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Should You Start a Storage Rental Business?

A Storage Unit Filled Completely with Boxes and FurnitureAs a Davenport rental property investor, you may be looking for supplementary means to expand your business and diversify your income streams. One prospect gaining notoriety in recent years is the self-storage facility. However, should you begin a storage rental business? To determine if the industry is a great fit for you, it’s essential to learn more about what it takes to get started owning a self-storage business.

Over the last decade, storage rental facilities have blossomed across the United States. Currently, self-storage facilities number somewhere around 50,000. To put that number in context, that’s approximately equivalent 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 focused on one single service: exchanging a monthly rental payment for space to store the renter’s personal belongings. From storing art and appliances to boats and RVs, individuals and businesses likewise rely on self-storage units to store things they need or aren’t ready to leave behind.

By all accounts, storage rental is a lucrative business, with profit margins averaging around 11 percent. And for those who can manage to get into the business, it may be a good opportunity. But there are a few other things to consider in addition to finances. For instance, you’ll need to ascertain 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. By working through some of these major considerations, you can more efficiently figure out if going into the storage rental business is right for your precise situation.

If you already have land or own a building you could convert into storage space, you may 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 may believe that building a completely new facility is the most expensive alternative, you may be wrong about that. Sometimes, transforming an existing building can be just as high-priced, depending on location, acquisition costs, and contractors’ availability to do the work. Or, you may find the idea of acquiring an existing storage facility more appealing. But keep in mind that even existing or turn-key facilities may need updates, renovations, or repairs, in addition to basic operational costs.

This is why no matter which direction you prefer, you’ll need proper funding to start a storage rental business. One of the most important 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 solution, 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 much you plan to acquire the funds for your storage rental business, be sure to include operational costs in your calculations. You’ll need to have at least six months of operational expenses covered, which means you’ll need to know what those costs will be and how you’ll manage your storage facility. From doing it yourself to hiring a third-party management company, there are several different approaches. 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 Lakeside 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 863-302-8752 to speak with a Davenport property manager today.

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