From 0 to 84: How I grew my portable self storage business
I'll never forget the first time I stumbled across the self storage business.
I was on a trip to Florida in early high school with my Dad. We would often drive to Florida together to visit my sister, who at the time was going to pharmacy school. We would always stop and visit one of my Dad's high school friends, too, who lived in Orlando at the time. His name was Terry.
I loved those trips to Florida for a lot of reasons, but I really enjoyed going to see Terry because he was so successful. It was always inspirational to hang out with him and see all of the things he had accomplished. After all, I was just a young high school kid with big dreams to be successful one day.
On those long drives down to Florida, my Dad and I would often talk about business, investing, and what I might do with my future for hours on end. Dad knew I was motivated, so I think he enjoyed those talks, too. He would tell me about his experiences with business and the lessons he has learned.
He had good reason to give that advice, too. He managed to be quite successful himself, despite no college education and growing up in a very rural area of the country. He tried his hand at flight school for a semester in Florida, but ended up moving home and purchasing his first semi-truck instead. Today he owns over fifty trucks and hauls milk and juice all over the tri-state area and has built himself a nice net worth.
He always advised me to take a different path, though.
On one of our trips to Florida to visit Terry and my sister we ended up going to one of Terry's commercial properties he owned. He owned all sorts of properties around the Orlando area. After a successful accounting career, Terry was in his early fifties, retired, and managing his real estate portfolio.
This particular property was a large boat and RV storage facility. I remember walking through each building in awe of all the beautiful boats and RVs that were stored in each of the buildings. Even more impressive was the fact that all of these people were paying such high monthly fees to store these things.
Even better yet, Terry had one person living on the property managing the whole thing for him. Any other facility of this size you would expect employees to be running all over the place, however since it was storage, it only needed one employee to run the whole facility.
Terry would only ever show up to the property a few times a month to collect money or his boat for a day out on the water.
I always knew that real estate would play some role in my future, but this had me instantly hooked on the idea of storage. I immediately started researching the industry to learn as much as I could.
A few years later while I was still in high school I was apart of our FBLA (Future Business Leaders of America) program and I had the opportunity to compete in a business plan competition. I decided to write my plan on building a self storage facility. I chose a local property that was for sale and pretended I was going to buy the property and developed a 30+ page business plan on how I was going to start this business.
I ended up winning the local competition and had the opportunity to go to States in Rochester, NY to compete at the state level. I did well there, too, with my plan. However, I ended up getting second place behind a couple of guys who did a juice stand business plan. I was ticked!
It was a phenomenal experience, though and one I'll never forget. A few years later when I actually started my self storage business I ended up using that business plan as a template for my real one that I actually used with the banks.
By time I actually started my self storage business I was a sophomore in college. All those years between early high school and my sophomore year of college I did not loose site of my vision to start a self-storage business. However, as a young guy in high school, the idea of building or purchasing a self-storage facility was pretty daunting and out of reach, but I kept researching and learning.
That's when I stumbled across the idea of portable storage units.
I thought to myself "wow, with portable units I could start small and build the business one unit at a time." This would allow me to avoid the huge risk of building or buying something for hundreds of thousands of dollars when I didn't have a penny to my name and significantly lower my risk of getting started.
I researched many different builders when I began and settled on a company from Wisconsin. They were a big name in the industry for producing traditional storage facilities, however they had just come out with a new portable product.
Between high school and college I managed to scrape up several thousand dollars in order to purchase a set of four of these units.
I can remember coming home from college almost every single weekend for months to build these units. They were essentially shipped in raw material form and I had to build them from the ground up. This was crazy for someone like me to do. I didn't exactly grow up as the most handy individual in the world.
However, my brother did. Thank goodness for him or else I never would have got those units built.
(Here are some pictures of the first set of units I ever built way back in 2011)
The other thing I needed to make this successful was a truck. At the time, I was still only 18 or 19 years old so I needed to stay under CDL requirements. I researched trucks for hours and hours every night until I finally found a roll-back tow truck in Virginia. This truck was the biggest truck I could get and still stay under CDL requirements.
My Dad and I took another one of our long drives to go get the truck. We borrowed my Grandma's comfy Buick and headed South; this also happened to be the first time I started drinking coffee. It was the wee hours of the morning and my Dad was ready for a nap so I took over driving. I wanted to make sure I would stay awake so I stopped at a gas station and got a large black coffee.
I became one of the best steering wheel drummers this world has ever seen. I had never felt so much energy, before!
Needless to say, it's now April 2020 as of this writing and I'm 28 years old and have a coffee in front of me so you can obviously see that I became hooked.
The ride home in the new truck was also pretty unforgettable. It was a used tow truck with over 230,000 miles on it and tow trucks aren't exactly the most comfortable ride nor the fastest. It took us 17 hours to make it home with my Grandma's Buick loaded up on the back of the truck. Typically, Dad and I used to be able to reach the Florida line in 17 hours flat, so for it to take 17 to make it home from Virginia was pretty bad (to Western, NY).
(My first truck!)
It wasn't glamorous, but it was a start.
Once I finally got my truck home and my first four units built, I was ready for business. It didn't take me long to get all four of them rented out. Lucky for me, they were all long-term tenants, too. One of those original tenants in 2011 is still one of my tenants today in 2020. It doesn't get much better than that.
This time I found a new manufacturer where the units were much lower cost and much easier to build.
I graduated West Virginia University with a Finance degree so my next step in life was to move to Philadelphia to begin working for Vanguard. I can't remember how many units I had at this exact moment, but I believe it was around 12.
It was a similar situation as before. I would come home a lot of weekends to manage the business. During the weeks while I was working I would schedule for my brother to do pickups and deliveries for me. This worked well for a couple years.
I spent two years in Philadelphia. It was an experience I absolutely loved. I met some great friends and Vanguard was a wonderful place to work (and invest!). It's a place I definitely could have seen myself working my whole career, but at the time I was dating my now wife for the entire two years I was there and she was located back home.
In addition, I never pictured myself as the long-term corporate career guy. I've always envisioned myself as an entrepreneur, so it was time to make my next move.
So, after a few years in Philly I was ready to look for a job closer to home. I could be closer to family, my future wife, and my business. I was trying to get into Erie Insurance to work in their investment department. In the meantime I had met a local insurance agent in Corry, PA. He was trying to help me get into Erie Insurance and then ended up offering me a job in commercial insurance.
I didn't know much about insurance and I never really gave it a lot of thought as far as a career. One thing I did know though is that insurance agents make a lot of money and it was a good opportunity to come home.
I worked this job for another two years while managing my storage business and kept it growing. After those two years I left the job over pay disagreements and I was ready to pursue my storage business full time. By the end of my time at the insurance agency I had built the business up to 48 units and I had just placed an order for 12 more units.
For the next six months from September 2018 to March of 2019 I was simply running the day to day operations of Boxit-N-Lockit (the name of my storage business). Those were some pretty amazing times to taste what it's like to work on your own business full time without a traditional job.
During that time, I was convinced this was what I was going to continue doing, just working full time on my business and I was loving it. I took the time to train and get my commercial driver's license during this time, too. I figured I could work a few days a week driving truck and then spend the rest of the week working on my business as a way to help pay bills while I wasn't officially working anymore.
I wanted to get my CDL anyhow in order to upgrade my delivery system to the system I was looking to go to in the future, so it truly was a win win.
Sometime in February of 2019 I received an interesting call from the City manager in the city I live in. We had developed a relationship during my time in insurance, as I handled The City's insurance account. He asked me out to lunch and ended up offering me a job as The City Business Manager.
Up until this point I had never pictured myself working in government. After all, I was an entrepreneur. It almost seemed crazy to me. However, I'm always open to new opportunities and this one landed right in front of me. It was a significant pay increase from what I was making in insurance and it was right down the road from where I lived.
It gave me the opportunity to have a good government job with benefits, continue working on my business on nights and weekends, get involved in improving my City, and allows me to continue reinvesting into the stock market and real estate.
As of this writing in April of 2020 it turns out that was a great decision. I'm really enjoying the job and things are going well. This job has allowed me to continue to significantly reinvest in my various businesses and especially Boxit-N-Lockit.
Nowadays, I currently have 84 portable self storage units and three rental properties. I'm still able to manage all of this completely on the side of my full-time job as the City Business Manager. In the last year I have upgraded my delivery equipment and I'm positioning myself for the future. My long-term plan is to continue buying more portable units and acquire more rental units to the point I can just focus on those things full-time.
(This is my new delivery system I upgraded to in 2019 - absolutely love it)
Ideally, I would love to build/buy traditional self storage facilities, too. However, I have found that purchasing self storage facilities over the last five years has been quite difficult to do. First off, there are a lot less storage facilities out there than there is rental properties, so there is much more competition to purchase them. In addition, they are a highly desired asset class, which further increases competition to purchase these assets.
That has forced cap rates on self storage facilities to compress to really low levels in the 3% to 6% range in most cases. For those cap rates, you are better off just investing passively in the stock market or buying into another asset class with higher cap rates.
As for building, that has become harder and more expensive, too. Many municipalities around the nation have cracked down on building new self storage facilities. Many municipalities struggle with them because they would rather see other developments built that generate more foot traffic and jobs for their communities.
As The Business Manager for a city, I can see their concerns, but what they are missing is that self storage is a resilient asset class that can generate a lot of property taxes for decades and decades to come and can benefit communities in many ways, too.
However, that alone is a whole other topic.
In summary, the reason I have not built or bought a traditional storage facility yet at this point is because I haven't been able to find one at attractive enough prices or the right building opportunity, yet.
Another reason is that the portable self storage side of the business has been going really well, so why force myself into traditional storage if the right opportunity hasn't presented itself?
By using portable storage units I can do everything that a traditional storage facility can do and then some. I can still rent out portable units as traditional storage units at a cheaper price, yet I can offer my customers the added benefit of portability.
Also, by being portable I expand my market reach much further than a traditional storage facility can reach. For me being located in a rural area, that is pretty important.
So far, I truly love the business. Getting out and making deliveries and doing pickups is an enjoyable process. I've got great equipment to do it with that makes the job easy and it impresses my customers.
I can also charge delivery and pickup fees in addition to monthly rent, which has been another great revenue generator for my business.
Portable storage units also have a lot of other benefits, too. An example of this is that a portable storage unit is considered personal property, not real estate.
Therefore, if I have a lot of them parked on a lot rented as storage and advertising my business, it doesn't generate any additional property taxes.
I'm doing this right now, in fact.
A few years ago I purchased a field on a busy road, installed a gravel driveway and gravel parking lot and just started parking several of my portable units around the perimeter of the parking lot.
I rent out the units on site as traditional storage, but it also serves as a great advertisement for the portable end of my business for all the cars driving by. The best part is, none of this has added to my property tax bill, which is a huge advantage over traditional self storage.
Another great advantage of portable storage is that units are also considered equipment for tax purposes. So, I can depreciate the full value of the storage units in the same year that I buy them, or I can choose to depreciate them over longer time periods, too such as seven years.
We all know that depreciation can be a large wealth driver in real estate, but traditionally with real estate you have to depreciate the assets over a much longer time period than what's available with equipment, so again this has been a huge advantage for portable vs traditional storage units.
Now don't get me wrong; portable storage does have some of its disadvantages, too. First and foremost, if you are looking for a strictly passive investment then portable storage, or storage at all, is not for you.
I get out on nights and weekends and pickup units and deliver them to customers. Turnovers in the self storage industry are higher than with rental properties.
I do have a lot of long term tenants in my self storage business, but I also get a lot more of the short-term tenants, too.
Such as people who are doing a quick move or a quick renovation project where they only need a unit for a month or two.
That translates to a lot of picking up and moving of units. For me, I love the process and the work so it's not so bad, but for someone looking for a passive investment this would not be ideal.
With portable units it's also a little trickier when someone doesn't pay you. It's not like storage wars where you just throw a lock on it, lock them out of the gate, and sell their stuff.
Sure, the idea is the same that you would sell their stuff, but you have to remember the containers are now out on other people's property instead of parked behind your gated facility.
In addition, you have to send delinquency notices before you can just show up and take your unit back, so it gives customers time to clean out their units before you show up and take it, leaving you in less of a position of leverage.
Also, there is the added risk of you just never knowing what people will do. Now I have been in the business since 2011 and I have only had to repossess a handful of units over that time and they all went well and nothing happened.
But it is still nerve racking each time I do it. Entering onto someone else's property to repossess a unit full of their stuff might not go over well, but it's part of the business and if you remain professional it's not so bad at all.
All in all, the self storage business and in particular, the portable self storage business, is a great business to be in. I started small with just four units and over the years have grown to eighty four units.
At only twenty eight years old I feel pretty good about that and look to continue expanding this business. In addition, I'm growing my rental portfolio and my stock portfolio, so I'm working hard to take charge of my financial future.
What things are you investing in? I would love to hear more about it in the comments below!