Storage unit auctions are getting more and more popular. Many sellers manage to get unique items through such auctions.
But what exactly are these auctions, how do they work, and how can you profit from them
Continue reading this article to know all the answers.
Storage Unit Auctions: An Inside Look
If you’ve watched or heard about the reality show Storage Wars, then you’re mostly aware of self-storage auctions.
But how did these auctions start? Surely nobody would want their items to be listed for an auction, right?
Americans are constantly utilizing storage units when they have no space in their facilities for certain items.
The service is becoming increasingly popular as it’s affordable, convenient, and straightforward.
However, the tenant might fail to pay their monthly fees for any reason.
If this continues, the storage service provider will lose money as they can’t rent the unit or sell the contents since they don’t own them.
The Birth of Self-Storage Auctions
The storage facilities would contact the tenant in hopes of working out a solution.
Should that not work, the facility would be forced to sell off the contents of the units to cover the lost money.
That’s when self-storage auctions start. The facility would list the contents of these abandoned storage units for sale through storage auctions.
It’s important to understand that a storage unit auction isn’t feasible for both parties.
The tenant will lose some belongings that could be valuable.
On the other hand, the storage facility will need to deal with a lot of documentation and legal paperwork before listing a storage unit for an auction.
Self-storage auctions are intended to help the facility recover unpaid rent from tenants who’ve abandoned their units.
The facility can make up part of the lost revenue by auctioning off the contents of the unit.
However, the facility doesn’t get any profit other than cover the unpaid expenses.
In some cases, the auction price may not even be enough to cover said expenses. In that case, they’d still pursue the tenant for the remaining difference.
As for the buyers, these auctions give people a chance to purchase goods at a discount. They may end up with valuable items.
How Do Self-Storage Auctions Work
Storage auctions start when the facility lists the items for sale. This can be done through live auctions or online auctions.
In most cases, neither the facility nor the buyers get to know what’s inside the boxes.
If you find the auction on the internet, you’ll mostly find an attached picture of the locker open but with closed boxes.
That’s why the profits to expect from such storage auctions could be a gamble.
If you want to purchase that storage unit, then you’ll have to bid on it.
Just like regular auctions, the facility will show you the highest price and the remaining time until the auction is over.
Customers with the highest bid when the timer expires win the content of the storage unit.
Depending on the facility, the winner will have 24–48 hours to secure the content of the storage unit.
How to Make Money From Self-Storage Auctions
As mentioned above, making a business out of storage auctions could be a gamble.
You may end up purchasing hidden treasures or ultimately end up with worthless junk.
The latter scenario could be devastating if your bid was too high.
Start by Doing Some Research
Do your homework on the location and the items that’ll be auctioned off first.
Search for any hints, such as brand names, quality of boxing, or descriptions of the contents.
This will give you some predictability regarding the possible value of the objects within; worthless items don’t often get stored in high-quality or branded boxes.
Set a Budget
Next, make a spending plan and stick to it. Don’t let the thrill of the bidding process distract you from being realistic about the things’ potential value.
Be strategic when placing your bid.
Think about placing bids on items that may have escaped the attention of other bidders or on items that seem to contain valuable stuff.
To improve your chances of winning, you might also want to make simultaneous bids on several units.
Prepare a Truck
In many cases, the content of the unit may be too much for a regular sedan to carry.
You should be able to know that easily by looking at the number of boxes/items in the locker.
If you think that a truck may be needed, then prepare it beforehand.
If you’re really into this market, then having your own truck can be even more helpful.
What Should You Consider Before Bidding on Storage Units
Here are a few things you should keep in mind before you bid on a storage auction:
1. The Distance
Storage auctions can be anywhere in the country.
So, it’s best to find storage auctions that are close to your area or at least in the same state.
You don’t want to end up winning auctions with content that you fail to reach.
On the same page, you don’t want to waste too much time and gas getting there, especially if you don’t own the vehicle you’re using for transport.
2. Transportation
If you don’t mind moving between states to secure the content of these winning lockers, then you need to consider the cost of traveling from your state.
It’s best to set a certain budget for transportation that you don’t exceed.
This will cut your losses if you end up with a unit with low-value content.
3. The Cash at Hand
All self-storage auctions are paid in cash. Checks or bank transfers are hardly used if ever.
It’d be a shame to have money in the bank but not on hand when you secure a good win.
4. Legal Items Must Be Returned
If you find any legal items like personal documents, contracts, and tax records, you have to return them to the owner if possible.
If you can’t contact the owner, return them to the facility and they’ll handle it.
5. Limit Your Losses
Self-storage auctions are games of hit-and-miss. No matter how profitable a storage unit can look, you may end up with worthless junk.
A neat-looking storage unit with branded boxes and tens of bidders doesn’t always indicate a jackpot.
If anything, it’s sometimes better to stay away from a unit with many bidders as it often indicates a high final price.
Winning high-value content won’t mean much if you’ve paid nearly full price for it.
The whole point of the bid was to practically get low-priced or virtually free items.
The Bottom Line
We hope that this guide gave you a resourceful insight into storage unit auctions.
Such an auction can be a fantastic deal if you know what you’re doing.
However, at the end of the line, luck plays a major role here. It’s always best to weigh your options and measure the profits vs. potential risks.
Research is going to be your best friend here. Look around for profitable storage auction sites in your area and try your best to go and see that site yourself.
Always keep a limit on how much you can spend and don’t get too thrilled to bid.
Follow these steps, and you could make some good money out of a storage auction.
