How to Make Money Renting Storage Units
While storage units may not seem like a great way to make money, this business can be extremely lucrative.
Renting out your storage units is an amazing source of passive income that requires somewhat little ongoing work to operate. Each month, your renters will send you a check for the space they use.
In this guide, I’ll explore everything it takes to build a storage unit business including the costs of building storage units, how to start a storage unit rental business, and some helpful tips to making more money with storage units. Let’s get started.
Why Start a Storage Unit Business?
As previously mentioned, a storage unit business is one of the best methods to build passive income. Once your units are built, there is a relatively low time and money commitment to keep them operating.
The largest barrier to entry is the land on which your units will reside. This often scares many investors away because of how costly land can be. However, it’s not always as expensive as you may think.
So why start a storage unit business? Here are my 3 top reasons:
- Storage units establish a passive income stream.
- The market can be undersaturated in many locations.
- There is a potential to make a large amount of money.
How Much Money Can You Make Renting Storage Units?
The amount of money you can make will depend on several factors including your location, the size and type of storage unit, and any amenities you might offer.
It is common to rent your units anywhere from $75 to over $500 per month depending on the size and location. Multiply this by the number of units you plan to build and you can easily see how profitable your business can become.
Location of Storage Units
The largest factor in determining how much money you can make renting your units is where they are located.
Units closer to large cities are likely to rent for significantly more than those placed further out. It’s common to see prices of storage units in larger cities over 100% more than their rural counterparts.
It’s a good idea to spend some time researching market rates for your area before you decide to get started.
Size and Type of Unit
Another great factor in determining your rental price is the size and type of unit you offer.
There are some benefits and drawbacks of building larger units.
If offering larger units you can expect to receive a larger rent payment each month however it might be more difficult to find tenants. You’ll also want to consider the opportunity cost of breaking the unit into 2 units. Could you rent out 2 smaller units for more than a single larger offering?
These are a few questions to consider when planning your business.
Storage Unit Amenities
Will your operation offer 24/7 access? Will there be security on guard?
Renters will take these ammonites into account when choosing which storage complex is right for them. By offering these amenities, you’ll be able to charge a higher price but your costs will also increase.
How Much Does it Cost to Start a Storage Unit Business?
The costs to get started range depending on the size and location of your business. For those living in a low cost of living area, you can expect to spend much less to get started than those located in a large city.
The main costs to start your storage unit business include the cost of land and the construction of the units themselves.
For those planning on building a multi-unit complex, you can expect to spend $25,000+ to start your operations.
For those looking to construct a single storage unit on their current property, you could get started for less than $2,000.
How to Start a Storage Unit Business
Starting a storage unit business will take some time and money to get started. You’ll need to cover the cost to build your units and marketing expenses when establishing your business.
Below, I’ll break down the steps to starting your rental storage unit side hustle.
Plan Your Business
Before investing in any business, you’ll want to do your research to ensure it has the potential to become profitable and make you money. This is true when it comes to starting your storage unit business.
You’ll need to have a few things to get started:
- Land to build your storage units
- Money to cover the cost of building your storage units and operational expenses
You’ll want to understand the most common sizes of rental units in your area. The most common sizes include 10×10, 10×15, 10×20, and 10×30.
Furthermore, you’ll need to examine rental rates in your area for a comparable unit to guarantee that there is a market for your offering.
After completing your market research, if you still believe your business is capable of succeeding, move on to the next step.
Purchase Land (If Necessary)
Once you’ve planned your storage unit business, it’s time to get started. The first thing you’ll need is space to build your units.
Depending on the complexity of your business, you’ll want to find commercial real estate that is easy to get in and out of.
For those looking to get started with less cash, you can consider building your storage unit on your own property to save money. While this option is less expensive, you’ll want to keep in mind the possibility of a decreased rental price because of less convenience for your customer. You can also opt to have your purchase financed, enabling you to get started with less money.
Build Your Storage Units
Once you’ve obtained land to build your business, you’ll need to construct your storage units.
You can choose to build them yourselves or outsource this work to a contractor.
There are several different kinds of storage units for your customers’ needs.
Basic Enclosed Storage Units
These storage units are the most simple to build with a solid foundation and garage-style door for easy access. These units will be the most cost-effective and are great for investors just getting started.
Climate Controlled Storage Units
More seasoned investors might want to consider offering climate-controlled storage units to increase their income. Because these are more difficult to find, you can charge significantly more than a basic unit.
The downside? They are very costly to produce and maintain. Depending on your location, you’ll need to have both air conditioning and heating in the unit to keep it at a constant temperature.
Indoor Storage Units
Some storage units are climate controlled and are located indoors. This offers a few benefits for customers and will come with a larger price tag.
As expected, these units are more expensive to build but can be a worthwhile investment.
Finalize Amenities and Operations
If you plan on offering any additional amenities like security this is your chance to plan these operations.
You should also finalize how you will bill customers, how they will pay, and any other basic business operations such as who will answer the phone, etc.
Market Your Storage Business
Now that you’ve finalized your operations, it’s go time.
There are many methods of marketing your storage unit business. Below are a few of my favorites.
Post Your Units on Craigslist
Craigslist is full of people looking for odds and ends products and services making it a great option to promote your storage unit service. You can often find people interested in storing random items like old vehicles or large furniture.
Post Your Units on Facebook
You’ll be surprised about how many friends and family might be interested in renting your units. Be sure to publish your offerings on social media websites to get the word out.
Pass Out Flyers
Flyers are an excellent method to reach residential customers, those likely to need your services. You can print flyers with all of the information for less than $0.10 each, making it a cost-effective tactic to gain customers.
Your flyers should include information about your business including how they can contact you, where your location is, and starting prices for your units.
Create a Company Website
A website is an easy way to give potential customers access to all the information they need before deciding to use your services.
You can choose to develop the site yourself or outsource this to a local marketing company for a cost.
Tips to Growing a Storage Unit Business
Below are some helpful tips for starting and growing your storage unit business.
While you might be enticed to go all-in from the beginning, starting small will give you the opportunity to fix any kinks in your business model without costing you a fortune.
One Up the Competition
At the beginning stages of your business, you’ll want to provide your customers with a leg up over your competition. This might mean pricing your units at a lower price or having slightly larger units.
This will give customers a reason to choose your services over others giving you the opportunity to keep them for a lifetime.
By offering discounts to potential customers they’re more likely to pull the trigger on your services. You can consider offering the first month free for new clients or offer a percentage discount.
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How to Start a Mobile Storage Unit Business
When you think of storage units, you’ll most likely think they tend to be at a physical location but in the 21st century, just about everything is mobile, including storage units.
There are several companies that have mastered this concept like Pods. The business model is simple. A large container will be delivered to your location that you can temporarily store your items in until you no longer need it. Then the container will be picked up from your property.
Benefits of a Mobile Storage Unit Business
Starting a mobile storage unit business comes with several benefits. One of the largest benefits comes with not having to make a massive investment in a physical location. Because your operation is mobile, you’ll only need space to store your units.
The other main benefit is the scalability of your business. Where a physical storage unit business would require you to obtain more land in order to expand your operations, a mobile business would only require a small investment in the amount of space needed to expand your operations.
Drawbacks of a Mobile Storage Unit Business
Just because you don’t need a large track of land to get started doesn’t mean your costs will be limited. In fact, a mobile business might be more costly to operate.
You’ll need to consider the costs of your units themselves, how you will deliver them, and the employees required to drop off and pick up units when they are no longer needed.
You’ll also need space to store units if they are not currently being used.
Conclusion: Is a Storage Unit Business Right For You?
Growing a storage unit business can be extremely lucrative and offer an excellent passive income stream for your finances.
While the upfront costs can be somewhat restricting for larger complexes, you can always get started by building a storage unit on your personal property.
The amount of money you can make renting storage units is limited to the number of units you have available, meaning your limit is essentially endless.
Like any business, starting a storage unit business won’t be easy, but it can be extremely worthwhile.