Self-storage rental units have been a darling of real estate investors for quite some time.
The appeal is obvious. First of all, people tend to accumulate more items than their homes can contain. Also, people today relocate more often than did their parents and grandparents. When people who often relocate collect too many items to store in their homes, they become in urgent need of somewhere to store those items. That’s where you and your new self-storage rental business come in. But don’t think that you can jump into the world of storage units without preparation. Before you purchase existing self-storage units, there are several things that you must know and know well.
Let’s consider nine things that should be at the top of your list.
1. What is Your Business Model?
Have you researched the market? Is the present owner enjoying a good return on his investment?
If so, there’s less that you’ll have to do to keep the profits coming in. However, if the present owner is struggling, you’re going to have to have a comprehensive understanding of what he’s doing wrong.
But it doesn’t end there.
You’ll have to determine if it’s likely that you’ll be capable of correcting the mistakes. In other words, it’ not enough to understand why the business is failing. You also have to know how you intend to make your self-storage business successful.
2. How Much Investment Capital Do You Have Available?
Can you allocate the appropriate amount of investment capital to see your venture all the way to success?
Have you done the research to learn how much money you should have on hand beyond your initial purchase of the business?
Don’t guess. Be well-prepared when you launch your new business. Know the financial hiccups that others have faced and then learn from their mistakes.
3. Do You Have a Working Knowledge of the Marketplace?
Are you relatively new to the storage unit market? You’ll want to learn as much as possible about who will form your target demographic.
What are your potential customers looking for in a storage unit? Do they want extended hours of service? Or extra security?
Do they want more space to park large-size vehicles when they’re loading or unloading?
4. Is There Room to Expand?
If you’re looking for a business that can be expanded in the years to come, you’ll want to note whether the storage units are located in an area noted for its growth? Are new brick-and-mortar businesses regularly launched in the town or city where the storage units are located?
Is there available real estate for building new units?
5. Do the Units Use Up-To-Date Technology?
Recent technological advances have changed the storage unit business.
If you purchase an outdated storage business, you’ll need to bring the facility into the modern age. Customers expect to have climate-controlled units for their more delicate collectibles.
You don’t have to make every unit climate-controlled, but you should, by all means, have several of such units always available for rent.
6. What is the Existing Reputation of the Business?
It’s difficult to change the reputation of a business that’s known throughout the community for its sloppy or questionable business practices.
If you purchase a business that hasn’t made customers happy in a long time, you’ll have to draft a plan to convince people that everything has changed. This situation is going to require more than just a name change. Locals will, at least initially, continue to associate the facility with bad customer service despite the new name of the sign.
You would be wise to factor into your cost of purchasing the business the price of hiring an advertising agency or publicity firm with a solid track record of changing public opinion.
7. How Will You Handle Daily Operations?
One of the reasons that investors are attracted to self-storage rental units is because they hold the promise of nearly hands-off operation. However, all good businesses require some degree of hands-on operation and the self-storage unit business in no exception.
True, computers and surveillance equipment make it possible to oversee the day-to-day running of the property from a remote location. Nevertheless, someone has to be available to respond to any problem that arises.
Will you be able to search for, interview, and hire a capable manager? Who, in turn, will oversee the manager? There needs to be someone who can resolve the issues that are too complex for the manager to handle.
If you don’t want to be responsible for any of the routine operations at your facility, you’re going to have to give the people you employ a thoroughly outlined procedure for handling problems.
8. Do You Know Which Taxes and Insurance are Required?
If you don’t have the time to become familiar with the federal, state, and local laws that will influence your taxes and insurance, you should hire an expert.
Your tax liability may differ widely depending upon the type of self-storage unit business you purchase and its location.
All businesses need complete insurance coverage. That goes double for businesses that stake their reputations on keeping other people’s valuable possessions safe. Don’t try to cut corners when purchasing insurance. Make sure that you have every reasonable avenue of insurance liability covered.
9. Are You Legally Protected?
Your new property will have a steady stream of ordinary people moving heavy items day after day. An injury is inevitable. You’ll want to make sure that you’re legally protected against unfair injury-related lawsuits.
You’ll also want to be able to sleep at night knowing that you won’t lose your entire business if a climate-controlled unit fails and a renter finds that his rare comic book collection is covered in mold.
If you value a good night’s sleep, make sure that your business is compliant with all relevant government legislative regulations.
Get Help From Self-Storage Unit Professionals
Making your self-storage facility stand out from the competition can be challenging. Flex Building Systems can give you just the edge you need to make your business a success. We work closely with you to design and build new units as well as to retrofit old ones to your needs and specifications. Getting started is easy. Contact us today, and request your quote.