Can I make money with storage unit auctions?
If you’re new to the storage auction scene, I’m sure your number one question is “can I make money doing this?” The answer is yes, but it comes with a catch. If you’ve seen the storage auction shows and it looks really easy to turn a thousand dollars into ten thousand in a matter of days, it’s not. Although these shows are entertaining, they do not depict the storage auction business in its true light. Now, I’m not saying you cant make a good living doing this, I’m just saying that the “dream units” they show on television are quite rare. You might have to buy 50-100 units for before a really good one comes along. Most storage units contain common household items like clothing, furniture, decorations, sporting goods, electronics, appliances, lawn equipment, tools & toys. The good news is, you can make a healthy profit reselling items like these, especially in a down economy where people are looking to save money. As long as you’re bidding conservatively, you can expect to double or even triple your investment on each unit. If you’re buying several units per month, that can really add up.
How often do storage auctions occur?
A lot of people are surprised when they realize that there are multiple storage auctions occurring almost every day of the week. There are usually several auctions being conducted in a typical day. On average, each storage facility is selling the contents of 3-6 storage units, although seeing 20-30 for sale at one facility, is not at all uncommon. There is no shortage of storage units on the auction block, especially in a down economy.
Are there storage auctions on weekends?
In the cities we cover, there are usually 2-7 different storage facilities holding an auction on any given Saturday. Sunday storage auctions are very rare and when they do occur it is usually because of a misprinted date in the legal notice. A majority of the auctions do occur Monday through Friday, starting as early as 8:00 AM and sometimes lasting into the evening.
Who can attend storage auctions?
Storage unit auctions are open to the public and anyone can attend. Anyone above the age of 18 may purchase a storage unit. Children under 16 years of age are discouraged by some auctioneers and facilities due to the liability; although, this is rarely enforced. If you have children you would like to bring, it is a good idea to call the storage facility in advance to find out if they are allowed to attend.
Do I need a special license or permit to attend storage auctions?
There are no special licenses or permits needed. Every now and then, you may need to show valid state identification, although this is rare as well. If you are planning on reselling the items that you purchase and you have a sales tax use permit, by all means bring it. If you don’t have one, you will need to obtain one or pay sales tax on any storage units that you buy.
What methods of payment are accepted at storage auctions?
Most self storage auctions are cash only and you don’t have time to go to the ATM after the storage auction is over. Checks are are not accepted. Some storage facilities do accept credit cards as a method of payment at their storage auctions; However, 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.
Do the storage facility employees go through the units?
Storage facilities in the state of Texas are required to provide a brief description of the contents of the storage unit in the legal notice that they have published. Some storage facilities choose to ignore this as they do some of the other requirements in Chapter 59 of the Texas Property Code, but we won’t get into that at this time. Once the storage facility has made several attempts to contact the tenant for payment, with no success, they will cut the lock and usually inventory the contents of the storage unit based on what they can see from the door. Very rarely do they ever move things or open boxes. Should you be worried about this? Not really. Most storage facility managers & owners are very honest and respectable people. I’m sure there are a few bad apples, as there is in any business, that do enter the unit and remove the valuables before the auction. However, if you are only bidding on what you can see from the door, what may have been removed from the unit will not effect you.
What happens when you buy a unit at a storage place but you don’t clean it all out?
Elizabeth,
That’s an excellent question. Most storage facilities require you to pay a clean out deposit when you purchase a storage unit. These fees can range from $20 to $100. If you don’t clean out the unit entirely, the storage facility can keep your deposit. Not only that, some auctioneers and facility managers will ban you from attending future auctions. If you plan on purchasing storage units in the future, you will need to get used to the cleaning. It’s just part of the business.
Now, if you are asking this question because you bought a bad unit that contained a lot of trash or unsellable merchandise, I feel for you. Bad units are part of the business as well. You have to take the good with the bad and move on. Believe me, it all evens out in the wash. If there is a lot of stuff in the unit that you don’t want to deal with and that someone else may be able to use, you can donate it to charity or try putting an ad on Craigslist under the free section. Most likely, someone else will want the stuff and they will haul it off for you. The old saying is true, one man’s trash is another man’s treasure.
What amount of money would be ideal to bring with you to a storage auction?
Sean, this is an excellent question and the answer is – it depends. There are several factors to consider and there is no perfect answer. Prices do fluctuate depending on the quality & volume of the contents & the number of other buyers in attendance. The following example lists the typical selling prices of storage units in our area. This example assumes that the storage units contain common household items in average condition. Keep in mind, this is just an average.
Most 5X5 & 5X10 storage units sell between $50-$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.
Here is another example: I have seen a 10X30 sell for $20 and have spoken with someone who paid $7,000 for a 10X30. The $20 unit had some large, heavy items which nobody wanted to move. The $7,000 unit was filled with brand new construction material that later sold for $25,000. So, obviously you can see that the selling price is directly influenced by the size, quantity, quality and condition of the storage unit’s contents.
If you’re looking for a specific number, $3,000-$5,000 should be sufficient if you plan on buying multiple units; However, when I first got in this business, I started out with just $400 of disposable funds, and within a few months, I was living off of the income.
Can people come just to watch? I want to get a feel for it before doing anything. Do many people show up to these auctions?
Brenda,
Yes, you can come just to watch and I encourage you to do so. Most newcomers are so eager to get their feet wet that they will overpay for their first storage unit. Don’t be in any rush, there are multiple auctions taking place almost every day of the week. The key to being successful in this business is waiting for the right unit to come along at the right price. I have a feeling that you will do well considering how cautious you are being.
It is difficult to predict how many people will be in attendance at a particular auction. In the first few months after their premiere, the storage auction reality shows brought out a multitude of new buyers to storage auctions across the country; However, it has tapered off a bit. There are several factors that can influence the number of buyers in attendance, the most important factor being how many other auctions are occurring at the same time. On a good day, there may be 7-10 other auctions taking place at the same time and the crowds will be spread out all over the city.
The best way possible to avoid the crowds is to attend the auctions that are not publicized in the larger newspapers. Since our service actually calls every storage facility, we highlight the auctions that were advertised in smaller, local newspapers. These auctions are referred to as “Honey Holes” by the professionals because they typically have fewer buyers in attendance. When there is less competition at an auction, your chances of getting a bargain increase.
Now that AuctionsTX.com is here, you can be confident that you will know about every storage auction event occurring in your area. Why pay hundreds of dollars to multiple newspapers, that have limited coverage areas, when you can have complete information for the cost of an average lunch? It’s a no brainer.
Okay, I was talking to a guy that mentioned someone he knows that won a unit, sold some items in it, then put up the unit for auction with the facility to help get rid of the rest of the items. He was current on the rent of the storage. The auctioneer took his commission and the rest went to the tenant. Is this allowed. thanks
Michael,
Yes, some storage facilities will allow their tenants to put their unit up for auction. Most auctioneers don’t have a problem with it either because they usually make 10 – 25% of the proceeds. If you’re planning on doing this, make sure you speak with the storage facility manager first. I have actually been to a Uncle Bob’s storage auction where this occurred. The tenant was actually paying her rent when the buyers were arriving. She asked the manager if she could put her unit in the auction and the manager and auctioneer agreed. It turned out to be a really good unit full of restaurant equipment. After the auction was over, the auctioneer took her cut and the rest went to the tenant. Whenever an auction like this occurs, the auctioneer almost always informs the buyers that the unit is a private sale and not being sold by the storage facility. This way, the buyers will understand that there is a good chance that most of the valuables have been removed.
I’m sure I can think of quite a few questions, as I’m going to my first auction this week, but I’ll stick to 2 important ones for now.
Do you typically have a certain amount of time to get the stuff out of the unit you’ve “won”? I would guess that alot of people would start renting it after a while but I’m hoping that most places would give you a few days. I know they want to rent it out again and start making money from that but surely there must be some lienancy in the amount of time you get to take your stuff and clean it out.
I’m hoping that I can make a good income by selling things online. I’m going to try various things like other types of auctions, thrift stores, garage sales, estate sales and wholesalers, but I’m going to start with storage auctions. So I guess this question is two-fold. Have you had any success selling with any of these other methods? And do you know what the rules are for income tax for someone who makes all their money reselling the contents of storage lockers online? If so, do you know any good websites that could further educate me on this matter? I want to make this my income but I’m worried about what’s going to happen when the next tax season comes along.
Thanks very much…
Derek,
The storage facilities typically allow you 48 hours to remove the contents of the storage unit and sweep it out. There are some storage facilities that only allow 24 hours and even some that want the unit cleaned out the same day, although these are less common. The auctioneer will usually let you know how much time you have before the auction begins. It has been my experience that most storage facilities managers will give you an extension if you ask nicely.
Yes, I have had good luck with being a picker at garage sales; However, it didn’t provide the volume of merchandise I needed to make a living. Once I began buying storage units, I had more than enough merchandise to keep me busy. I had good luck using garage sales and Craigslist to sell my merchandise.
See the following article for the answer to your question about taxes. Income Taxes For Storage Auction Buyers
I truly hope this helps.
Hi Travis, I’m just starting out in the storage auction business and I was wondering what a resale certificate was? Also, I was wondering if I needed one in order to resell the items in a the unit after I bought it at an auction? Thank you very much.
Christian,
When purchasing a storage unit for resale purposes, a resale certificate or sales tax use permit allows you to avoid paying sales tax at the time of purchase. You will still be required to collect sales tax from your customers and file a quarterly return with the Comptroller’s office. If you plan to keep the merchandise that you purchased, just pay the sales tax upfront.
Recent auctions on auctionstx for week ending 11/16/12 show several w/ notices of special items for sale i.e. trailer, tool box, etc. Why would i want to go to their auctions if they go through them and pull out the “good stuff”. If all i am going to get is old clothes etc. are they even worth buying? should i avoid these auctions? Why does the facility management go thru the lockers instead of selling the “as is.”
Thanks,
Hubert
Hubert,
When we list items next to the auction, that just means that these items were were visible inside the unit when the property manager did their inspection. By Texas law, a storage facility is required to give a general description of the property in the legal notice. Very rarely do the property managers ever go inside the unit, move anything or go through boxes.
Is the sales tax figuired on the amount paid for the unit? If I pay $250 for a unit is that the amount I am charged sales tax on and what is the sales tax amount in Texas? Thank you for your help
Tamara,
Yes, sales tax is paid on the winning bid amount. I believe the current tax rate is 8.25%.
what are the laws in Texas regarding things like cars, boats and firearms sold at auction?
is the facility required to do a lien search on a vehicle prior to the auction, so that we don’t buy something only to loose it when we try and register it?
I understand the auctioneer is required to remove firearms visible when the unit is opened for inspection as they don’t have a license to sell them; but if we find one buried in the unit can we sell it privately?
I want to learn how to buy my first locker and I was wondering if you can help me
with this? I need to know when are where to go.
Margaret,
AuctionsTX.com provides the complete storage auction schedule for the 5 largest cities in Texas. We list hundreds of auctions in each city every month. Just go to our website and click the Join Now button. Once you’re a member, you’ll receive the schedule and a free e-book which will teach you everything you need to know about the storage auction business. If you have any other questions, just let me know.
How can I find out who purchased a unit in a auction?
Stefan,
Storage facilities keep the names and contact information of buyers confidential. If you need to get in touch with the buyer, you can ask the storage facility manager to ask the buyer to get in touch with you. However, the buyer is under no obligation to do so.
In response to this question , isn’t this a public sale? So shouldn’t the buyer be public also? Does the storage facility have to keep this information for Any amount of time ? And the book that is used to sign in ; is it kept on site or is it the auctioneer who keeps this ?
Robin, I’m not a licensed auctioneer, or an attorney, and this is my personal opinion. Please seek the advice of a legal professional before relying on any of this information. Yes, storage lien sales in Texas are public; however, the storage facility retains the right to refuse any bid. In most cases, the tenant will be allowed to bid on their own storage unit. I’m not familiar with the law pertaining to the time period these records are required to be held. I’ve read Chapter 59 of the Texas Property Code dozens of times and I don’t recall seeing such a provision. That doesn’t mean that there isn’t one, for example in the business law code. As for where these records are kept, most storage facilities and auctioneers keep their own records, just in case a wrongful foreclosure suit is brought forth.
how much time do you have to empty the units? thanks
Thanks for explaining that storage unit auctions are open to the public and anyone over 18 can attend and participate. My husband and I have been looking for a new hobby and have been considering trying a storage unit auction. I thought we might need a permit or something, so thanks for letting me know it’s fine to just show up!