Across the United States, there are over 50,000 self-storage facilities. Of course, each of these facilities varies in size, but if the average storage facility holds about 564 units, that means there are about 2,800,000 units available nationwide.
The self-storage facility business is only growing, which makes it a very advantageous time to invest. If you’re wondering how to start a self-storage facility business, look no further. Here are a few questions you’re most likely already asking, with steps you can take to put your potential investment into action.
How Expensive Is It To Start a Self-Storage Facility Business?
The cost of starting a self-storage facility business can vary widely depending on various factors such as location, size, and amenities provided. It’s important to do your research and also remind yourself of the long game when thinking about investing in self-storage. Here are some of the main costs associated with starting a self-storage facility business:
- Land & Construction: If you are building a brand new facility, you’ll, of course, need to consider the cost of land and construction. The cost of purchasing land or renting space for the facility can vary greatly depending on the location and size of the facility. Additionally, the cost of constructing the facility, including the cost of building the units, the cost of installing security features, and the cost of landscaping and site preparation, will also need to be factored in.
- Equipment and materials: Purchasing equipment, such as security cameras, lighting, gates, and fencing, should be considered as part of your upfront costs.
- Marketing and advertising: You should think about the cost of marketing and advertising the facility, including the cost of creating a website, advertising in local media, and promoting the facility through social media and other channels. While this might not feel like an immediate need, your online presence is how most of your customers will find you!
- Operating expenses: This includes the ongoing cost of running the facility, including rent, utilities, insurance, and potential salaries for staff.
How Important Are Research and Planning When Starting a Self-Storage Facility?
Starting a self-storage business requires significant research and planning to ensure its success.
Below are some important aspects to consider:
- Market research: Conduct market research to determine the demand for self-storage facilities in the area. Analyze the competition, location, and demographic trends in the area.
- Site selection and location: Choose a location that is easily accessible and visible to potential customers. Consider factors such as zoning laws, traffic patterns, and proximity to major roads and highways.
- Feasibility study: Conduct a feasibility study to determine the viability of the business. This will involve analyzing the costs associated with starting and operating a self-storage facility, such as construction, marketing, and maintenance costs.
- Business plan: Develop a comprehensive business plan that includes a marketing strategy, financial projections, and an operational plan. This will serve as a roadmap for the business and will be necessary when seeking financing.
- Legal considerations: Research and comply with all applicable laws and regulations governing self-storage facilities. This may include obtaining permits, licenses, and insurance coverage.
- Financing: Secure financing to cover the costs of starting and operating the business. This may involve seeking a business loan, finding investors, or using personal funds.
- Operations: Develop an operations plan that outlines how the business will be run on a day-to-day basis. This may include hiring staff, implementing security measures, and maintaining the facility.
Should You Consider Buying an Existing Self-Storage Facility?
Ultimately, the decision to buy an existing self-storage facility will depend on the specific circumstances of the business and the potential for revenue growth. It is important to conduct thorough due diligence before making a purchase decision and to seek the advice of professionals, such as real estate agents and financial advisors, to ensure that the investment is sound. Here are a few pros and cons of buying an existing self-storage facility:
Pros of Buying an Existing Self-Storage Facility
- Established customer base: An existing facility will already have a customer base, which can help generate revenue from day one.
- Pre-existing infrastructure: An existing facility will already have the necessary infrastructure, such as security systems, office equipment, and staff, in place.
- Easier financing: Financing an existing facility may be easier than financing a new one as there is a proven track record of revenue and profitability.
- Existing cash flow: An existing facility may already have a steady cash flow, which can be beneficial for financing and reinvestment purposes.
Cons of Buying an Existing Self-Storage Facility
- Cost: The cost of acquiring an existing facility can sometimes be higher than building a new one.
- Location: The location of the existing facility may not be ideal, which can impact its revenue potential. You have fewer options when it comes to location.
- Condition: The existing facility may require significant repairs or upgrades, which can be costly.
- Limited expansion potential: An existing facility may have limited expansion potential, which can potentially restrict revenue growth.
How Will You Manage Your Self-Storage Facility?
Managing a self-storage facility can be very costly in nature, but when you hire a remote management team, you will increase your margins and long-term revenue and take care of the heavy lifting for you. Here are a few ways a remote management team can support your business:
- Marketing Efforts: Relax and let Copper Storage Management manage your website, establish pay-per-click marketing campaigns, and build your SEO.
- Remote Call Center: Make sure all of your incoming calls are answered quickly, get all of your customer service issues handled, and rent units all with a remote call center managed by your remote management team.
- Online Transactions: Make transactions easy for your customers with an online system and automated reminders.
- Revenue Management: Copper Storage Management will create and manage ongoing dynamic pricing controls to maximize street rates. They will also advertise ongoing promotions depending on supply and demand to keep business steady.
- Maintenance Consulting Services: A remote management team can provide direction for weekly onsite maintenance duties, taking yet another to-do off your plate!
Investing in a self-storage facility does require thoughtfulness, intentionality, and preparation. However, the long-term investment can outweigh the upfront time and energy if you invest wisely. Using a self-storage management company like Copper Storage Management will provide peace of mind while simultaneously saving you money.