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Should You Start a Storage Rental Business?

A Storage Unit Filled Completely with Boxes and FurnitureAs a Round Rock rental property investor, you might be searching for new ways to expand your business and diversify your income streams. One alternative that has recently attracted attention is the self-storage facility. But should you begin a storage rental business? To know if the industry is the right one for you, you need to learn more about what it requires to start operating a self-storage business.

Over the last decade, storage rental facilities have blossomed around the United States. Presently, self-storage facilities number somewhere around 50,000. To put that number in context, that’s nearly the same as the quantity of McDonald’s, Subway, and Starbucks locations in the U.S. combined. Self-storage rental businesses come in several different forms but are focused on a single service: exchanging a monthly rental payment for space to store the renter’s household items. From storing art and appliances to boats and RVs, individuals and businesses alike depend on self-storage units to keep stuff they need or aren’t ready to dump.

By all accounts, storage rental is a lucrative business, with profit margins averaging around 11 percent. And for individuals who can stand to get into the business, it may be a viable option. However, there is a wide range of things you need to consider together with finances. For instance, you’ll need to determine the total cost of starting a self-storage business; think about whether you should build your own facility or purchase an existing structure; what sort of operating expenses there will be; and how you will market and staff your business. After implementing some of these significant considerations, you can more quickly decide if it’s a good idea to go into the storage rental business.

If you currently have land or own a building you could convert into storage space, you may be in the right place to start a storage rental business. After all, one of the major challenges of the self-storage businesses is the cost of the facility itself. It’s imperative to do some research and calculate how much it will cost to secure a location, building and achieve the necessary construction.

While you may believe that establishing an entirely new facility is the most expensive method, you might be mistaken. Most of the time, renovating an existing building can be just as pricey due to the area, acquisition expenses, and contractors’ availability to do the work. Or, you may consider buying an existing storage facility truly captivating. But remember that even existing or turn-key facilities may require updates, renovations, or repairs, in addition to basic operational costs.

This is 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?

Of course, if you are a rental property investor, the objective is to diversify, not put all of your investment eggs into one basket. If selling off your other assets isn’t the key, could you qualify for a loan (either to purchase or to build a facility)? You may also try going into business with one or more partners or finding an investor willing to support you by financing an acquisition or development deal.

No matter how you plan to get the funds for your storage rental business, bear in mind to incorporate operational costs in your calculations. You’ll need to have at least six months of operational expenses covered, which implies you’ll need to know what those costs will be and how you’ll manage your storage facility. From doing it personally to employing a third-party management company, there are a wide variety of strategies. No matter what, you’ll need to determine whether you can afford not only the hefty upfront market price but also the time and effort it will need to get your storage rental business up and running.


Are you looking for new ways to expand your investment portfolio? Give Real Property Management All Connect 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 512-806-0606 to speak with a Round Rock property manager today.

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