Category - Storage Auctions 101

Now More Than Ever, Patience is a Virtue at Storage Auctions

March 12, 2012
Travis Lane
Storage Auctions 101
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Patience

The storage auction business has changed, it is not what it used to be. You can thank the cast of Storage Wars and Auction Hunters for making our business what it is today. With lots of new competition and storage units selling for record prices, you have to be patient and wait for the right unit to come along at the right price.

A lot of newcomers are just eager to get their feet wet. This enthusiasm, inspired by the incredible finds displayed on the storage auction reality shows, can cause an inexperienced bidder to overpay. For those of you who are new in the business, allow me to be blunt. You have to buy a lot of units in order to find one really good one. Now, I'm not saying you can't make money on every unit you buy. I'm just saying that the "dream units" where you turn a 1000 percent profit or more are extremely uncommon. You may have to buy 20 or more units before one of these comes along. You may have to buy hundreds of units before a windfall gain occurs. This being said, if you want to be in this business for the long haul, don't overspend and don't be in a hurry. There are still ways to outsmart your competition and get a good deal without gambling on a unit.

On a really good day, you might have the opportunity to view 100 or more storage units up for auction. A lot of people are determined to buy a unit at any cost; they will overpay on the hope that the hidden items inside the unit will justify their frivolous spending. Some of these people would be better off going to a casino and betting all their money on black.

Consider this fact: Over half of the people who attend storage auctions have less that $1,000 in their pocket. At the prices units have been selling for recently, that's 1-2 units they could purchase. Once these people spend their money, they are finished for the day. If you are just patient, the crowds will dwindle at the following auctions. Once these people leave, you will have a better chance of buying a unit at a price you can make money on. This way, you will be better prepared when the right unit comes along, since you will have all of your money in your pocket.

How To Size Up Your Competition At A Storage Auction

March 12, 2012
Travis Lane
Storage Auctions 101
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Sizing Up The Competition

For those of you who plan on attending storage auctions on a regular basis, it is important to know as much as possible about your competition. There are several types of buyers you will run into at storage auctions. Although there are usually a lot of first timers at an auction, you will consistently see the same faces time & time again. There are some buyers that will be at the auctions every day and you will have an opportunity to get to know these people through casual conversation. It works to your advantage if you know what their motives are, what type of units they like to buy and what their budget is. Here are some important things to know about your competition which may work to your advantage in the long run.

Their Motives

  • Are they buying for resale purposes?
  • Are they just shopping for themselves?
  • Are they collectors or antique hunters?
  • Is this a business for them or do they buy storage units for a hobby?

What types of units do they like to buy?

  • Are they looking for larger units with lots of volume?
  • Are they looking for smaller units that are easy to move?
  • What contents are they looking for...furniture, household items, electronics, appliances, tools, business equipment, etc.?
  • Are they looking for units with collectible items?

What is their budget? This can be a little tricky without being rude.

  • Are they full time storage auction buyers or are they in another line of work?
  • Are they retired?
  • Do they usually buy smaller units under $300?
  • Do they bid on larger units over $1000?
  • How many units do they buy in a typical week?
  • Do they attend several auctions per week?

What does your competition do or not do when interested in a unit?

  • Are they bidding near the storage unit door or are they in the back of the crowd?
  • Do they start bidding from the beginning or do they wait until right before the auction is about to end to place a bid?
  • Has their bidding style changed - Are they using their voice or hand signals?
  • Are they bidding quickly or letting the auction almost end before calling out their next bid?
  • Are their any changes in body language?
  • Do they try to talk negatively about a unit to discourage others from buying it, only to try and buy it themselves?

All in all, the more you know about your competition the better prepared you will be when you have to go heads up with them. You won't learn everything overnight, but if you take some time and observe the other bidders at the auctions you attend, you will get to know their habits over time.

How to Open a Safe That You Purchased in a Storage Auction

March 12, 2012
Travis Lane
Storage Auctions 101
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Open Safe

Finding a safe in a storage unit is not a common occurrence; However, it does happen. In my first year of buying storage units alone, I found five. Three of those five had no valuables inside of them; However, after I had them opened, I was able to resell them and make a small profit. Used safes can bring a pretty penny and they typically sell fast. Not only that, you never know what valuables may be inside.

I'm sure most of you have seen the episode of Auction Hunters where the guys use a cutting torch to open a safe. Using a cutting torch is a bad idea. If there were high-end items inside the safe, they could be damaged by the flames or heat. Some of the safes I have opened contained precious items like collectible paper currency, valuable documents, stamp collections, mint proof sets, cash, watches,  jewelry & an antique revolver. It isn't worth risking damage to items like these just to save a few bucks.

Trying to break into any safe with a resale over $75 is like throwing money away. For example: a Sentry standard size fire safe with a retail value of $150 would cost less than $50 to have opened and would typically resell for $75-$100. If you were to break into this safe, it would be unsellable. Also, some safes have a re-locker mechanism. Though the designs vary from manufacturer to manufacturer, if the re-locker is tripped when the when someone is trying to break in, it triggers a set of auxiliary locking devices which will lock out the safe completely. Even the proper combination will not open the safe once the re-locker has been activated.

Hire a locksmith or a safe technician. This will save you money in the long run because they can typically open the safe without causing permanent damage to it. Then, you can resell the safe and recover the fees you paid to have it opened and, in most cases, turn a small profit. If you are lucky enough to find valuables inside, that's just icing on the cake.

So, how does the locksmith open the safe?

This really depends on the type of safe. If it is a standard size fire safe and the previous owner never changed the factory issued combination, the locksmith can usually make a phone call to the manufacturer and have it opened in minutes. If the original combination has been changed, they may need to drill a small hole on the side of the tumbler, which can be easily soldered. The fees for these services range from $30-$50 for a standard re-key or replacement combination to $50 -$100 to have the safe drilled and the tumbler combination changed.

If it is a common fire safe, and you want to save a few bucks, you can contact the manufacturer directly. Most manufacturers will charge you around $35 for a replacement combination. They will require you to sign an affidavit and have it notarized and it can take up to a week to receive the code. Keep in mind, there is no guarantee that this will open the safe since the original combination may have been changed. Once again, I recommend hiring a locksmith who specializes in safes. In most cases, locksmiths won't charge you a fee if the manufacturer's code doesn't work and you have them open by another method immediately.

If the safe opens by key only, the lock can be picked or drilled and replaced inexpensively. If it is an antique or a high security safe, it may require you to hire a safe cracker. Most crackers charge a minimum of $300 to open a safe; However, this shouldn't cause dismay. Chances are, if you have to hire a cracker, the safe is worth a lot of money.

I hope this article has been helpful.

Don’t Quit Your Day Job

March 12, 2012
Travis Lane
Storage Auctions 101
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Don't Quit Your Day Job

I was recently watching an episode of "Storage Wars" in which a newcomer said he was going to quit his job and get into the storage auction business full time. Although his enthusiasm is inspiring, if you are new to the storage auction scene, I don't recommend you make a commitment like this until you have tested the waters. If you are considering getting into the storage auction business, make sure that it is right for you before you change your occupation.

Go to the auctions, buy some units, sell the contents. Repeat this several times and then, if you are still committed after you are familiar with everything, consider making the change. Realize that this business requires a lot of time and physical labor. I'm not trying to discourage you from jumping in, I'm just encouraging you to look before you leap.

The storage auction business is not what it used to be. The bid amounts that you saw on the first season of the reality shows were normal. Due to the influx of new buyers attending storage auctions, bid amounts have doubled if not tripled at some auctions. Don't get me wrong, there are still storage auctions that few others know about at which you can get some great deals. The auctions at these storage facilities are referred to as "honey holes" by the professionals because the crowds are unaware of them. The professionals love these places because when there is less competition at an auction, it increases their chances of buying a quality unit at a good price.

Truth be told, most new buyers lose money because they are paying to much for what they are buying. They are hoping that they will find something valuable hidden in the unit that will make up for their overspending. Most of the time, what you see is what you get. Example: (If you see a jewelry box in a unit, chances are it will be empty. If you pay hundreds more on the hope that it is has jewelry in it, you won't be in this business for long.) Even if the contents of the unit are fairly obvious, you have to know what second hand merchandise sells for and allow room for moving expenses and profit. Remember the #1 rule - only bid on what you can see, set you limit & stick with it. If you follow this rule, you will be successful in the storage auction business.

 

The Top 10 Mistakes Newcomers Make At Storage Auctions

March 7, 2012
Travis Lane
Storage Auctions 101
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Storage Auction Mistakes

1. Overpay Just To Buy A Unit

If you're new to the storage auction scene, don't be in any rush to get your first unit. You have to wait for the right unit to come along at the right price. It will happen. I know you're eager to get your feet wet, but the object of the game is to make money. Just be patient and you will find a bargain.

2. Buy A Unit Too Large To Remove Merchandise Within 48 Hours

When you buy a storage unit at auction, you have to have it totally cleaned out and broom swept within 48 hours. A lot of newcomers will purchase a large unit not realizing how much work it is to clean out. Keep in mind that some units contain heavy items like furniture and appliances that require some muscle to move. It is a good idea to have a truck and labor lined up in advance, especially if you plan to buy multiple units.

3. Keep Ego In Check

When you're bidding on a unit, try to keep your emotions in check. Some people who are new in the business are trying to make a name for themselves from the beginning by getting into a bidding war or trying to run others up. If you're going to be a successful buyer, you must know when to let the unit go. If it doesn't make sense, don't buy it. Some new buyers even overbid to let others know that they have money. This isn't a good idea because no matter how much money you have, there will always be someone else with deeper pockets. I personally know a multi-millionaire that attends storage auctions just for fun.

4. Bid To Find Hidden Treasures

This is a common mistake newcomers make. They've seen the storage auction reality shows and they think there is an expensive item hidden inside every unit. Well, I have news for them. Most units contain common household items, appliances and furniture. If they pay hundreds or thousands more for a unit on the hope that the unit contains hidden treasure, they won't be in this business for long.

5. Not Having A Resale Strategy

Some new buyers buy a unit without having a plan to sell the contents. Possible outlets are garage sales, setting up a booth at a flea market or selling the items online. Either way, it's a lot of work. The key to making a profit in this business is turning over your inventory as soon as you can. Unless you have an unlimited supply of cash, you will need get your money back quickly, so you can reinvest it in more storage units.

6. Not Enough Cash On Hand

If you have a good amount of cash, by all means bring it. Nothing hurts worse than missing out on a great unit because you didn't bring enough money with you. Remember, most auctioneers will not allow you to go to the ATM after the auction is over, so if you don't have enough cash in your pocket, do not bid on the unit.

7. Buy Junk Storage Units

A junk unit can put a bad taste in your mouth for the storage auction business. If the unit looks like it contains a lot of trash or worthless items, it is a good idea to avoid it. It takes a lot of time and energy to clean out a unit, especially ones that are unorganized and contain a lot of trash. Focus on units that are fairly organized and show signs of quality merchandise.

8. Did Not Clean Out Unit Entirely

Some newcomers buy a unit that they are unprepared to move. They start their excavation only to realize that the unit isn't what they thought is was. If the unit contains a lot of unsellable items and trash, you might feel like giving up and just leaving the bad stuff behind. This is one of the easiest ways of getting banned from future auctions. Even if the unit turns out to be a complete bust, you have to dispose of it properly. The contents of the unit must be completely removed and the unit needs to be broom swept. Most storage facilities will not allow you to use their dumpsters so I recommend that you locate a dump in your area. Believe me when I say you will need it.

9. Did Not Bring Necessary Supplies

I see a lot of newcomers who don't even have a flashlight with them. Most storage units do not have lights in them and it can be quite difficult to see the contents. If you don't already have one, make sure you invest in a rechargeable flashlight. The other essential is having multiple padlocks on your person. At my buying peak, I usually kept at least three locks on my belt loop and another 7-10 locks in my vehicle. Tip: Buy padlocks that are keyed the same or color code your locks and keys. Nothing is more frustrating than trying to locate the right key for the lock while the auctioneer is moving on to the next unit.

10. Stereotyping Storage Facilities Based Upon The Area

Some people try to profile an auction based upon the area that the storage facility is located in. Let me start off by saying that some of the best units I have ever bought were in rough neighborhoods and I got the units dirt cheap. If you only attend auctions in nice areas, you will be missing out on some great bargains.

Do you know of any other common mistakes newcomers make at storage auctions?

If you would like to add them to this list, please leave your interesting and creative responses in the comments section below.

What Is A Storage Auction?

February 27, 2012
Travis Lane
Storage Auctions 101
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Storage Auction

Storage unit auctions are the method most storage facilities use to evict tenants who have gotten behind on their payments, recover lost rent and fees and have the property removed from the unit so they can rent the space in the future. Most storage facilities allow a 90 day grace period in which the tenant can get current on their back rent. During this period, the facility attempts to contact the tenant by phone, email, traditional mail and certified letters. Notices of the intent to sell the tenant's property at public auction are placed in a newspaper of general circulation in the county where the storage facility is located. If the delinquent tenant does not make a payment by the auction date, the storage unit is sold to the higher bidder. Once the unit is payed for and the purchaser has a bill of sale, the contents of the storage unit are then legally owned by the purchaser. Typically, the purchaser has 48 hours to remove the contents.

Does It Take A Lot Of Money To Get Started In The Storage Auction Business?

February 26, 2012
Travis Lane
Frequently Asked Questions, Storage Auctions 101
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Money Storage Auctions

Before I started AuctionsTX.com, I was a full time storage auction buyer. I have proven that you don't need a lot of money to get started in the storage auction business. I began attending self storage auctions with $400 of disposable funds and within a few months I was living off of the income from this business. It's kind of like going to a casino, but if you buy smart and only bid on what you see, you will consistently beat the house.

Most self storage auctions are cash only and you don't have time to go to the ATM after the storage auction is over. Some storage facilities do accept credit cards as a method of payment at their storage auctions. It is a good idea to call the storage facility for the specific terms and conditions of the storage sale. I have heard others say that using a credit card to buy a storage unit at auction is a bad idea. I personally feel that if you are financially responsible and being conservative on your bids, credit cards can be a great tool for getting started in the storage auction business.

If you have plenty of cash, by all means, bring it. Nothing hurts worse than missing out on a great storage unit because you didn't bring enough money with you. I know one storage auction buyer that brings up to twenty five thousand dollars with him to every auction. Is this really necessary? No, but every now and then, when a really incredible storage unit comes along, it works to his advantage.

On a really good day, you might have the opportunity to view 100 or more storage units up for auction. Consider the number of storage units you would like to purchase, and use the following guide to determine the appropriate amount of cash to bring with you every day. Most storage units sell in certain price ranges. Keep in mind, this is just an average. Selling bids do fluctuate depending on the quality & volume of the contents & the number of buyers in attendance.

Most 5x5 & 5x10 storage units sell between $5-$200. Most 10x10 & 10x15 storage units sell between $200-$700. Most 10x20 & 10x30 storage units sell between $700-$1500. Once in a while, a spectacular unit will come along and surpass these figures.

There is a learning curve. Not only will you need to have an idea of what things sell for in a retail environment but you will need to know how much they sell for used. Every storage auction buyer has their own method of determining a storage units value. Here is what has worked well for me: If you only bid on what you can see, then everything that you can't see is pure profit. This strategy works great on larger storage units where there are a lot of boxes or where the contents in the back of the storage unit are obstructed from view.

Another strategy that works well on storage units where a majority of the contents are in plain sight, is to consider the total resale value before the bidding begins. Divide that figure in half and subtract moving, labor & disposal expenses. Once you determine your maximum bid for the storage unit, stick with it. It's quite easy to get caught up in emotional bidding, especially on units that have something in them that you really want.

Storage Auctions Are A Business, So Treat Them Like One

February 25, 2012
Travis Lane
Storage Auctions 101
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The storage auction scene is getting an influx of new players recently. Who knows exactly why more people are showing up, but it probably has something to do with the economy and TV shows that might sensationalize the process a bit. Whatever the cause, newcomers are coming in and treating the situation like a lottery instead of the business it is. This phenomenon isn’t limited to new people, however, and everyone can benefit from reevaluating their particular process. Here are some business areas that everyone needs to pay attention to:

- Maximize profit margins and minimize risk

Any first-year business student can tell you the difference between profit and revenue. You don’t need an MBA to know that profit (the money left over after all expenses have been covered) is what really matters. Despite this basic knowledge we all have, it can be hard to know when our profit margins are suffering. Think about the last big score you had. Did you think of the small locker that doubled your money or the one big-ticket item that sold for thousands but only netted a profit of a hundred bucks? You probably thought of the latter, which is normal. You need to get out of this mindset if you’re going to be successful in the long term.

When it comes down to it, you should be focusing on risk and profit management instead of big-ticket items. For every locker you should evaluate everything that could go into the “profit equation” before you bid. Do you (honestly) know how much the contents are worth? Will you have to store anything? Are you going to need cross country movers because your buyers are far away? Speaking of buyers, do you have any in mind? All these factors can eat into your bottom line, and you need to be an expert at analyzing them on the spot at the auction.

- Network like a businessperson

The majority of successful business people are master networkers. They make connections with all kinds of people and can remember them at the drop of a hat. They might be doing it for sales, or making connections that will allow for expansion of their core business in the future, or any number of reasons. If you’re serious about the storage auction business you need to do the same thing and build up a huge rolodex of buyers, sellers, appraisers, consigners, fixers, and any others who can affect your bottom line. Treat every situation as a chance to make a new contact, and devote time every week to focusing on networking.

- Leave your feelings in the parking lot

You’ve probably heard the phrase “It’s just business,” usually after someone has done something to someone else that’s less than desirable. We’re not saying you need to be ice cold toward everyone, but there’s not much that “feelings” can do for you in this business. Have a gut feeling that there’s something hidden away in a locker? Ignore it unless you have overwhelming evidence. Think the guy bidding against you has a vendetta because he doesn’t like you? Who cares, let him do his best to throw you off your game. If you follow the advice above you’ll already know all the variables so you can make the best decision. In almost every situation it’s going to be better to leave emotion behind in favor of calculation.

If you follow these tips you’ll be on the road to creating a business with storage auctions instead of throwing money at rooms in hopes of hitting it big.

Author’s bio: Ryan is a guest post author who writes about business, shipping, and technology.

 

What Does A Typical Storage Unit Contain?

February 21, 2012
Travis Lane
Storage Auctions 101
1 Comment

Most self storage units contain household items like cookware, dishware, decorations, pictures, all types of furniture, bedding, clothing, accessories, books, antiques, tools, electronics, collectibles, lawn equipment, personal hygiene items or sometimes the remnants of a failed business. The good news is that there is a demand for all of these typical items, especially in a recession. Some people will say that others don't store valuable items like gold, cash, jewelry & guns in storage units. I can't argue with this statement, most people don't. Items like this are usually kept at their home. However, every now and then you will get lucky!