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It’s 2023, and AI threatens to overhaul many businesses. But do you know one industry that’s pretty safe from the threat?

The storage business!

And as such, many savvy entrepreneurs and would-be business owners are opening their eyes and turning to the storage business.

So we thought, why not make a guide letting everyone know the basics of the storage business so they can decide if it’s an avenue they truly want to pursue?

Before we begin with your guide, let’s start with the baseline knowledge you’ll need to make your decision.

It’s stats time!

According to the IRE (1), owning a storage facility can earn you an average of $350,000 to $800,000 a year! It’s believed that at least 1 in 3 Americans has used a self-storage facility, and of those, 50% end up being repeat customers. (2) But demand is quickly increasing, and storage facilities are fulfilling their occupancy goals quicker than ever! That’s because there are very few (if any) alternatives to storage units - and most of them are much more expensive!

When it comes to owning a storage facility, you have four self-storage business models to choose from.

  • A self-storage warehouse with a wide range of storage units that vary in size
  • A storage container facility (think the big containers from the hit TV show Storage Wars)
  • A storage garage (like you have at home for your vehicle but for storage and no tenants!)
  • A storage facility run by a moving company (for those who want to grow a multi-hyphenate empire!)

Each type of storage facility has its own set of pros and cons, which we will discuss later on in this guide.

So yeah, the storage business is doing pretty well for itself.

But hey, we see those eyes bulging with dollar signs! We’re going to have to politely ask you to push those back in and come back to reality for a moment.

Sure, storage businesses can be lucrative, but to make it work, you need to do your due diligence and make sure you know what you’re in for.

By now, your brain is probably racing with storage business ideas. This means it’s time to dig a bit deeper, and we really need to get to know what it takes to start a storage business.

Ready? Let’s begin.

Your Annual Income Owning Storage Units

Remember that $800,000 annual income from owning storage units we mentioned? Well, it comes with a caveat. See, just because your storage units can make you serious money, it doesn’t mean you get to keep it all.

There are upfront and maintenance costs you’ll need to factor into your budget when asking yourself if owning a storage unit business is profitable, and those will depend on many different factors. Renting, taking out a loan, franchising costs, high maintenance costs, renovations, taxes… they all add up. 

That said, we can still give you an overview answer to the question “How much does it cost to start a self-storage business?” showing you the average costs and earnings associated with building a storage business. Just promise us you’ll do some specific market research for your area and self-storage business model, ok?

So, how much does it cost to start a storage unit business?

Well, according to Projection Hub (3), the average start-up cost of a storage business is $2 million. That includes purchasing land, construction and renovation costs, and acquiring all the relevant permits you’ll need to get your business going. It also includes the infrastructure - things like security, storage unit managing software, and marketing costs (because no-ones are going to rent a storage unit from you if they don’t know you exist!). 

But maybe you want to buy an already-constructed facility. In which case, you might have specific building questions such as “How much does it cost to build 100 storage units?” We’re going to have to pull out the calculators for this one. The standard storage unit size is 10x10ft (100 sq. ft.) and it costs around $40 per sq. ft. So, 100 units at 100 sq. ft. is 10,000 sq. ft. 10,000 x $40 = $400,000. So 100 storage units would cost an average of $400,000 to build. 

Phew, that was hard! But now for the answer you really want. How much do storage units make a month? Well, based on the annual average, you can expect to earn $30,000 - $67,000. 

How To Start A Storage Unit Business

Ok, time to learn how to start a storage unit business.

The most important thing you need is to create a robust self-storage business plan, including your projected costs and income. We highly recommend downloading a self-storage planning guide and worksheet from a reputable site to help you get started. 

So why is the self-storage business plan so important? Well, let’s face it, $2 million is a LOT of money, and chances are, you don’t have that lying around to spend. This means you need to find a way to fund your business, and having a plan will attract investors.

Yes, we read your mind. We know you want to know how to start a storage unit business with no money. Self-storage is such an incredible business venture, and it’s not fair that only the lucky few who have buckets full of money can afford it. So we’re going to help you explore your options. Here are the main ways you can find funding for your self-storage business:

  • Get a bank loan
  • Find an angel investor
  • Get a rich family member on board
  • Get a local business grant
  • Win the lottery (ok, maybe not, but we can dream, right?)

Your self-storage business plan is the key that will secure funding as it’s proof that investors can trust you and that you’ve done the relevant market research needed to make your business thrive. It also shows you’re someone to be taken seriously and that you’re ready to make things work. Essentially, your storage unit business plan is your passport to your self-storage business dreams!

So, there you go. We just saved you a few minutes on your “How to start a storage business without money” Google search! You’re welcome!

The Pros And Cons Of Owning Storage Units

Sure, the self-storage industry is booming, and the possibility of earning some serious money is real. But, like with everything in business, you can’t ignore the real risks of investing in self-storage.

Let’s have a look at the pros and cons of owning storage units:

Pros:
  • There will always be demand for storage units
    From moving homes and redecorating to housing excess furniture to make way for a home office, there are very few affordable options to store your stuff. Which means people will always need access to storage units.
  • It’s easy to operate from a distance
    Yes, you need to be pretty hands-on when you first build your business. But with the amount of management software available, the job becomes self-sufficient pretty easily, Which means you’ll have better flexibility in your work schedule.
  • There are potential tax benefits of owning storage units
    Check with your local government to see if your self-storage business is eligible for depreciation tax breaks.
Cons:
  • There’s a lot of competition in the storage unit industry
    The extra competition means you cannot guarantee optimal occupancy rates. And high occupancy is what your income depends on.
  • You will have problems with tenants
    Most of your tenants will be delightful and easy to deal with, but you’ll almost certainly come across a few who have trouble paying their rent. We know you can handle it, but they are still a headache to deal with!

Self Storage Listings.

Ok, we’ve gone through costs, income, pros and cons. Hopefully, we haven’t scared you away, and you’re even more excited to get started!

So what are your next steps? Well, it’s time to do your market research, of course! But we won’t just leave you high and dry. Your main objective should be to find out how much your new self-storage business will cost you to get off the ground.

So what are your next steps? Well, it’s time to do your market research, of course! But we won’t just leave you high and dry. Your main objective should be to find out how much your new self-storage business will cost you to get off the ground.

  • Self-storage listings in (insert your location of interest here)
  • Self-storage facilities for sale in (insert your location of interest here)
  • Storage unit businesses for sale in (insert your location of interest here)
  • Self-storage franchises for sale in (insert your location of interest here)

This will give you a more accurate idea of how much it will cost you to start your storage unit business. 

Once you have those figures written into your trusty storage unit business plan, you’ll need to look into the various management and security software options out there and how much they cost so you can build a self-sufficient storage unit business your competition will be envious of.

When you’ve finished making your plans and found your investors, it’s time to start building your storage unit empire!

And once you’re ready to get going, don’t forget to get in touch with us here at Adverank to help you boost your reputation with our innovative self-storage unit marketing experts!

SOURCES
[1] https://irellc.com/resources/how-much-income-self-storage-facilities-generate/
[2] https://www.ccim.com/cire-magazine/articles/self-storage-transformation/
[3] https://www.projectionhub.com/post/how-to-start-a-self-storage-unit-facility#:~:text=The%20average%20cost%20to%20construct,on%20information%20provided%20by%20Storable