Generate Passive Income by Buying and Renting Out Storage Units

Storage units have become an increasingly popular way for people to store their extra belongings when they don't have enough space at home. This growing demand for storage makes storage units an potentially lucrative investment for generating rental income. Here's an overview of how you can buy and rent out storage units to create a stream of passive revenue.

Buying Storage Units

When looking to buy a storage facility, you'll usually purchase an entire complex property. Key factors to evaluate are:

- Location - Properties near residential areas or business parks are ideal. Easy highway access is also beneficial.

- Occupancy Rates - Anything over 70% occupancy is decent. 85% or higher occupancy signals strong demand.

- Mix of Unit Sizes - Most renters need smaller 5x5 or 5x10 units, but larger 10x20 units generate more rental income. Aim for a good variety.

- Condition - Storage buildings have low maintenance costs, but examine the roofing,climate control, security measures, office space and overall upkeep.

- Cash Flow - Calculate if the operating income minus expenses (insurance, property taxes, maintenance) meets your investing objectives.

There are often commercial real estate listings for storage unit facilities you can browse. Also contact specialized storage unit brokers to find off market deals.

Platforms for Buying & Selling Storage Units

Getting engaged with these storage industry organizations, service providers and marketplaces can provide tremendous value in buying, renting and operating storage facilities.

SelfStorage.com - List your property and search competitor pricing using this storage unit listing service.

StorageTreasures - Auctioneers specializing in storage unit lien sales and online bidding platform.

Argus Self Storage Sales Network - Brokerage firm with buying/selling resources and nationwide storage property listings.

Here are some additional online platforms that can be helpful for buying and selling storage unit facilities:

Marketplaces for Listing Storage Units for Sale

• BizBuySell.com - Popular general business for sale listings that has a category for storage units.

• Loopnet.com - Commercial real estate listings, including storage unit investment properties.

• UnitedStoragerealty.com - Specialized brokerage focused specifically on storage units and facilities.

Auction Sites for Storage Unit Foreclosures

• StorageAuctions.com - Provides a number of storage unit auctions taking place nationwide.

• StorageTreasures.com - Specialized storage auction site to bid on units in default across the U.S.

• Lockerfox.com - Another self storage auction marketplace to uncover potential deals.

These various online platforms open up more avenues to investigate available storage unit businesses for sale or individual units being auctioned. The broader you search, the better chance of finding an appealing investment opportunity!

Reach out for any specialized information not covered here.

Setting Your Rental Rates

The going rates for storage units in the area will heavily influence how much you can charge tenants. But also consider factors like:

- Unit sizes - Per square foot, larger units often have lower rental rates.

- Accessibility - More convenient drive-up access units warrant slightly higher prices.

- Security features - Gate codes, video surveillance, etc for premium prices

- Climate controlled - Temperature regulated units have the highest rental rates.

Occasionally increase rental rates year-over-year in line with market rates and inflation. Offer rent discounts to long-term tenants to retain business.

Managing and Filling Vacant Units

Since storage facilities generally have a fixed operating cost, keeping occupancy high is paramount. Almost all facility management is focused on sales and marketing.

- Site signage - Place prominent roadside signs to attract drive-by traffic.

- Online listings - List available unit sizes/prices on rental websites and your own website.

- Referral fees - Pay small finder's fees to current tenants who refer new customers.

- Seasonal discounts - Offer move-in discounts near peak rental seasons, like spring or summer.

Holding a few strategic events on site, like parking lot sales or auctions of seized units, creates additional visibility and draws crowds.

Maximizing Profits

Storage units offer mostly passive income with very little day-to-day oversight required once fully rented. Ways to further increase your profits over time include:

- Raising rents annually or whenever the local market allows

- Using strong occupancy rates and cash flow to finance expansion of existing facility

- Adding drive-up external access to exterior units that lacked accessibility

- Converting some small units into larger units to earn higher rents

- Offering discounts for automatic rent payments to reduce administrative workload

With the right location and approach to filling vacancies, storage units can produce sizable passive revenue for minimal continuing effort.

Helpful Resources

When getting started buying and operating storage units, it helps to connect with industry-specific organizations. Here's a few more useful websites:

National Self Storage Association - Industry news, conferences, local networking events and more through this trade association.

Storitz - Leading provider of self storage software for management, payments and online rental agreements.

Janus International Storage Building Solutions - Construction of storage buildings and replacement doors, halls, roofs, etc.