Business Overview

A self-storage business makes it easy for people to store their personal belongings without the hassle and clutter of keeping things at home. These businesses also cater to other businesses who need storage space for equipment like office supplies, furniture, and more.

The lack of space in homes and offices, and the desire to be able to store and forget about items, are the driving forces behind self-storage businesses.

Who is this business right for?

People who succeed in this business enjoy working with people and are excellent when it comes to tenant relations. It helps to have simple maintenance skills to fix some of the things that may need repairs. You should be able to use a ladder to change light bulbs and be able to keep the place painted nicely.

What happens during a typical day at a self storage business?

Many of the storage spaces are owned and operated by a team. Marketing of available spaces is ongoing. Interested new tenants are shown the facilities. Applications need to be taken and processed with background and credit checks. Security deposits, key deposits, and the collection of rental payments, all need to be handled properly. Monthly accounting records need to be up-to-date and accurate.

The facility needs to be kept clean and constantly supervised to prevent vandalism and theft. Rent for any storage space that is past due needs to be collected, and if there is a serious problem with the rental payments, the proper legal processes need to be taken to manage the problem. This may include turning the account over to collections, filing court papers, giving eviction notices, and/or selling the items left abandoned in storage spaces after the correct amount of time has passed according to the local laws and the rental contract agreement.

Statistics Brain says that the contents of about 155,000 storage spaces are auctioned each year, for the average price of $425, because of past due rental payments.

What is the target market?

The best customers are the ones that have a longer-term need for storage, such as a military member who is on active duty outside of the United States, and who are able to pay for the monthly rental by using some method of automatic payment, such as a monthly credit card payment or an electronic fund transfer (EFT) from a bank account.

The most popular storage size is a 10’ by 10’ by 10’ space with the best customers renting one for up to two years or more.

How does a self storage business make money?

The income streams include monthly rental collections, auction proceeds from past due accounts, fees, and sales of related products such as moving supplies and locks.

These businesses make extra money from administrative fees, lost key fees, lock removal services, late fees, and other fees, in addition to the normal rental fee structure. Some charge a premium rate for the rental of storage spaces in a climate-controlled building. Others offer insurance, for an additional monthly premium, to insure the contents of the items placed in a storage space.

What is the growth potential for a self storage business?

This industry sector has everything from locally run single storage facilities, to huge major national operations with thousands of locations. There are over 54,000 storage locations in America with over $30 billion in annual revenues. The SpareFoot Storage Beat reported on the largest public storage companies, their market valuation, and revenues for 2015. They are:

  1. Public Storage: Market Valuation $2.38 billion
  2. Extra Space Storage: Market Valuation $782.27 million
  3. CubeSmart: Market Valuation $444.5 million
  4. Sovran Self Storage (Uncle Bob’s): Market Valuation $366.6 million
  5. U-Haul: Market Valuation $211.1 million (self-storage revenue only)