It’s 2010. 

You’re binge-watching Storage Wars on TLC, wondering why anyone would waste their time bidding on garages full of junk in the hopes of finding vintage comics worth $10k. 

I’m with you on that. 

But, as entertaining as that show was (no shame), here at Unconventional Acquisitions, we’re all about minimizing the amount of time we spend on the businesses we invest in and maximizing the cash that’s lining our pockets and funding our dreams.

We want passive income streams. Emphasis on passive. 

Instead of hopping from storage unit to storage unit looking for My Little Pony collectibles, we’d much rather own the entire storage facility and let the bidders do their own thing.

Cha-ching for us, chasing dolls for them. 

If you’re new to what we do here, we’re on a mission to create 100,000 small business owners by buying boring businesses. 

Our philosophy? We help you acquire profitable businesses by buying then building, so you can see cash flow on day one.

Think you’re ready to become a storage investor?

Before we encourage you to get the ball rolling and add the very boring business of self-storage to your portfolio, there are some things you’ll need to consider. 

Here’s a list of the pros and cons of buying a self-storage facility (yes, you’re gonna wanna bookmark this one): 

Pro #1: Self-Storage Facilities Require Very Little Upkeep.

Nothing is more appealing than a business that requires little to no maintenance. Self-storage facilities primarily run as a hands-off business, which is something we loooooove to hear. 

The business model functions similarly to traditional real estate investing. You’re essentially renting out mini apartments where people store their things instead of living there. 

This means when it’s time for your customers to ‘move in’, they’ll sign a contract, put all their stuff into their unit, and pay their rent each month. 

When the contract ends, they’ll remove everything in the unit and all you, or your operational manager, need to do is sweep it out and get the next tenet in.  

Simple as that.

Pro #2: Storage Investments Provide a Steady Stream of Monthly Passive Income.

Again, this business is comparable to real estate investing. So…like having a renter who pays your mortgage each month, hundreds of people will pay you to rent your storage units and store their stuff. 

Running a business with predictable and stable revenue is something we love because you know exactly how much money you’ll make each month. 

According to Leverage.com, storage units usually only require about a 45% occupancy rate to break even. And depending on where your facility is located, you’ll be able to fill them very easily. 

When things are going well and your occupancy rates are high, you could also explore marginally increasing your rent to boost profits without doing a lick of extra work.

Because most tenants are on short-term contracts this is easy to make happen and will result in a boost in cash flow, even if turnover is high.

Pro #3: It’s Practically Recession-Proof.

Recession-resistant. Two words we don’t hear often enough. 

Believe it or not, storage facilities fall under this category. From the ‘08 financial crisis to the craziness that was these past two and a half years post-panini, self-storage businesses tend to do even better when the economy downturns.

Music to our ears.

It’s a known fact that when the economy tanks, people start to downsize. The tell-tale sign of any recession is people spending less money. And there’s no question that one of the first things to shrink in size is the square footage of their apartment. 

You may ask…but where will they store all their extra stuff…at least for the time being? 

Enter said recession-proof storage units.

On the other end of the spectrum, you can still expect high-profit margins when the economy is thriving. Hot take here, but this is because most people have too many things. 

With the rise of consumerism (and influencers on TikTok), it’s only getting worse. According to Sparefoot, 10.6% of households are already using a self-storage unit and this number is only projected to increase. People would rather rent storage space than give up their stuff.

Con #1: Tenant Issues and Problems Are Inevitable.

When it comes to renting out any type of property—whether it’s residential, commercial, or storage units—you’re bound to encounter some problematic tenants.

There’s no avoiding it.

But this next part kind of sucks because storage facilities are known for having a mixed bag of customers. And sometimes, it can get a little sticky. 

Some customers who rent storage units have come from desperate situations. Some may have just been evicted or had their homes foreclosed.

Nothing wrong with that, but this could also end up looking like late payments, ghosting, or even having tenants living in your units. 

You’ll want to prioritize security cameras, quality locking systems, and taking the time to hire the right people to manage the business. 

Con #2: It’s All About Location.

The success of a storage facility is really dependent on its location. 

Let’s face it, people love convenience and accessibility. The fact that Uber Eats exists says it all. The easier it is, the more likely they’ll do it. 

So when it comes to storage units they can’t be too far out of the way from where people are living. This means the best ones are usually situated on high-traffic roads that see around 25,000 cars per day or are extremely close to a well-populated area. 

Day after day, people will pass it driving home, half asleep after a long day of work or while they’re late to pick their kids up from daycare. 

So when they need a storage unit to house all of their extra possessions between their next move, they know their stuff is safe. 

This means that storage facilities in the wrong locations generally have lower capacity and occupancy rates, and they’re usually incredibly difficult to turn around. 

Even with the best management team in place, you won’t see a high cash flow if there’s low visibility. Nothing you can do about that one. 

Make sure to work with a quality commercial real estate agent to help with your due diligence on the location. When real estate is included with a business for sale, like in the storage market, their help could save you a ton of time and money. And they will likely understand the local cap rate to help value the business.

Con #3: Occupancy Rates Are Highly Variable.

In the world of storage facilities, it’s all about occupancy rates. 

The health of a facility hinges on how many people are renting out your units. Pretty obvious. And just like any business, the demand varies and fluctuates. 

High-performing storage facilities run at about a 90% occupancy rate resulting in high-profit margins and more cash in your pocket. 

With a ~45% occupancy rate to break even, you’ll want to make sure that you’re staying far above that to continue to make it worth your while.

When times are tricky and occupancy decreases, you can solve this problem by raising the unit rent to subsidize the low occupancy rates. 

This could look like a small increase in rent, even by 6 to 7%. And as we mentioned before, with high turnover and short-term contracts, it’s easier to do than you’d think.

Want to go deeper and get the inside scoop on how to find the right boring small business for you to invest in? We walk you through everything you’ll need to do in our small biz buying course.

And if you’d rather hear it straight from the experts (that’s us), make sure to join our mastermind. 

Yours Unconventionally,

Codie & Ryan

Co-founders – Unconventional Acquisitions

If you want to learn more about how to find and buy businesses, check out these articles👇

• The 7 Most Important Questions to Ask When Buying a Business
• The Four Things Holding You Back From Buying a Biz
• The 5 Most Common Mistakes in M&A

You can also register for the course here OR if you are serious about buying a small business, join our Mastermind.