Abandoned storage units are always popping up for sale. That's because once someone moves their stuff in, they don't want to mess with moving it again. Owners of storage facilities have found ways to make big profits from that discovery.
What To Know: The storage unit business is extremely profitable because people pay for space on a month-to-month basis. Also, human nature keeps customers coming back.
"Statistically, once a customer stays with us for a year, they end up staying for five years," Joseph Russell Jr., CEO of Public Storage PSA told the Wall Street Journal.
It doesn't matter what the rate is when you move in versus what it is now. In order to avoid the hassle of moving items out of one storage unit into another or simply throwing the stored items away, people are willing to keep paying more, even if the owners of the storage facilities raise rates regularly.
Because of this, storage facilities are in high demand, and people are willing to pay more than the cost to build one just to get their hands on a business that is ready to go.
Ryan Auger noticed this when a bidding war broke out over a couple of storage properties that his uncle owned. The buyer ended up making more than double what it would cost to build the unit.
"That blew me away," Auger said.
After picking up on the trend, Auger started looking for run-down properties that he could take advantage of. He raised money from some wealthy friends, quit his job as a software engineer, and started cold-calling owners of neglected storage facilities.
He acquired one storage business for $1.2 million, fixed it up and started raising monthly rates — most of the customers didn't care. The place is now generating twice as much in revenue a month as it was previously, and Auger estimated that the property is worth approximately $2 million.
"There’s no way I could make that kind of money working for someone else," he said.
Mike Wagner has also capitalized on America's storage craze. He purchased his first storage facility for $330,000, fixed it up, added units and ended up selling the place for $1.8 million.
Now Wagner is teaching others to do the same. With all the success stories out there, there's plenty of people who want to learn. His business "Storage Rebellion," coaches people who want to invest in the storage business. It's nearly $300 a month and there are special training sessions available for around $800, $1,000 and $3,000 depending on what you are looking for.
With demand for storage facilities soaring over the last two decades and the human nature element that keeps customers in place, there seems to be a lot of storage strategies that are generating profits from those willing to take the leap.
"There is more than enough wealth to go around in storage," Wagner said.
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This story is part of a new series of features on the subject of success, Benzinga Inspire.
Photo: Paul Brennan from Pixabay.
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