Have you ever watched the A & E series “Storage Wars“? The reality show follows a group of people who earn money bidding on storage units that are up for auction. The unit’s content goes to the highest bidder, who then resells the items and goes home with a tidy profit. Sounds like an easy way to earn a side income, right?
Unfortunately, as is often the case, TV makes it look easy. Making money with storage unit auctions is hard work, and if you’re not careful, you can lose a lot of money and get stuck with a lot of junk. However, it can be a fun and lucrative business if you do it right.
So, how much can you make doing this, and is it worth the risk? Let’s take a look.
The Rise of the Storage Unit in the U.S.
Americans have a love affair with shopping and collecting, and they increasingly need extra space for all of their stuff.
According to SpareFoot Storage Beat, a news and analysis website for the self-storage industry, there were between 44,000 and 52,000 storage facilities in the U.S. as of March 2018, totaling 2.3 billion square feet of rentable space. That averages out to 7.06 square feet per person. SpareFoot also reports that spending on self-storage construction has risen sharply since 2014, going from around $1 billion to just under $4 billion each year.
With the rise of the storage unit, storage unit auctions have become a profitable business in themselves. Simply Self Storage reports that 155,000 storage units are auctioned off nationwide each year. With an average auction price of $425 a unit, storage unit auctions have become a $65-million-a-year industry.
How Storage Unit Auctions Work
Storage units go up for auction when a renter defaults on the monthly rent. This often happens when someone dies and their family doesn’t know of the unit, when someone has a medical hardship, or when someone is going through a divorce. If the outstanding balance isn’t paid by a specific time, the unit goes up for auction so the owners can recoup some of their losses.
The period of time from delinquency to auction varies from state to state. In most cases, once a tenant is delinquent for 30 days, the storage unit owner must send a piece of certified mail alerting them that the contents of the unit will be sold at auction if they don’t pay. After another 30 days, the auction date is set. The owner must then advertise the auction for at least two weeks, providing the address and unit number and a general description of the contents.
On the day of the auction, bidders are given a quick peek at what’s inside the unit. They’re not allowed to go inside and look around; they must decide to bid based on what they can see from the door, as well as a guess of what else might be inside. The unit might be full of junk or full of treasure; you never know for sure.
An auctioneer is on-site to manage the bidding process. A storage unit could sell for $1 if there’s only one bidder, or it could sell for thousands if many bidders show up and the unit looks valuable. The winner will also have to pay a cleaning deposit, which generally costs $100 to $200.
If you’re the winning bidder, you have 24 to 48 hours to empty the unit and make sure it’s clean. If you meet the deadline, you get your cleaning deposit back. You’ll have to pay for the unit, the sales tax, and the deposit in cash, so make sure you show up with several hundred dollars in case you’re the highest bidder.
It’s also important to realize that once you win, you’re responsible for everything in the unit. All of that “stuff” is now yours, and all of it must be moved out by the deadline.
What Can You Find in a Storage Unit?
A better question might be, “What can’t you find in a storage unit?”
Tales abound of auction bidders who’ve found priceless treasures and shoe boxes of cash in the units they win. Others have found famous works of art, antique and estate jewelry, racks of designer clothing, crates of expensive wines, and even celebrity memorabilia. But for every tale of hidden treasure, there are hundreds of tales of woe: junky silverware, worthless documents, battered furniture, and broken bicycles.
The secret to earning money with storage unit auctions is knowing how and where to resell the everyday items that, at first glance, don’t look like they’re worth much. Once you have a few auctions under your belt, it is possible to make a decent side income, or even a full-time income, reselling these everyday items.
How to Find Storage Unit Auctions
First, check your local newspaper; even the smallest storage unit facilities must advertise any auction they’ll be conducting in the next couple of weeks, and you can usually find a comprehensive list of auctions here.
Keep in mind that storage facilities in smaller towns will likely have lower attendance, which increases your chance of winning a unit with a small bid.
There are also several websites to help with your search:
- StorageTreasures lists local auctions and also conducts online storage unit auctions.
- AuctionZip lists storage unit auctions by zip code.
- Simply Self Storage Auctions lists their upcoming auctions nationwide.
Tips for Storage Auction Bidding
Still itching to try your hand at storage auction bidding? Follow these tips to increase your chance of success.
1. Learn the Process First
One of the best ways to get started with storage auction bidding is to go to several auctions not to bid but rather to watch and learn. See what the process is like, what people bid on, and what they don’t bid on. Pay attention to what other bidders bring with them to make the process easier.
After the auction, strike up a conversation with the winners. What are they going to do with the unit’s contents? Do they feel they overpaid for the unit or got a good deal? Talking with seasoned bidders can shorten your learning curve and help you avoid making some common mistakes.
2. Watch for Power Plays
Watching several auctions without any money can also teach you about bidding strategy, as well as how to spot when someone is trying to take advantage of you.
Sometimes, experienced bidders will “run up the bid” on a unit to drive the price higher. They do this to discourage new bidders, as payback for a past wrong, or to maintain their reputation. Whatever their motivation, someone who’s running up the bid can cause you to overpay for a unit significantly.
You can spot a bid run-up if someone throws in a bid that isn’t in line with the pace of the other bids. For example, bidding on a unit started at $25 and bids have been going up by $10 increments. The current bid is $95 when, suddenly, a new bidder steps in and bids $275. If the new bidder truly wanted the items for themselves, they would have bid $105 or slightly higher. It does them no good to unnecessarily raise the price they’ll ultimately pay if they win.
That said, throwing out a much higher bid isn’t always a power play; the bidder might be trying to secure the unit based on what they think they can make for it. If a unit is currently going for $300, for instance, and a bidder thinks they can earn more than $1,000 on it, they might bid $1,000 to scare everyone else off. If they stop bidding entirely after their initial bid, you know it was just a run-up.
3. Have a Plan
Imagine you win a 10′ x 10′ storage unit that’s packed from floor to ceiling with boxes, bags, and furniture. You only have one to two days to move all of that stuff out; that probably won’t give you enough time to sort through everything on-site. You’ll have to move it first and then start sorting.
All too often, new bidders get caught up in the bidding process and end up winning a unit before they’ve even thought about what they’ll do with its contents. If the unit isn’t cleaned out by the deadline, the bidder forfeits their win to the storage facility. The only way out of this is to renew the monthly contract with the storage facility to buy some time.
It’s important to make sure you have a plan in place before you attend your first auction or you’ll end up paying much more than you planned. Questions to ask yourself include:
- Where will you put all of this stuff until you’ve sorted through it and resold it?
- Do you have enough garage or basement space to keep it for a month or two? If not, do you have your own storage unit with enough space to sort through items?
- Do you have a truck to transport it all? If not, how much would a rental truck or moving truck cost?
- Are you strong and healthy enough to move everything somewhere else? If not, how much will it cost to hire laborers to move items for you?
4. Research Where You Can Resell Items
Chances are, you won’t want to house all of this stuff indefinitely, so you’ll need to sort through it, donate the junk, and resell the rest. That can take a considerable amount of time, which is why you should have a list of places where you can sell or dispose of items.
These can include:
- Flea markets
- Clothing consignment shops
- Children’s consignment shops
- Furniture consignment shops
- Local auction houses
- Antique stores
If you don’t know much about vintage and antique collectibles, it’s worth your while to start browsing through antique stores to see what’s for sale and how much it’s selling for. This will help you identify valuable antiques and collectibles when you come across them in a storage unit.
You’ll also want to talk to representatives from your local auction house to find out how much commission they take. Most houses take a 10% to 25% commission on whatever they sell. It’s important to know this before you bid on your first unit so you’re better able to calculate your potential profit. The same goes for local consignment shops, which might take up to a 50% commission.
You’ll also need to know where you can donate the items you don’t want to sell. Remember, you can get a tax deduction for donating many items, so it’s important to determine which disposal option makes the most financial sense. A good place to start is Goodwill’s Valuation Guide, which lists the average selling price of the most commonly donated items.
5. Be Wary of Almost-Empty Units
Sometimes a storage unit will be mostly vacant, with only a few boxes or pieces of furniture. Be wary of these “empty” units, as they might mean the tenant already came by, took the valuable items, and left the junk.
For your first auction, only bid on the smallest units with a decent amount of stuff inside. This will give you a chance to get into the process of moving, storing, sorting, and reselling items without becoming too overwhelmed. As you gain more experience, you can work your way up to larger units.
Keep in mind that smaller units are often more appealing to bidders because they’re easier to process and clean, so bidding might be higher on these units even though there are fewer items in them.
6. Bring the Right Tools
There are several items you should bring with you to an auction. These tools will help you better identify what’s actually in the unit.
- A flashlight. You’ll need this to see into dark units before you bid and after you win.
- A step stool. This can help you see beyond items in the front of a unit to items further inside before you bid.
- A notebook and pen. A notebook is useful for jotting down big visible items before bidding starts in order to calculate how much you might be able to earn from them.
- A padlock. You’ll want to put your own lock on a unit immediately after settling up with the storage facility.
- Gloves, Bags, and Sanitizer. If you plan to start sorting through items immediately after you win, make sure you have everything you need to do this. Arrive with garbage bags, empty plastic bins, a broom, plastic gloves, a face mask, and hand sanitizer. Remember, you have to leave the unit completely clean, so come prepared.
7. Only Bid On What You Can See
Fantasizing about what might be inside that towering stack of boxes or tucked away behind that old refrigerator can cause you to overbid on a unit and lose money.
A better strategy is to only bid on the items you can see. Estimate how much you can make selling those items and don’t bid any higher than 50% of that amount. This strategy will lower your risk, leave room for profit, and ensure you don’t overpay for a unit. And if you do find a box full of rare books behind that old refrigerator, it’ll be icing on the cake.
8. Know the Code
Storage unit bidders have a code of conduct that dictates what you can and can’t do. One thing that violates a bidder’s code of conduct is keeping any highly personal items you find in a unit.
Imagine the unit you win has a box of photographs, old birth certificates, love letters, and an urn full of ashes. These are items that you should return to the storage facility, who will then try to return these personal items to the family of the previous renter.
Another no-no is using the storage facility’s on-site dumpster to dispose of unwanted items. You’re responsible for disposing of any items in a unit you win, and this means going to the city or county dumpster yourself. If you use the facility’s dumpster, you’ll upset the owners and risk being banned from future auctions.
9. Sort Carefully
When it comes time to start the sorting process, wear plastic or rubber gloves, pants, and a face mask. Items will likely be dirty and dusty, and you never know what a box contains until you open it.
When you start going through items, be meticulous. Go through pants pockets, riffle through book pages, open drawers, and look for hidden nooks and crannies. Money or other small items might be stuffed into unlikely places, and you’ll miss them if you don’t take your time.
Storage auction bidding is not a get-rich-quick scheme or a fast-track to easy money. It’s dirty, labor-intensive, and risky.
That said, it can still be a great way to earn a solid side income, especially once you gain experience and start building relationships with storage facility owners, auction houses, and other people who can help you resell the items you find. It can also be downright fun.
Have you ever bid on a storage unit? If so, what was your experience like? Did you find trash or treasure? What tips do you have for aspiring bidders?