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Should You Start a Storage Rental Business?

A Storage Unit Filled Completely with Boxes and FurnitureAs a Caldwell rental property investor, you may be looking for additional ways to expand your business and diversify your income streams. One option gaining popularity in recent years is the self-storage facility. But should you start a storage rental business? To determine if the industry is a good fit for you, it’s important to learn more about what it takes to get started owning a self-storage business.

Over the last decade, storage rental facilities have blossomed within the United States. Now, self-storage facilities number somewhere around 50,000. To put that number in context, that’s almost identical to the sum of McDonald’s, Subway, and Starbucks locations in the U.S. combined. Self-storage rental businesses come in various sizes but are focused on a single service: trading a monthly rental payment for space to store the renter’s important belongings. From storing art and appliances to boats and RVs, individuals and businesses alike rely on self-storage units to stock things they need or aren’t ready to sell.

By all measures, storage rental is a lucrative business, with profit margins averaging around 11 percent. It can also be the best option for those who can afford and want to enter the business. However, there are a couple of other factors that you need to take into account in addition to finances. As an example, you’ll need to estimate the total cost of starting a self-storage business; determine whether you should build your own facility or purchase 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 vital considerations, you can more effectively comprehend if going into the storage rental business is advantageous for your circumstances.

If you already possess land or own a building you could convert into storage space, you may be in an ideal place to begin a storage rental business. Despite everything, one of the primary hindrances of self-storage businesses is the cost of the facility itself. It’s vital to perform some research and determine how much it would cost to secure a location, building and complete the necessary construction.

Although you may believe that constructing a totally new facility is the most expensive approach, you may be wrong about that. Sometimes, restoring an existing property can be just as pricey, based on place, operating cost, and workers’ availability to complete the job. Or, you may find the idea of purchasing an existing storage facility more appealing. But don’t forget that even existing or turn-key facilities may require updates, renovations, or repairs, along with basic operational costs.

This is why you still need proper funding to start a storage rental business, no matter which path you choose. 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 goal is to diversify, not place 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.

It doesn’t matter how you aim to obtain the funds for your storage rental business; keep in mind to bring in 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 personally to appointing a third-party management company, there are a lot of different ways. Whatever it takes, you’ll need to determine if you can afford not only the high upfront price but also the time and effort it will consume to get your storage rental business effective and working.


Are you looking for new ways to expand your investment portfolio? Give Real Property Management Nampa 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 208-960-0660 to speak with a Caldwell property manager today.

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