Storage Scores: Buying and Selling Storage Lockers

CI - Jason Hartman Rental Property InvestingWith the advent of reality television programming, we’ve recently seen an influx of shows focused on the repossession of storage units. Shows like Storage Wars and Auction Hunters center around teams of buyers who travel, sometimes across the country, to storage units that have been repossessed or otherwise abandoned. Once on site, these buyers engage in bidding wars to claim the usually unidentifiable contents of the unit. Sometimes, a buyer gets lucky and uncovers objects worth large amounts of money—antiques, memorabilia. Other times, the value of the contents are more immediately obvious—electronics, DVDs, etc. But most of the time, these units represent a relatively normal household and contain extra linens, childhood stuffed animals, the occasional human ashes.

These shows have recently come under fire for their claim that what is happening on screen is in fact “real”—at best, a stretch. Valuable objects are planted in units, down-on-their-luck teams are given money to make bidding more competitive, things are carefully edited to give a certain sort of impression. But, as viewers of so-called “reality” television, it seems fair to say that we usually suspend our disbelief willingly.

In the real world, the process of buying delinquent storage lockers is a bit different. While these shows make it seem like the bidding pool consists of five or so teams of people, the actual pool is much larger, and the auction winner is anyone’s guess. And very rarely do units contain such treasure (to see the top five finds from 2011 go here)—usually, their contents are a great fit for garage sales, swap meets, eBay, flea markets, and thrift stores. Seldom do things actually sell for the inflated numbers presented by show cast members and even more seldom is the task, from auction to resale, accomplished in such a short amount of time.

If you’ve got an interest in buying and selling, storage auctions might actually be a great fit for you. To begin, perform an online search for storage auctions in your area or call local storage facilities. Reading online reviews for places might give you a good idea of the type of people using the business and provide an early idea about what kind of things you might find there.

Consider going to an auction prior to the one where you think you’ll buy to get an idea of how that particular auction functions and how financial transactions are conducted. When you are confident that you’d like to participate, arrive a few hours early so that you are able to take a look around and ask questions. Set a budget for yourself, and don’t exceed it. Remember that you’ll likely not find a hidden stash of treasure that will make you instantly rich. After you’ve acquired a unit, make sure you have a plan. It might be helpful to categorize the items by their value and perceived audience (trash, flea market, eBay) and have designated vehicles or trips to dispense the items.

The key to successful storage locker buying is in managing your expectations. And there is no reason to forget your favorite storage war show–remember the go-get-it attitude of the cast members as you embark on your next business venture! (Top image: Flickr | John Picken)


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How to Avoid the Deadbeat Tenant

Jason Hartman advises that you screen tenants well. There are standardized ways to check for good tenants. Much like how selecting a productive employee comes with the process of interviews, background checks and qualifications, checking for good tenants come with similar processes – that have worked for years.

In this post, we’ll discuss effective tactics the Home Owner’s Association uses to check for good and bad tenants. Investors also have the opportunity to join this group to help protect themselves against any indemnities.

Here is a checklist:

The Criminal Background

You’ll want tenants that have no history of domestic violence, sex offenses, drug use and more. Renting to such tenants can devalue your property, which you’ll want to avoid at all costs. You’ll also want to avoid tenants that have been evicted in the past. Records are available from a nationwide or state-specific database.

Check Income

Match up documents, cross check files, and verify W-2s to ensure that there’s no reason to suspect identity theft. Also, ensure that the tenant has had a stable income for some time. The Home Owner’s Association is known for having a third eye for detecting deadbeat tenants, as well as fraud. To avoid the tiring and expensive process of evictions, this association can help to weed out bad tenants, and select ideal ones. In the long run, joining such groups can save you headaches.

The Home Owner’s Association can also help owners collect delinquent rent – even though this can be lengthy process.

This Association allows investors to report bad tenants, and also help with the process of getting payments owed. Jason Hartman advises that you run properties like a business, versus taking losses as is. If there’s a judgment against the client, the investors, or a third party, the company can go after default tenants’ assets.

Investors, if they’ve taken the financing route, need to pay mortgage as well as monthly and yearly expenses. As such, don’t take your feet off the gas pedal when it comes to driving the payments home. A lease agreement can be also drafted up to notify tenants of the procedures, should delinquency occur.

As a final note, here’s a word to the wise: Most investors tend to prefer investing close to home. It’s really nice to roll up your sleeves and work, but it’s even nicer to delegate, diversify, and reap more rewards. To help manage your property, delegate it into the hands of expert firms to help perform screenings.

(Top image: Flickr |William Brawley)

The Commercial Investing Center Team