Auctions are often a high-risk, high-reward method of making money. There’s no telling what the ending price will be, and it’s easy to get in over your head. The one thing that’s sure about auctions is that the more competition there is, the higher the going prices will be. That’s why the very popular TV shows have made auctions a much less profitable place: newcomers drive up prices and reduce your margins.
You need an upper hand. That’s why I want to give you three huge, relatively unknown secrets that only the pro’s know.
Storage auctions are a volume play. You need to be able to buy and sell in bulk. This requires financial stability and a long list of auctions (to buy) and an outlet, some means to sell your winnings (to sell).
You need to be able to sell in large volumes. We’re all looking for the storage unit filled with gold bullion (or even antique figurines, whatever it takes), but the majority of your risky buys, where there’s more in boxes than sitting out in the open, will leave you with a bunch of junk. You need to be able to move this junk in volume. Do you have a place to bring boxes of dishes? What about somewhat valuable coins – do you have a coin guy? For everything you win at an auction, you need a buyer, collector, or storefront that does VOLUME.
You need to be able to buy in large volumes. You need to know where the auctions are. You can use a site like this storage auction search
to find a large majority in your area. Ask around when you go to these auctions to determine auction schedules. You’ll need some financial backing. Units worth buying run from $50-1000, and you may not catch a profitable unit in your first 5 or even 10 attempts. You need to be able to support short-term losses. Remember, this is a gamble compared to banking your money, investing in real estate, or maybe even investing in the stock market.
Flashlight, trailer, dirty clothes. There’s no question about it: you will want a flashlight when you’re moseying about these units. The storage operators or auctioneers usually cut the lock, roll open the unit, let everybody take a look from outside the unit, and then start the bidding. One little hint at the contents of a box could be the vital piece of knowledge you need to get a good deal on a lot. Knowledge is power in the storage wars. And everybody knows you need a trailer. Like I said, volume is key to actually making a legitimate amount of money from storage auctions (doubling and tripling on units)
You’ll need dirty clothes because you’ll end up with some dirty stuff. Even in the nicest indoor, climate controlled facilities, dust accumulates on stuff that doesn’t move for a while. And this gets us to our final point: look for the little clues.
These are the tricks of the trade that you’ll pick up over time. There’s no getting around it. If you see enough units with Uhaul boxes vs. appliance boxes, for example, your mind will associate those Uhaul boxes with big wins, and those reused appliance boxes with disappointments.
The first big one is dust. The right amount of dust can tell stories about the unit. For example, is there a lot of dust on the ground, but not on the tops of some boxes? Something was moved from the storage unit. Any smart storage tenant who’s about to get his or her stuff sold at auction will make an effort to get the valuable stuff out before overlocks are placed on their unit and their access codes repealed. Note that a light amount of dust is normal for the amount of time that it takes to put a lien on the unit and announce/schedule the auction.
In one storage unit in Chicago (click here
and to see Chicago storage listings), I noticed a really nice looking 10′ x 10′ unit with a big clear area in the center and boxes lining the sides of the walls. Everybody noticed that.
I also noticed that there was a smaller area on the floor that was clearly the outline of an ATV (all terrain vehicle or 4×4). It was clear that the owner took what was valuable here and moved on. I knew not to bid on the unit, which got quite high due to there being fishing poles poking up from the background. But the poles were crap, the unit was a bust, and I’m glad I had that bit of information.
Other than the condition of the boxes and the dust trick, look at the auctioneer and storage manager’s body language. The manager may have been there when the tenants were moving in, and he may be visibly excited to know whether those classic bicycles will still be in the unit. The auctioneer is sometimes positioned better than you to see inside the unit. Look for inflection in their voice and use your gut. It’s part luck, part competitive spirit, and part industry-know how that will help you buy good units, and part luck, part networking, and part hustle that will help you sell your winnings and profit from storage auctions.
This has been a guest post by Tony from Sparefoot.
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.