How To Start A Self Storage Business

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How To Start A Self Storage Business: Easy Way To Make $10K?

A self-storage company makes it easy to store your personal belongings without cluttering up your home. These businesses also provide storage space for equipment such as furniture and office supplies.

Self-storage businesses are driven by the need for extra space in offices and homes and the desire to store away items and forget about them.

Towards the end of this article, you’ll find answers to some of the most frequently asked questions on how to start a self storage business…

But most importantly, you’ll see the exact system many others have used to build their own internet marketing business to over $40,000 a month in mostly passive income.

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Table of Contents

How To Start A Self Storage Business: Things To Consider Before Starting

Whether you are getting an existing property or building one, starting a self-storage business is an expensive venture because startup costs of self-storage projects are significantly high.

If you are building a business, be prepared to do extensive planning and go through a long-term startup process. You should have a team of professionals who are skilled in finance, legal, design, real estate and construction.

You can have different reasons for buying self-storage units. Some will invest in self-storage units to earn a return on their land investments until they find better opportunities. Some people see it as a long-term investment.

Many self-storage facilities offer additional products like locks, boxes, moving supplies, and services such as renter’s insurance to earn additional revenue.

Before you invest in a self-storage business, make sure you do extensive market research. You should consider factors such as whether there is enough space for RV and boat storage, whether climate-controlled storage is available in your area, and whether storage units can be accessed from the road or via an elevator.

You have to remember that unit size is also important, along with the facility’s overall layout and size. Security is a constant concern in this industry. Consult with security advisors to help you determine the best layout and technology.

Start A Self Storage Business By Following These 10 Steps:

The steps below will help ensure that your business is adequately planned, registered, and legally compliant. It’s the ultimate guide on how to successfully start a self storage business.

Step 1: Create Your Self Storage Business Plan.

To be a successful entrepreneur in any industry, you would need a clear business plan. It will help to map out your goals and identify potential problems. The following are essential points to be aware of if you want to start a self storage business:

What Are The Costs Involved In Opening A Self Storage Business?

MakoSteel recommends that 25% to 30% of the total development budget be allocated to purchasing land. If the land cost is $1.25 per square foot and covers 40% of the job site’s area, then the land cost would be approximately $3.13 per rentable square foot.

The construction cost per square foot for a single-story facility is between $25 and $45. Meanwhile, a multi-story building would range from $42 to $70 per square foot. If a business person wants to set up a self-storage facility, they will need the financial resources (or investor support). The typical project will require between $2 million and $3 million, with a 10 to 20% downpayment.

Here’s an example of a development budget from Inside Self Storage:

What Are The Costs Involved In Opening A Self Storage Business?

MakoSteel recommends that 25% to 30% of the total development budget be allocated to purchasing land. If the land cost is $1.25 per square foot and covers 40% of the job site’s area, then the land cost would be approximately $3.13 per rentable square foot.

The construction cost per square foot for a single-story facility is between $25 and $45. Meanwhile, a multi-story building would range from $42 to $70 per square foot. If a business person wants to set up a self-storage facility, they will need the financial resources (or investor support). The typical project will require between $2 million and $3 million, with a 10 to 20% downpayment.

Here’s an example of a development budget from Inside Self Storage:

What Are The Operating Expenses For A Self Storage Business?

Self-Storage operations include maintenance, marketing expenses, and loan debt service.

Inside Self Storage offers an example of financials to show how a business can rent 50,000 square feet at $9 per sq. foot per year. This is less than the national average, as the example is from 2000. Even so, even a modest operation like this is still quite profitable.

Who Is The Target Market For Self-Storage Businesses?

Customers who have a long-term storage need are the best to target. For example, military personnel on active duty overseas are eligible to pay the monthly rental using an automatic payment method, such as a monthly credit card payment or electronic fund transfer (EFT), from a bank account.

A 10’x10’x10′ storage space is the most popular. Customers who rent one for more than two years are among the most sought-after.

How Much Can You Charge Customers Of Your Self-Storage Business?

Easy Storage’s monthly average rate per square feet (PSF) of non-climate controlled storage units is $1.26. For climate-controlled space, the average monthly fee is $1.60. The average rate per square foot is $1.42. The 10’x10′ unit is the most sought-after size. Each unit’s average monthly rental income would range from $126.00 to $160.00, depending on whether or not the building is climate-controlled.

The national average for storage unit occupancy was 90%+ in 2015. Some units located in areas with high demand may be subject to waiting lists. These rates could be higher than the national average.

The average customer renting a moving truck will pay between $200-$500 for the rental truck and any equipment necessary to complete the move. This is if the move takes place locally. Depending on how far they were driving, they could pay as high as three to four times the amount for long-distance moves.

Step 2: Form A Legal Entity.

Some of the business structures that are commonly used include sole proprietorships, partnerships, limited liability companies (LLC), and corporations.

If your self-storage business is sued, you can avoid personally being liable by forming a business entity, such as an LLC or business corporation.

You can create an LLC independently and only pay the state filing fees or hire an LLC Service provider. Additional fees may apply.

Step 3: Register For Taxes.

In order to start a business, you must register with multiple federal and state tax authorities. To register for taxes, you must have an EIN.

Small Business Taxes

There are many options available for taxation, depending on what business structure you choose. An example of this is an LLC that could be taxed as an S Corp.

Below are a few guides to help small business owners learn more about taxes:

  • LLC Taxes
  • Sole Proprietorship vs. LLC
  • LLC vs. Corporation
  • S Corp vs. LLC
  • How to Start an S Corp

Step 4: Open A Business Bank Account & Credit Cards.

It is crucial to protect your personal assets by opening dedicated credit and bank accounts for business purposes.

Mixing personal and business accounts places your home, car, and other assets at risk. This is known in business law as piercing your corporate veil.

Furthermore, learning how to build credit for your business can help you get credit cards. You can finance your business with other funding in your company’s name (instead of your own), higher interest rates, better credit lines, and many more.

Step 5: Set Up Business Accounting.

It is essential to record all expenses and income sources to understand your business’ financial performance. Your annual tax filings will be much easier if you keep accurate and detailed records.

Step 6: Obtain Necessary Permits And Licenses.

Failure to obtain necessary permits and licenses can lead to heavy penalties or even the termination of your business.

Service Contracts

A self-storage company should require that clients sign a service agreement before starting any job. This agreement should clearly define client expectations, minimize legal disputes, and include payment terms and service expectations. Below is one example:

Liability Waiver

Labor Safety Requirements

It is important to comply with all Occupational Safety and Health Administration requirements.

Certificate Of Occupancy (CO)

Self-storage businesses are usually run from a warehouse. Often, Businesses that work from a physical location need a Certificate of Occupancy (CO). A CO verifies that all building codes and zoning laws are met.

If you want to lease a site:

  • It is usually the landlord’s responsibility to obtain a CO.
  • Before leasing, confirm with your landlord that you have or can obtain a valid CO.
  • A new CO is required for major renovations. A valid CO must be issued first before lease payments begin, as stated in your lease agreement.

If you want to buy or remodel a place:

  • You will need to get a valid CO issued by a local authority.
  • For self-storage businesses, it is essential to check all relevant building codes and regulations for the area where they are located.

Step 7: Get Business Insurance.

Insurance is essential for your business to operate legally and safely. Your company’s financial security is protected in the case of a covered event.

Many insurance policies can be used to protect different types of businesses and various risks. General Liability Insurance can help you determine the risks your business faces. This coverage is what small businesses most commonly need. It’s an excellent place for you to start.

Another crucial insurance policy that businesses require is Workers’ Compensation Insurance. In most states, workers’ compensation insurance is required.

Step 8: Define Your Brand.

Your brand is your company’s identity. Your business image also depends on how the public perceives it. A strong brand can help you distinguish yourself from other companies.

How To Promote & Market A Self-Storage Business

The location of the self-storage facility is crucial. It is best to be located in an area with many renters. Advertisements on nearby freeways can be effective using large billboards. Effective bus stop advertising is also possible. A prominent sign can be placed at the bus stop to advertise. Access to major freeways is critical.

National franchise companies’ cooperative media advertising campaigns combine efforts online with websites using the same branding and style. They use radio promotion, TV ads, and physical ads to increase brand awareness and advertise local locations.

How To Keep Customers Coming Back

To compete with large national companies, smaller self-storage companies might offer more competitive rates and service areas that aren’t usually served. Hand delivery of discount flyers is a great way to reach apartment buildings and other neighborhoods to attract potential renters. Active digital marketing is vital using the best search engine optimization methods.

Step 9: Create Your Self-Storage Business Website.

Once you have defined your brand and designed your logo, you will need to make a website for your business.

Some people may be afraid of creating a website, even though it is an important step. Although this was a reasonable concern back in 2015, it has become much less common in recent years.

These are the main reasons to build your website now:

  • Websites are a must for all legitimate businesses. It doesn’t matter what industry you’re in or what your business is when you launch online.
  • Facebook pages, LinkedIn business profiles, and social media accounts are not meant to replace your business website.
  • Websites can be created in minutes via website builder tools like the GoDaddy Website Builder.

STEP 10: Set Up Your Business Phone System.

Having your own company phone line helps keep your personal and business lives separate.

Aside from helping you automate your business, it also gives it credibility, and it makes finding and contacting potential customers easier.

Entrepreneurs can choose from a variety of services to set up their business phone system.

What Is The Growth Potential For A Self-Storage Business?

This sector includes everything, from small-scale storage facilities with a few locations to large national operations that have thousands. Over 54,000 storage facilities in America generate over $30 billion annually. The SpareFoot Storage Beat analyzed the top public storage companies in America, their market value, and their revenues for 2015. These are:

  1. Public Storage: Market Valuation $2.38 billion
  2. Extra Space Storage: Market Valuation $782.27 million
  3. CubeSmart: Market Valuation $444.5 million
  4. Sovran Self Storage (Uncle Bob’s): Market Valuation $366.6 million
  5. U-Haul: Market Valuation $211.1 million (self-storage revenue only)

The US self-storage market is expected to grow at 8% in the period 2020-2025. The United States has many major companies that have established themselves in the region, which will provide a substantial boost to market development during the forecast period.

Is The Self-Storage Business Right For You?

The people who succeed in the self storage industry enjoy working with people and are great at managing tenant relations.

If you want to start a self-storage business, it helps if you know basic maintenance skills to fix things that might need repair. To change light bulbs, you should know how to use a ladder and keep your storage spaces well-painted.

What Is Our #1 Recommendation For How To Make Money In 2021?

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Although it’s not real estate in the traditional sense, it’s all digital.

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How Do You Get Paid And How Much?

Simple, after you forward the jobs off to a business owner and he makes some money off of them, you simply ask to make the deal beneficial for each other.

A fair price to charge per lead, depending on the industry is 10-20%…let’s just use the tree service industry for example and go by worst case scenario.

Let’s say you build and rank the site and only 20 jobs a month come in. The average tree service job is anywhere from $500-$2000!

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The great thing is how easy it is to scale. You don’t have to answer the phone…all you have to do is get the phone to ring.

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Digital real estate allows you to have passive income with most of your day being spent OUT of the brick and mortar landscape.

Now, I know you probably have tons of questions… So, check this out to learn more.

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