Evaluating Business Opportunities in the Self-Storage Industry

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The self-storage industry has experienced steady growth over the past several decades. That’s because both businesses and households seek extra space to store their excess belongings. This upward trend, even during economic downturns, makes self-storage an appealing industry for entrepreneurs and investors looking to buy an existing storage facility business or build their own. This is where you need to look for business for sale storage units. Here are some important factors to evaluate.

Location, Location, Location

Self-storage relies heavily on convenient visibility and access to local markets. The optimal locations are near residential areas and busy commercial spaces where storage needs are high, such as near colleges/universities, military bases, and major highways.  

Drive the surrounding area to get a first-hand look at traffic patterns, population density, and local construction projects that could bring more potential customers. Growing, middle-class neighborhoods are ideal. Be wary of more isolated, rural locations with limited visibility. Also pay attention to zoning regulations that may impact future expansion plans.

Competition Analysis

While searching for business for sale storage units, you shouldn’t ignore competition. Scope out direct local competitors by visiting their facilities and gathering intel. How old is their property? What amenities and features do they offer compared to the business for sale? Do they seem well-maintained and managed efficiently? 

Try posing as a prospective renter to ask questions and gain insights. Also research indirect competitors like other storage options in the area, such as garages, attics, rented moving trucks, etc. Understanding the competitive landscape assists in evaluating true demand and opportunities.

Infrastructure Condition

The physical quality of the facilities being acquired has a big impact on ongoing costs and the renter experience. Inspect the property thoroughly, looking for safety issues, dysfunctional access control systems, cleanliness, and organizational flow in the storage units themselves. 

Well-designed storage facilities have climate controlled options, wide halls for moving bulky items, reinforced building structures, quality storage unit doors/locks, adequate security lighting, accessibility for disabled renters, and more. Cosmetic fixes are easy but replacing major infrastructure components like HVAC systems can be extremely expensive.

Occupancy Rates

The existing occupancy rate offers instant insights into local area demand. A mostly vacant facility indicates potential underlying issues, while high occupancy signals prime location and effective management. Ask for documentation on historical occupancy rates to reveal growth patterns and seasonal ebbs and flows. Also find out why current renters chose this facility compared to other options. High occupancy with minimal renter turnover is ideal.

Growth Potential

Once satisfied with the current state of the business, investigate options for future expansion. Is there extra land to add more buildings or storage units? Can existing structures and systems support additions? What about introducing truck rentals, moving supplies, records storage, wine storage, ecommerce fulfillment capabilities? Savvy buyers aim for scalable businesses with long runways for growth.

Financial Documentation

Potential buyers will want to thoroughly analyze historical revenues, operating expenses, profit margins, and tax liens for at least the past 3 years, if not longer. This helps establish fair valuation and price negotiations. Also examine what percentage of revenue comes from rent vs fees. Review all vendor contracts and service agreements that will transfer with the sale. Ask sellers to explain any significant financial swings or irregularities.  Financing options are also worth discussing upfront.

Final Words 

Owning and operating a business for sale storage units takes considerable time, effort and capital. But for entrepreneurs who do ample homework beforehand can unlock a world of potential. Taking over an existing cash flow positive storage operation in a thriving market with built-in demand makes for a sound, scalable investment. Conduct thorough due diligence and move forward confidently.

Interested in more information about buying and selling businesses?

Find the pros and cons of owning various businesses on the Truforte Brokers Blog.

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