Understanding the Business Model for Reselling Storage Unit Finds
Summary: Making money by purchasing abandoned storage lockers and selling their contents represents a good business opportunity for entrepreneurs and side hustlers alike. The business model is straightforward and easy to understand. But it does take time to master.
The mystery of discovering hidden treasures in abandoned storage units has attracted both entrepreneurs and side hustlers for years. Both groups see the potential for high rewards boosted by relatively low overhead. But to make money with storage unit auctions, you need to understand the business model.
Storage Units as a Revenue Stream
There are as many business ideas as there are people willing to start their own businesses. So why focus on storage units? Because they can be a fairly lucrative revenue stream. Think about what storage units hold.
Consumers rent storage units in order to have a place for things they either do not want in their homes or do not have room for. These are things with enough value to prevent consumers from merely throwing them away. This isn't to say that everything found in an abandoned unit has resale value. It is to say that most units have at least some things worth selling.
Entrepreneurs and side hustlers can take advantage of storage units when renters stop making their payments. That's because state and local laws allow storage unit owners the right to seize property when rent goes unpaid. Such property is sold via on-site or online storage unit auctions. And with a steady stream of auctions, there are plenty of opportunities to buy low and sell high.
How the Auction Process Works
A storage unit auction is not unlike a car auction or an auction linked to an estate sale. Increasingly, storage unit auctions are being conducted online. Yet they don't have to be. Traditional on-site auctions are still held. Here is how it works from the buyer's perspective:
- Research Research is the first step in bidding on abandoned storage units. A buyer starts by identifying local facilities and checking their auction schedules. Buyers can use sites like Lockerfox to find local auctions without having to make dozens of phone calls or drive around town.
- Auction Attendance If it is a local auction a buyer is interested in, he actually goes to the site. He bids in real time along with all other bidders in attendance. When a buyer takes advantage of an online auction, he simply enters his bid price and then monitors to see how things are going.
- Bidding Strategy The most successful entrepreneurs tend to develop bidding strategies prior to each auction. They set a budget and stick to it. They consider potential resale value based on what they can see from storage unit pictures or onsite viewing.
The goal is always to bid the lowest possible amount before turning around and selling storage unit auctions at the highest possible price. It is a pretty simple business model. But there is always a risk involved. A bidder never knows what he is going to get until he takes possession and begins going through the storage unit.
Look but Don't Touch
The biggest risk of bidding on abandoned storage units is not fully understanding the contents. Unfortunately, state and local laws usually don't allow bidders to enter storage units and personally look through items. They can look into a unit from the outside, but that's it. They cannot touch or handle unit contents in any way.
For online auctions, the same restrictions are in place. Landlords can only take pictures from the outside. What a buyer sees in a picture is all he is going to see before bidding commences. So a big part of turning storage unit auctions into a viable business is learning how to assess units with just a picture.
Here at Lockerfox, we encourage bidders to do plenty of research based on what they can see. For example, brand-name products tend to do very well. A bidder can look up a brand before making any kind of decision.
Experienced bidders know enough to research:
- Antiques and collectibles.
- Vintage items.
- Currently trending items.
- Furniture and appliances.
- Decorative items.
A bidder's best friend is a cell phone with internet access. Armed with a phone and a little bit of knowledge, a bidder can turn some quick research into a wise decision.
Selling Storage Unit Contents
The second half of the equation is selling the contents of the storage unit. eBay and Facebook Marketplace are two extremely popular tools among auction winners. Both offer an extensive reach across an eclectic global audience. We recommend them, along with flea markets:
- eBay eBay has long been the gold standard for this sort of thing. Items can be listed at a fixed price or sold via auction. Bidders can set their own shipping rates and choose multiple shippers. Most importantly, eBay encourages high-quality images and detailed descriptions.
- Facebook Marketplace Facebook Marketplace is a fantastic sales tool for local-only sales. It allows bidders to reach local customers and simultaneously save on shipping costs. And because everything takes place over Facebook, communication between both parties is streamlined.
- Flea Markets Renting space at a local flea market is usually pretty affordable. It is common for flea market sellers to rent space on weekends. That gives them the rest of the week to bid on auctions, clean out storage units, and go through the items they have won.
The one caveat that comes with flea markets is the potential commitment required. Flea market operators do not want valuable spaces going unused. So if a storage unit buyer wants a long-term rental agreement, they may have to commit to being there on specific days and for a certain amount of time.
Legal and Tax Compliance
It is important that entrepreneurs and side hustlers just getting started with storage auctions make the effort to learn about all the legal and tax compliance issues. For example, a bidder may have to collect sales tax on all items sold. Bidders may also be required to obtain local business licenses. All will have to handle their own local, state, and federal taxes.
The storage auction business model is fairly simple to understand. Implementing it is not too complicated either. With the right knowledge and some practice, just about anyone can turn abandoned storage unison to profit.
FAQs
Is there a typical starting price for storage unit auctions?
Every auction is unique. We have seen some with prices as low as $10. But starting prices are commensurate with the perceived value of a unit's contents.
How can I assess storage unit value?
Assessing the value of a particular storage unit requires a combination of research and experience. You need to know what to look for and how to research what you see.
Where is the best place to sell items that I obtain?
The two best outlets are eBay and Facebook Marketplace. Local flea markets work well, too.
How do I make my listings more productive?
The two big things buyers look for are detailed descriptions and high-quality pictures. Offer both with each listing.
Are there any tax implications?
Yes. At the very least, storage unit resellers must handle paying their own local, state, and federal taxes. But state sales tax compliance might also be in play.
