you to move your items when it is convenient for you. The goal is to have you rent a storage unit too to store important items. Depending on the zoning for your facility, you might operate a fuel station, a janitorial business, or other forms of contract work too to expand your revenue options.
4. It offers your community an opportunity to be organized.
The best storage unit facilities offer places for businesses to store essential items which may not be safe on-site. Numerous businesses use these units to keep documents, files, and even intellectual property away from prying eyes. This structure gives everyone the opportunity to be efficient with their planning to create optimal solutions.
Businesses also use storage units to maintain equipment or furniture assets which may not be needed all year long. A landscaping business might store their mowers in your facility, for example, or a small business might keep extra desks there after downsizing.
5. You help people save time.
The average person in the 30+ developed countries in the world today spends at least 1.5 hours each day looking for something. That means six days each year are wasted because items were misplaced. The things which we feel are the least important tend to create the most clutter, making it a challenge to locate the other items wanted. Offering storage units in your community will help homes and businesses de-clutter, reducing their need to search for items over and over again.
You’ll also help people be more productive with their time since they aren’t always searching for things. Being more time-efficient allows everyone to pursue their passions with greater ferocity.
6. It reduces personal risk.
There are several elements of risk to consider when storing items at home or at a place of business. Too many items may create tripping hazards. Valuable items increase the risk of theft. Delicate items may break because there is so much clutter around. When a community has access to a self-storage unit, then the risks associated with moving items frequently declines dramatically. You’ll help reduce the risk of break-ins because the items are stored off-site. Storage units even reduce elements of damage to property because the items are not moved as often.
7. You have access to multiple income resources.
About 5% of your total income for the year in the storage unit business comes from various elements of the industry outside of your gross annual rent. Administrative fees, retail sales, late fees, and commissions can bring in over $25,000 per year if your facility operates at the median gross revenue levels in the United States. That’s enough to cover some of your tax burden, operating costs, and other various expenses that you’ll encounter in this line of work.
8. It can be a hands-off business.
Storage units are often self-service because it reduces the administrative work involved. Customers come into the office to sign their rental contract and make payments. That’s the last you’ll often see of them if they have a successful experience at your facility. You have more time to manage your grounds, take care of bills, and ensure the safety of the property stored at your location. This structure cuts down on the need for employees too, with some facilities operating with a manager for each shift only. Some facilities even shut down overnight, relying on their automated security precautions, which reduces the labor charge even further.
List of the Cons of Owning Storage Units
1. You must hire the right people for the business.
Many owners tend to manage their storage units personally because bad management can tank your company very quickly. If you don’t plan to run it yourself, then you must pay someone what they’re worth and treat them right to be successful. People are not motivated by money alone either. Some of the best people are passionate about your business because they’re helping others. If you don’t listen to their ideas, then they will leave.
Good help is hard to find in this industry. Be patient with your hiring practices, then pay the perfect individual something that they can’t turn down.
2. It’s all about the location you choose.
If you already own property zoned for storage unit use, then you’ve got the capital expense issue with which to content. When you’re looking to purchase an existing business, then make sure that you do your homework. Don’t just purchase the first facility you find that is up for sale. The best storage units operate at a 90% capacity most months, have high-visibility at their location, and offer something of value to the community.
You may find that some facilities under-perform because of poor management. Those can be turned around. Storage unit companies which offer low capacity consistently could also be hampered by their difficult location.
3. You must meet the preferences of your community for storage.
Some communities prefer the cheaper indoor storage options where you’re offering something akin to a closet. Others like the concept of an outdoor facility where someone can drive up to their unit whenever they wish to access their items. If you offer both, then you can meet both needs since you’ve got each style. Without market research, however, you may not know which option is preferred over the other.
4. Your customers are sometimes experiencing a difficult day.
You must be careful about the customers in the storage unit industry because there are some folks in desperate circumstances. They want the cheapest unit, whatever is available at that moment, and that is where you should be wary. There are always exceptions to the rule, but it is these folks who are usually coming out of an eviction, needing some place to hold their stuff. If they didn’t pay their previous landlord, then there’s a good chance you’ll struggle to get what they owe you too.
5. The occupancy rate of your facility can be variable throughout the year.
Most storage unit companies are encouraged to shoot for a 90% occupancy rate as a way to measure their annual income. If you could achieve $500,000 in gross annual rent revenues at 100% capacity, then your budget would be $450,000 at the recommended level. The only problem with this estimate is that you never have a guarantee on achieving or maintaining that occupancy level. If you over-commit your budget based on an estimate which never happens, then you could find yourself running short on cash very quickly.
6. You cannot protect the items in each storage unit 100% of the time.
Self-storage units employ several different security features to keep personal or commercial property safe. From the locks on the doors to the security cameras overlooking the grounds, you must have adequate safeguards in place for customers to want to use your facility. Fencing, check-in protocols, and other costly upgrades might be necessary to help your business grow. If you can’t afford that cost, then you may find that the storage unit business might not be the best first option to consider.
7. Then you have the capital cost to consider for this business.
If you build a single-story self-storage facility on property that you own, then the cost ranges from $25 to $40 per square foot. That cost doesn’t include any site or land improvement costs which might be necessary to complete the work. If you want to build a multi-story facility, then the costs can reach as high as $70 per square foot. When you want to purchase an existing business with its assets, you’ll find prices upwards of $1 million throughout most of the country. Even small facilities require capital of at least $500,000.
These pros and cons of storage units show how this business opportunity can help a community and your bottom line. There are risks associated with any business, and you will find that customer service must be a top priority in every industry. If you can handle the capital expense of building or purchasing this business opportunity, then cover the operating expenses, you’ll have an opportunity to build a revenue-generating machine that will help to build your wealth for years to come.
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