Do you have a barn in your backyard? Or maybe you have some property? Or maybe you’re just looking for a passive income idea? Maybe you’ve been wondering how to start a storage rental business!
You provide the space. People bring their stuff. Then they hand you gobs of money to keep their stuff under your roof. Seems pretty simple right? It is. And, it pays amazingly well!
There are two main types of storage businesses:
- One for small items – typically overflow from people’s homes and garages
- And the other is for large recreational vehicles – typically campers and boats
Then, there are a variety of levels of care for each storage facility:
- Is the unit temperature controlled?
- Is it accessible 24/7?
- And, is it locked down and safe (from both people and small varmint)?
Which Storage Business Are You Interested In?
Before you even start digging into the dollars, it helps to pinpoint which type of storage business you’d like to operate – this will narrow your focus and help you better understand the market in your area and the potential dollars to be made.
- Do you like seeing people and helping them move their motor vehicles in and out of tight spots?
- Then having a big barn in the back of your yard would make a perfect income generator!
- Or, do you really not want to deal with people, and you’d rather they help themselves when they need it?
- Then it sounds like you might want to operate a self-serve storage unit. There’s more overhead and operating costs here, but it is more hands-off when everything is running properly.
First, know yourself. Then you’ll know what type of storage rental business you’d like to start!
How Much Could You Earn?
The storage rental business is incredibly hot right now. People continue to like their stuff….a lot. They just can’t do without it!
And, with more people and less available land these days, it’s more common that they don’t have anywhere to put it!
With a high demand and a low supply, that could mean BIG money for you!
So, before we dig into exactly how to start a storage rental business, you should first take a look at the amount of dollars that could be earned! Will it be worth your investment, both in time and money?
Self storage units look like the image on the right.
The renters of self storage typically operate like this…
- They drive up to a gate
- type in a code or push a button to call to the main office
- the gate would open and they’d head to their storage unit
- Use a key or combination to open the lock
- Annnnd pull out what they need, close it up again, and be on their merry way.
Like I said, it’s a simple business that doesn’t need a whole lot of attention.
How Much Do People Pay for Self Storage Units?
According to SquareFoot, the average rental cost of a 10’x10′ self storage space is $90 a month.
How Much Can Be Earned Per Year with Self Storage Units?
Put up a building that can support 100 of these 10’x10′ spaces, and you’ll be earning $9,000 a month. That’s $108,000 a year!
Now let’s look at recreational storage for boats and campers.
There’s two types of storage here:
- indoor, and
If you don’t have a barn or building, but you have a ton of open land, then operating an outdoor storage might be a good way to start.
Let’s say people come to you with their 20 foot boats. Near me, the going rate is $7.50 per linear foot, per month. So for a 20 foot spot (which technically means the front of the trailer to the back of the boat, FYI), the cost would be $150 a month.
Indoor boat storage yields approximately the same rate – $7.50 per linear foot, per month. So again, if you parked a 20 foot boat for someone, this would equate to $150 a month!
(If you’re wondering why indoor storage doesn’t fetch a premium price, it’s because it’s far less work to store because you’re not protecting the boats/campers from all the elements outside.)
How Much Can Be Earned With Recreational Storage?
Let’s say you have room for 50 boats in your barn.
- 50 boats
- For 6 months out of the year…
That’s $7,500 per month x 6 months = $45,000!
But hold on! I bet you could store some campers (or cars) in that space while the boats are in their slip! Let’s say you could fill half the slots during boating season. That means another $22,500!
A simple barn in the backyard could earn you $67,500 a year!
How to Start a Storage Rental Business (and the Costs Involved)
Do all the details above sound good to you so far? You like the idea of starting a business, and now you’d like to know how to start a storage rental business.
Below are the steps that I would personally take if I was starting a storage unit business.
1) Evaluate the Need in Your Market
This is a big one. You don’t want to go to all the trouble of starting a business (especially if you’re sinking money into building a huge structure) if there really isn’t any market for it in your area! Do your homework here.
How can you begin to know?
Start calling storage unit businesses in your area and pretend you’re looking for space. Ask about pricing and see how easy it is to find a spot. If it’s super simple and multiple owners are willing to give you a deal, the market is likely saturated.
If, however, the pricing is outrageous and everyone you call is at capacity, then you know you’ve got an opportunity!
2) Secure a Business License For Your Idea
I own several small businesses and I usually record them as LLC’s. They’re cheap, and they protect your personal assets if anyone ever decides to sue you for some reason. It’s well worth the small cost and the little effort it takes.
Before you go any farther with this idea, be sure to treat your venture like a true business and set it up with a proper business name and license.
Related: How to Start an LLC
For your storage business, you could be…
- utilizing your open land for an outdoor storage space
- using an existing structure on your property
- or, you might be erecting a structure
Below are the next steps for each one of these options.
Outdoor Storage Space
Have a huge field for storage? You’ll want to do two main things to get ready.
- Flatten out your field. When vehicles are parked, they need to be level. Get a roller and run it across your field several times. It will eliminate many future headaches!
- Put up a fence. You’ll need to protect all those vehicles if you’re going to operate a business. Don’t go too cheap. You need it to be appealing to the customer.
Have a barn out back? Perfect! That’s an amazing thing to have when you’re considering a storage unit business!
Your next steps?
- Map out how to use the space. Look at all the entry doors and map out how the space could be best utilized (ie. how can you fit as many vehicles as possible without cramming in so many that your customers get irritated when they can never get to their boat or camper!).
- Clean it up! Before people start shelling out their cash, they’re going to want to see the space and make sure it’s worth it to them. So be sure it’s clean and free of any type of insect or varmint.
Erecting a Structure
If you’re planning on shelling out a bunch of money to put up a structure, you really need to be sure that the income is there.
My suggestion? Start small with a plan to grow.
The cost of single-story storage units are roughly $30 per square foot. If you’re looking to put up a 100 unit structure (with 10’x10′ storage spaces), you’ll need approximately 12,000 square feet (all those walls take up space you know…and you’ll need 10,000 square feet of usable space).
The total cost = $480,000.
And, if you need to buy the land, that’s extra. Let’s say you’re all-in at $600,000. That’s actually a pretty steep starting price.
It might be worth looking around at other options that already exist today.
- Perhaps there’s a house and barn for sale nearby. You could rent out the house AND the storage space for a cheaper total cost!
- Maybe there’s a warehouse for sale that was rented out to businesses. Perhaps you could transform it into a storage unit business!
- Or, maybe there’s an old-timer that’s doing well with his self storage business, but just wants to get rid of the hassle. This might be a great option as well!
Always keep your mind open for different solutions. They often become more profitable than your initial idea!
Don’t Forget About Operating Costs
If you’re running the business model of using your land or your own barn, your operating costs will likely be low. But, if you intend to heat and cool your buildings and have a high-tech set up, be sure to consider your monthly utility costs and your maintenance costs! They can get out of control quickly.
Now that you’ve got your space, you’re going to need everyone to know that it exists.
First off, put a sign up! Put one on the building and near the road. Let everyone know that it’s a storage rental facility and that they’re welcome to call to find out more information!
Second, register your business with Google. It’s easy. Just head to Google My Business and enter in your info!
Finally, start telling everyone you know about it. You’d be surprised how powerful word of mouth can be!
Not getting as many clients as you were hoping for?
If you’re not getting the traffic that you expected, you might have to sweeten the deal for a little while.
- Offer reduced rates for up-front payments
- Offer a referral discount if your current customers bring you other customers
- Start a loyalty program for those that stick with you for the long-term to ensure you keep their business while you drum up new clients
5) Stay Up To Date on Insurance
Always remember the value of the items you’re storing each year and be sure you have enough insurance to cover a disaster. You never know when a storm might hit and destroy everything in that barn of yours. And if that happens, you can be certain that people will come looking for restitution.
6) Figure Out The Method of Payment
How do you want to be paid?
- with a check once a year?
- with a credit card?
- electronically every month?
What’s easiest for you and your customer? Be prepared for a variety of payment solutions.
- A check is easy if people are paying up-front for the year, but not everyone carries checks anymore.
- Credit cards are simple and you can use the Square app on your phone to receive payment this way, but don’t forget about the fee for each transaction!
- Setting up a monthly recurring payment can be a great option for you and your customer. Venmo is a nice solution for this. My business friend swears by it!
7) Be Kind, Clear, and Dependable
Customer service is key with the storage unit business. People often don’t know they need to get their stuff until moments before they show up.
Be available, be kind, and always follow through on your word. It’s rare today and can be a valuable trait to have in business!
Are You Ready to Start a Storage Rental Business?
Now that you know how to start a storage rental business, will you? Do the dollars line up and are you ready to put the idea into practice? I hope so! There’s nothing I love more than people coming up with a business idea and having huge successes with it!
I hope you’re that next success story!
Have additional questions or comments on how to start a storage rental business? Leave a comment below!
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.