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Should You Start a Storage Rental Business?

A Storage Unit Filled Completely with Boxes and FurnitureAs an Argyle rental property investor, you might be looking for extra ways to expand your business and diversify your income streams. One option that is becoming increasingly popular in recent years is the self-storage facility. But then again the question is, should you start a storage rental business? To decide if the industry is a good fit for you, it’s important to learn more about what it takes to get started maintaining a self-storage business.

Over the last decade, storage rental facilities have blossomed throughout the united states. Currently, self-storage facilities number somewhere around 50,000. To put that number in context, that’s roughly equal to the number of McDonald’s, Subway, and Starbucks locations in the U.S. combined. Self-storage rental businesses come in all various sizes but are concentrated on one single service: substituting a monthly rental payment for space to store the renter’s personal possessions. From storing art and appliances to boats and RVs, individuals and businesses alike rely on self-storage units to store items they need or aren’t ready to leave behind.

In every sense, storage rental is a lucrative business, with profit margins averaging around 11 percent. And also for those who could afford to get into the business, it may be a good option. But there are a few other things to consider along with finances. For example, you’ll need to determine the total cost of starting a self-storage business; decide whether you should build your own facility or buy an existing structure; what kind of operating expenses there will be; and how you will market and staff your business. Through the work of some of these major considerations, you can more easily figure out if going into the storage rental business is right for your particular situation.

If you have existing land or own a building you could convert into storage space, you might be in a good place to start a storage rental business. After all, one of the biggest hurdles of the self-storage businesses is the cost of the facility itself. It’s important to some research and figure out how much it will cost to secure a location, building and perform the necessary construction.

While you might think that constructing a completely new facility is the most expensive alternative, you may be wrong about that. Sometimes, converting an existing building can be just as costly, depending on location, acquisition costs, and contractors’ availability to do the work. Or, you may find the notion of purchasing an existing storage facility more appealing. Although bear in mind that even existing or turn-key facilities may need updates, renovations, or repairs, in addition to basic operational costs.

This is the reason why no matter which route you choose, you’ll need proper funding to start a storage rental business. One of the biggest questions you should be asking is: where will the money for your new business come from?

Obviously, if you are a rental property investor, the idea is to diversify, not put all of your investment eggs into one basket. If selling off your other assets isn’t the answer, could you qualify for a loan (either to purchase or to build a facility)? You may also think about going into business with one or more partners or finding an investor willing to help you finance an acquisition or development deal.

No matter how you plan to acquire the funds for your storage rental business, don’t forget to include operational costs in your calculations. You’ll need to have at least six months of operational expenses covered, and that means you’ll need to know what those costs will be and how you’ll manage your storage facility. From making it yourself to hiring a third-party management company, there are many different methods. No matter what, you’ll need to decide whether you not only can afford the hefty upfront price tag but also the time and effort it will require to get your storage rental business up and running.


Are you looking for new ways to expand your investment portfolio? Give Real Property Management Lakeview a call. We work with investors like you to improve rental property margins, increase profitability, and connect you with great off-market deals. Contact us online or call 940-323-0505 to speak with an Argyle property manager today.

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