Do you want to know how much money you can make yearly renting storage units? If YES, here are factors that determine the profit margin for storage units. In order to have an idea of the amount you can make renting storage units, you should clearly define the services and facilities that a storage unit business offer.
Self-storage units are mini storage spaces created for people to store their belongings for a short period of time, and it is subject to renewal. The storage space could be lockers, rooms, boxes, containers or even an empty space in a secured environment. It is important to state that self-storage unit isn’t open for people to rent and live in. It is strictly for storing of personal belongings and goods.
Factors That Influence the Amount a Storage Unit Facility Owner Makes Yearly
Table of Content
- The Size of the Storage Unit Facility
- The Location of the Storage Facility
- The Type of Facility and Complimentary Services that is Available in the Facility
- The Management Style of the Business
- The Business Approach of the Storage Facility
- The Advertising and Marketing Strategies Adopted by the Facility
- The Number of Years the Storage Facility is in Existence
- Average Profit Margin from a Storage Unit Facility
The Size of the Storage Unit Facility
You will agree that no one can conveniently state the amount a storage unit facility owner is expected to make yearly if you do not know the size of the storage unit facility and the number of lockers, rooms, boxes, containers or even an empty space available in the facility per time. A storage unit business that operates from a small facility is expected to make far less than a storage unit facility that operates from a standard and well – equipped facility.
For example, a self storage facility with 40,000 net-leasable square feet, in a market with $9-per-square-foot annual rents, will generate $450,000 in gross annual rents at 100 percent occupancy. Please note that depending on the size of your storage units facility, you can make an average of $361,000 to $798,800 gross per year owning storage units business.
The Location of the Storage Facility
We must not rule out the fact that the location of a storage facility is a major factor that will determine the amount the facility owner is expected to earn monthly. Storage facilities are usually located close to places where people are always on transit, campsites, campuses and beaches et al.
So, if you locate the business in a location that has people with steady accommodation and steady income, you are likely going to find it difficult to get your storage unit facility occupied and that will no doubt affect the amount you are expected to make.
The Type of Facility and Complimentary Services that is Available in the Facility
Another important factor that will determine how much a storage unit facility owner is expected to make yearly is the type of facility and other complimentary services offered by the owner. For example, a storage unit facility that offers cold storage will sure make more money than a storage unit facility that only makes available empty land for storage.
Some storage unit facilities offer complimentary services that ensure that they make more money; they engage in renting out of trucks.
The Management Style of the Business
Another key factor that will determine the amount a storage unit facility owner is expected to make yearly is the management style of the storage unit facility. Trust me, the results you will get when you are a good manager with eyes for top – notch customer service will definitely be far different from a storage unit facility with poor management style.
The idea is that a good storage unit facility manager will not just retain their old customers (members), they will also keep getting new customers to make use of their storage facility especially through recommendations and that no doubt will greatly influence the amount the storage facility owner is expected to make annually.
The Business Approach of the Storage Facility
There are different business approaches that a storage unit facility owner can choose from and no doubt it will greatly influence the amount they are expected to make monthly and yearly. Of course, we know that a storage unit facility owner may decide that they want to operate only from one location and do their marketing alone and they can decide to go into franchising and also partner with other businesses that will recommend clients to them.
You can run a storage facility that operates franchises and also partners with managers of beaches, campsites, campuses and travel and tour organizations et al.
The Advertising and Marketing Strategies Adopted by the Facility
Another key factor that will determine the amount a storage unit facility owner can make yearly is the advertising and marketing strategies adopted by the owner. Trust me, there are several advertising and marketing strategies that can help a business scale-up and increase their earnings, but you may be expected to spend more.
But the results you will make will far outweigh the amount you spent on advertising and marketing. Of course, you don’t expect a storage unit facility owner that is engaging in aggressive advertising and marketing to make same amount yearly with a storage unit facility owner that is passive with its advertising and marketing.
The Number of Years the Storage Facility is in Existence
Lastly, another key factor that will determine the amount a storage unit facility owner is expected to make on a yearly basis is the number of years the storage unit facility is in existence. In business, the number of years you are in existence will go a long way to determine the amount you will make especially if the business is well-managed.
This is so because over the years, you would have been able to gain the trust of your customers and it will be easier for you to always have them coming back and also recommending clients to you.
For example, in your first fiscal year (FY1) you might make three hundred and fifty thousand dollars ($350,000), in your second fiscal year (FY2) you might make five hundred and fifty thousand dollars ($550,000) and in your third fiscal year (FY3) you might make seven hundred and fifty thousand dollars ($750,000).
Average Profit Margin from a Storage Unit Facility
Studies show that the potential profit of a storage unit facility varies greatly. It is dependent on its size, facility and location et al. You can make an average of $361,000 to $798,800 gross per year owning storage units business. So also, the profit margin of owning a self storage facility with 40,000 net-leasable square feet, in a market with $9-per-square-foot annual rents, is about $450,000 in gross annual rents at 100 percent occupancy.
Interestingly, a storage facility business usually fixes the price as it suits the business and they can mark-up their prices as it suits them which will usually influence their profit margin. Plus, the amount spent on ongoing expenditure such as salaries, utility bills, logistics and miscellaneous spending (changing of electric bulbs, changing locks et al) will no doubt influence the profitability of a storage unit facility.