The self storage business industry is projected to reach $115.62 billion by 2025.
The last time you dropped off a box at your storage unit, did you think of how much profit the owner was bringing in each year?
We hope you are now, as self storage investors often see a fantastic return on investment when getting into the business. Homeowners and apartment renters need somewhere to put their possessions, and you could play a lucrative role in that. But you need to know where to start, and we are here to help.
Continue reading below for our guide on starting a self storage business!
Investment Costs of a Self Storage Business
Does the storage industry tempt you because of its high profits? You aren’t wrong to view storage units as a great investment opportunity. But the best investors will be attentive to details, have great organizational skills, and understand financial projections.
Investing in a self storage business takes a hefty financial burden before breaking even.
Mako Steel reports that an average single-story business costs $25 to $40 per square foot, while multi-story runs $42 to $70 just for construction. Land, as a separate cost, is estimated at $3.13 per rentable square foot.
Costs you need to account for the business include:
- Land (or existing storage property)
- Security systems
- Office supplies
- Website domain
- Runway for the first few months
Your business will need 40% to 60% occupancy to break even, though successful storage businesses have larger occupancy rates.
Trends to be Aware of for Income Success
Storage businesses will be in high demand for the foreseeable future as homes and apartments get smaller. This is true across major urban cities, such as New York, LA, and Miami.
But the longevity of the industry doesn’t make it immune to new trends. As you figure out the self storage business plan, you need to pay attention to what homeowners and renters are like.
Climate-controlled units, secured down long hallways with elevator access, are now decreasing in popularity. Drive-up climate-controlled units are becoming the rage, as homebodies want easy access with minor strain.
Many businesses have transitioned to self-service, especially when it allows for social distancing. A self storage business is no different, as customers want to access a website or app for check-in.
Finally, long gone are the days where rundown buildings are accepted. People are seeking more luxe experiences, even with storage units. That means more decor, landscaping, and architecture for business owners to put into a P&L.
Steps to Legitimize a Business
Any business owner will tell you that starting a business is a detailed process. You should pay particular attention to the storage industry, as this business involves real estate knowledge and high liability.
Here is a simple checklist to begin a business:
- Write a business plan to outline aspects of the company, such as market analysis and financial projections
- Form the legal business entity, selecting from sole proprietorship, corporation, partnership, or limited liability corporation
- Select the business name and location
- Apply for any business licenses or permits such as the Occupancy Permit
- Register for state and federal taxes
- Open a business bank account
- Apply for financing, including small business loans and grants
- Secure business insurance, vital for self storage businesses
- Create a brand website and build a brand marketing plan, including low-cost marketing efforts
- Begin to track business accounting
Begin Your Self Storage Business Plan Today
You have picked a lucrative opportunity in the self storage business, but you need to be organized and financially savvy to hit break-even numbers. Use this guide to start your business plan and see how the storage industry may be your best idea yet.
Ready to bring your storage idea to life? Check out our self storage education plans to become a pro ASAP.