Self-storage unit auctions have been getting increased attention to two new reality TV shows, Storage Wars and Auction Hunters. The premise is simple. If someone pays to have their stuff stored there, but stops paying the rent, the storage company won’t let you pick up your stuff until you pay up. If you still don’t pay your bills, they’ll auction off all your stuff in order to make the unit available again. I’ve always tried to avoid such places because I figured that just meant I had too much stuff!
The auction itself is quite a gamble. Bidders usually only get to see what is visible while standing outside the unit, and that’s it. So you could end up with valuable antiques, or a carefully-folded collection of used underwear. Want to participate in a live auction to see what it’s all about? Traditionally, you would be looking for the legally-required notices in your local newspaper. These days, the best site I could find for looking up self storage listings in your area is Sparefoot.com, a start-up that primarily does self-storage price comparisons. Bring cash, and verify the time and place by phone on the day of the auction.
A few added warnings. First, the new popularity means winning bids have doubled in some areas. Second, some shady places now actually scam people by making the unit look artificially valuable with things like (empty) brand-name boxes. Almost sounds like a Freakonomics topic.
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There was an interesting article in the WSJ on Penny Auctions yetersday. This was the first I’d heard of that phenomenon.
http://online.wsj.com/article/SB10001424053111903392904576512280986981242.html
I’ve heard of storage auctions for years but always figured you’d have to buy a lot of them to make a profit. Maybe if you look for storage places in higher income areas you might end up with better items, but you still have to go through all their crap and sell it.
I agree with you, better to get rid of the extra stuff than pay to store it. For the cost you could just buy more later on.
This seems like more of a hobby than a way to make money for most people. I would assume you’d need to have a lot of connections to be able to resell stuff…definitely some economies of scale set in.
I saw your article title and was compelled to read it – cos I’ve never ever heard of self storage auctions!! my goodness – there are really ways to get creative in the market today .. ;p
The reality, or truth, about storage auctions is not what you see on TV. The storage operator is only allowed to collect the lost rent, all proceeds above the lost rent go back to the tenant or to the state if the renter has abandoned the unit. Auctions rarely bring in enough money to cover the lost rent. When you buy a unit, you need to take everything, you can’t smash things in the aisle or throw it in the dumpster. There is never any drama at an auction, most bidders spend less than fifty dollars to buy a unit, it takes less than five minutes. The majority of the units that go to auction have already been picked through by the delinquent owner, what remains is trash. Self storage, when managed properly, is a great business and a benefit to any community. Self storage is simply a temporary holding area for items that won’t fit in your home or office.
There’s a This American Life that highlights this. It’s part of the “Contents Unknown” episode that aired back in early 2010.
Back in my “hustlin” days I trawled every kind of auction there is out there. Storage, estate, auto, whatever. Louis is dead on the money. I reckon you’d have to buy a 100 lots before you got anything remotely of value, and even then you’d still be in the red. And have to dispose of tens of thousands of pounds of garbage. As a general rule just avoid any type of public auctions if you’re out to turn a profit.
My uncle lives for storage auctions. He has a thrift shop where he sells the items he collects. He has had some really good finds but never any “gold mines” like you see on the tv shows. He does however make a good living doing this, but like most things it has to be something you really enjoy doing and you are in it for the long run. In most cases you aren’t going to run in and buy a unit for next to nothing and get rich off of that one unit. Thanks for the article, I enjoyed reading it and the comments that followed.
John,