The mini storage industry has been a top growth sector year after year for over 35 years. With 10% of the American population renting storage for an average of 10 months, vacancy levels are at historic lows, resulting in higher rent and swelling net incomes for American mini storage operators. This upsurge in net income is also driving cap rates upward annually which is enticing real estate investment trusts to search for mini storage businesses for sale throughout the country.
Turning a vacant parcel of land into a profitable investment is made easier by using General Steel’s mini-storage kits, starting with pricing a building specific to your location. Take a look at this time-lapse video to see just how quickly these building kits can be constructed.
3 Things You Need to Know Before Starting a Mini Storage Business
Every successful business starts with a thorough plan that completely evaluates a potential business. Our goal here is to make entrepreneurs aware of a great opportunity that exists in the mini storage industry and get you headed in the right direction.
1. Supply and Demand
Supply: In America, there is around 2.3 billion square feet of rentable storage space. According to this video from MoneyTalksNews.com that’s enough space for every person in the United States to stand inside the available units.
That there’s enough demand for self-storage space to support more mini storage buildings every year, and that this year operators are expecting rental rates to increase even more. In fact, the average net income for a facility operator has increased 147% since 2014.
The Great Recession is the primary reason why the self-storage industry has been experiencing record growth. Those who were forced to downsize had to find a place to store their belongings, and more importantly for storage operators, renting a storage unit is much cheaper than a rate hike an apartment dweller is hit with for adding an extra bedroom or office space.
2. Basic Operating Knowledge
Since demand far outweighs supply, pricing power resides with the operator in the mini storage business. However, according to sparefoot.com, potential storage space renters rank price as their top concern followed by security, location, access hours, cleanliness, friendliness and reviews. Oddly enough, price is also the primary concern of operators because it determines whether or not the initial investment makes sense. So lets investigate the rates for average sized storage units before we outline how much a typical mini storage project will cost.
Rental Rates Research
We arrived at the rate ranges below by visiting our local public storage company websites in Colorado. We suggest you do the same to determine what your locale rates are for your locale.
| Size | Avg. Low Rate | Avg. High Rate | Climate Controlled |
|---|---|---|---|
| 5′ x 5′ | $54 | $64 | $70-$78 |
| 10′ x 10′ | $119 | $140 | $145-171 |
| 10′ x 15′ | $211 | $248 | $257-$303 |
3. How Much a Mini Storage Building Project Will Cost
While you will need to also account for leasing or purchasing a parcel of land and the cost of employees, we can give you a good idea how much the facility will cost since General Steel is a leading supplier of metal mini storage buildings.
Phase 1
Phase 2
Phase 3
Evaluating and Pricing 500 Unit Facility
The average mini storage facility has around 500 units and a mixture of storage space sizes. Through General Steel, a standard mini storage facility costs $5-$8 per square foot depending on your exact location.
Example Unit Sizes and Cost Ranges
The majority of people rent a 10’ x 10’ space, so for the purpose of this evaluation we will let that size account for the majority of the project followed by a smaller size and a larger unit.
| Size | # Units | Avg. $ per SQFT | Materials Cost Range |
|---|---|---|---|
| 5′ x 5′ | 150 (30%) | $5-$8 | $18,750-$30,000 |
| 10′ x 10′ | 300 (60%) | $5-$8 | $150,000-$240,000 |
| 10′ x 15′ | 50 (10%) | $5-$8 | $62,500-$100,000 |
| TOTALS | 500 (100%) | $5-$8 | $231,250-$370,000 |
Based on this estimate, how long will it take you to breakeven and start to profit? To answer this basic feasibility question, we need to factor in the average occupancy rate of 87%, how long it will take you to reach this average occupancy rate and the average monthly revenue per unit.
| Size | Avg. Occupancy Rate 87% | Avg. Monthly Revenue High | Avg. Monthly Revenue Low |
|---|---|---|---|
| 5′ x 5′ | 130 Units | $7,020 | $8,320 |
| 10′ x 10′ | 261 Units | $31,059 | $36,540 |
| 10′ x 15′ | 43 Units | $9,178 | $10,788 |
| TOTALS | 434 Units | $47,257 | $55,648 |
At the rates above, it would take you approximately 4-8 months to pay off your initial investment in 500 mini storage units. However, according to NationalRealEstateInvestor.com mini storage properties used to take around 48 months to stabilize but today they are taking an average of 36 months to reach average occupancy levels. Therefore, to be conservative in your analysis, you need to account for the 36 months it will take to reach 87% occupancy and allocate enough capital to operate and pay yourself.
Which Self Storage Buildings are Right for Your Project?
Now that we’ve established that mini storage buildings are a great investment, it’s time to decide who you will have supply the units. We recommend that you select a supplier who’s buildings can exceed the following important guidelines:
1. Durability
2. Versatility
3. Competitive Price
While you do have options when it comes to storage, here’s why General Steel has been a leader in American mini storage buildings for over two decades.
1. Durability: Protecting Your Investment
In the self-storage business, using low-quality storage units can be a serious mistake. Cheaper quality units are not as durable and can be expensive to maintain. High-quality General Steel storage buildings offer increased resistance to external damage factors and normal wear from common use, resulting in an overall lower cost of ownership.
We use high grade steel which provides straight walls, tight connections, and increased durability. Our buildings are designed to withstand the wind, snow and seismic conditions in your area and have the longest warranties in the industry. Therefore, you can focus on running your business rather than worrying about whether or not your investment will last; since our buildings are virtually maintenance free and will last for generations.
2. Versatility: Customization Options
Customizing the functionality and look of your units is one of the most important decisions for your business. For example, the color scheme you choose will be essential to catching the eye of potential renters and help you reduce the time it will take to reach full occupancy. Your color combination may also be an important factor in getting your project approved by your local building department. Take a look at some examples below and take note of which colors you prefer.
Mini Storage Building Photos
3. Competitive Pricing: Buy Right the First Time
At General Steel, we understand that buying your prefab metal building at the right price is just as important as purchasing or leasing your land at an affordable price. After all, the level of your initial investment will ultimately determine when you breakeven and start to turn a substantial profit. General Steel has the highest purchasing power in the industry which results in a better building price for you. If you happen to find a lower price, General Steel will never be undersold if you take advantage of this apples to apples price guarantee.
Finding the Right Piece of Land
Here’s a great tool to help you find the right parcel of land for your project. Simply find the address, then input the mini storage building’s length and width. Next, tap place your building to see how your project would look while evaluating access points and setbacks.
Note: This app works best on a desktop or tablet device
Need Help? We’re Here!
Let us know if you need help planning your mini storage project. We can price multiple size projects so you can evaluate different options and our Project Consultants can be reached at 1-800-745-2685 to answer any other questions you may have.
Jay’s Mini-Storage Business | Kentucky
“I have been a customer of General Steel Corporation for four years. I made my first mini-storage building purchase in spring of 2009. General Steel Corporation helped lead me in the right direction for my storage business to be a success. My business has grown each year and I have made a mini-storage building purchase from General Steel Corporation every year since 2009. I have already made a purchase for this year. Every level of their business has been very professional from the building proposal to delivery. General Steel offers a great product with a great warranty and customer support. I would not buy a mini-storage building from any other supplier. We have completed construction on our last order and started renting units. When we get 75% full we will be looking at another purchase”
