Wednesday, February 8, 2017
How to Make Money from Buying Up Storage Sheds
Since Matt and I started buying storage sheds up for auction last October, I've gotten a LOT of comments that hinted (or outright asked) for me to detail more of the process. So today, I'm going to deliver just that!
First, for some background, storage sheds go up for auction when the person owning the unit fails to make payment on it for several months and despite multiple warnings (much like a house that goes into foreclosure). The owners of the storage shed facility then put up the unit for auction (often in a live bidding event) to try and recoup some of their lost funds.
The purchase of storage sheds and then the sales from items within has become more popular with such shows as Storage Wars (which is totally how we got into it), so there are more people than ever before looking into this as a way of making some extra income.
Here are the answers to a few questions people have often asked us:
Is there actually money to be made from doing this?
The short answer? Usually. But there is a TON of work involved, and the profit often takes a long time to come (depending on how you're selling the items). But yes, we've been able to make a profit on all the units we've bought up so far (and often tripling or more what we paid for the unit itself).
How do I find out about possible storage auctions in my area?
Initially, we found out about local auctions from the classifieds section of the newspaper or from legal notices posted online (since I believe that storage shed companies are required to list publicly that they will be auctioning off the units). However, once we got more into the process, we found that it was a lot easier to go through a site that collected all such data for you, and we particularly liked Storage Unit Auction List because of how it listed all the data found per location, updated any known changes in the auctions, and listed contact info for the storage shed companies. We weren't always successful at finding auctions through the local paper, but there always seemed to be some on that website. It does, however, cost a monthly fee (of $9.85).
If you're only planning on just getting your feet wet and trying to buy one unit to see how it goes, try and find something listed locally through your paper, or try out the free 7-day trial on Storage Unit Auction List. If it's something that you want to start doing regularly, it might be worth it to factor the payment of the monthly fee as a business expense.
What happens when I actually go to a storage shed auction?
First, they will pass around a sheet asking for your contact information and go over some general rules. The person in charge will also announce if any units have settled their account previous to the auction (which will then make those particular units not up for sale) and which units are up for auction that day.
Generally, the person in charge will lead everyone to the unit up for auction and you will be allowed to walk up to the edge of the storage unit to look around, but you aren't allowed to go inside, touch, or move anything to see further.
The auctioneer will then start the bidding, and you simply raise your hand and shout out what you're willing to pay as the bidding continues. At the auctions we've been to, the bidders have set the speed of the bidding, but the bidding will usually increase by at least $10 or $20 per bid up (although sometimes a person will jump up more if they're trying to intimidate the other buyers).
Once the bidding stops, the auctioneer's assistant (usually) will collect payment and double check your contact info, and go over any specific policies the storage shed business has on clearing out the unit (most companies want it cleared and swept out within 24 or 48 hours).
What should I bring to a storage shed auction?
First off, you must bring cash for payment. As far as I'm aware, no other form of payment is accepted, so if you're wanting to bid on a nicer unit, bring several hundred dollars with you in cash (and make sure you have some smaller bills like tens and twenties in there too since you never know exactly how you'll be bidding).
Second, bring a flashlight. Even though most auctions are held in the morning or midday, the units are often still dark in the back corners and it can be hard to see everything in them otherwise.
Third, bring a vehicle that can cart away your newly acquired stuff (or have one lined up that you can borrow for such an occurrence). This is a mistake we made several times, and it is beyond stressful to not have a truck or other large vehicle at your disposal to move the items.
Fourth, bring a lock (an old-fashioned combination lock works fine) just in case the company doesn't provide one and you need to leave the facility and then come back later.
How do I know if a storage unit is worth bidding on?
This one will depend a bit on the person, but a couple general rules to keep in mind are first, look for units that show a pride of ownership (such as carefully organized stacks, labeled boxes, sheets covering furniture, etc.). We made the mistake on a couple of our units of buying stuff that had obviously been shoved in there, and not only was it a pain to try and extricate everything from the unit without stuff falling on our heads, but it also usually meant that the stuff within wasn't the greatest quality.
As for other factors, it depends on what you want to get into selling. If you want to try and sell furniture (because it tends to bring in a bit more income), look for items with furniture in good condition. If you want to sell vintage clothing, look for clues that might indicate that the items within might be from a few decades back. In the end, just make sure to ask yourself if the unit seems like it will be worth all the time to go through, sort, and clean out. If you're not sure, don't bid.
Isn't it kinda sad to get into this? What with this being people's personal stuff and all?
Surprisingly, this is the comment/question I've gotten the most. In short, yes, it is kind of sad, but it's sad in the same way that a home up for foreclosure is sad. The fact is, for whatever reason, the payments weren't made and the people almost always stopped being in contact with the storage shed company, so the natural consequence is what it is.
That said though, you will often find several personal items in storage sheds that you buy, including photos, journals, scrapbooks, etc. In all of the storage shed companies we've bought from so far, they have all requested that any such personal items be returned to the storage shed company, who will then put them aside for a set amount of time and try again to contact the owners. (Note: if you can sort through the stuff at the facility itself, that's often the best way to go so you won't have to keep running stuff back and forth every time you come across more personal items).
How do I know if buying up storage sheds is a good fit for me?
First---and I cannot stress this enough---if you plan to get into this, you MUST have a lot of space to store all this stuff until you sell it. We have made so many mistakes on this one already (and our poor parents are having to store a lot of the stuff for us, unfortunately) because we just bit off way more than we could handle in our small two-bedroom apartment. So, before you just jump into this as a great money-maker you can do from home, stop and consider where you're actually going to keep everything.
Second, if you have a serious ick factor with secondhand stuff, this also might not be for you. In two of the units, the owners had put in bags and baskets of dirty laundry (I'm not even kidding), as well as questionable photos, random sharp objects that would come out of nowhere (like needles kept in a jewelry drawer), and makeup or lotions or whatnot that had been stored poorly and just went everywhere (not to mention one of the units that had dog hair over EVERYTHING). So, for the love of all things sanitary, WEAR GLOVES while you are going through the stuff (and be prepared with a nice, huge, empty trash can when you're sorting through stuff).
Third, if you're the kind of person that struggles finishing projects, you might want to sit this one out. Items can often take months to sort through, clean up, and then sell, and it can be tempting to lose steam. What I've done to stay on top of it is set aside certain times just for listing items (or I've set myself a weekly goal of what I want to list that week) so that I don't get behind (and so that the stuff is not eternally stored in my in-laws' garage).
Fourth, even though there is money to be made in this, it requires a lot of work and a lot of patience. I can't tell you how many times people will tell me that they're meeting to pick up an item and then never show up, or how many times people will tell me that they'll meet me at a certain time and then show up an hour and a half later. You must be patient, and you must learn to live with the idea that this stuff could be with you for a long, LONG time before it ever gets sold.
How do I go about actually selling the stuff I've bought?
There are a few different routes we've gone, and I'll walk you through our logic in choosing each.
For large, bulky, or heavy items (and items that are in general demand), I go through KSL Classifieds (a local Utah service) or Facebook Classifieds. I go this route with those kinds of items because then I don't have to worry about shipping costs, and items that are generally desirable tend to sell well wherever you're located (rather than unusual collector's pieces that will only appeal to a small group of people).
If you have a lot of smaller items that you wouldn't be able to list for very much (around $5 or less), you might consider having a yard sale. At the yard sale we held back in November, the majority of the stuff we sold was so small/inexpensive that we wouldn't have found it worth taking the time to list, so we were just going to donate a lot of it to the secondhand store. This way, we were able to get rid of a lot of it AND make back most of the money we paid for the units in the first place (and all from stuff we were going to get rid of anyway!).
If you have very unusual pieces that aren't very bulky, heavy, or large, you might want to consider listing them on eBay. You also might want to list things on eBay that local people might not be as willing to pay as much for (like vintage clothing, spare parts for a specific machine, and collector's items).
How do I know how to price each item?
The Internet is a glorious place, and it provides a wealth of information about the value of many pieces if you just type the specific stats of an item in a search engine. However, a rule of thumb---you'll almost never get what an item is actually worth, so I usually take what an item is worth and then cut it in half when I'm trying to sell it locally. On eBay, people might be willing to pay a bit more for an item, but if you're expecting to get full value on all your stuff, you'll be waiting for a long, long time.
So that's all that I came up with off the top of my head, but definitely feel free to shoot any other questions you have our way! I'd love to help in whatever way I can.