Best Self Storage Franchises to Invest in 2024

Introduction

Patrick Findaro, co-founder at Vetted Biz, is excited to host Mark Goodin, CEO of Storage Authority. Mark, a civil engineer with over 40 years of experience, has spent much of his career designing and building storage facilities for others. In recent years, he has transitioned to developing his own facilities and now works with franchisees through his brand, Storage Authority. Mark shares insights into his journey and the opportunities available in the self-storage industry.

From Civil Engineer to Self-Storage Expert

Mark’s career began in civil engineering, but a chance encounter with a client looking to build a self-storage facility in the early ’80s set him on a new path. Over time, he became known as a self-storage expert in Connecticut, designing facilities for numerous clients. Mark quickly realized that those involved in self-storage had more flexibility and success compared to other business owners. This realization prompted him to dive deeper into the industry, eventually leading to his first self-storage build during the 2008 financial crisis.

The Evolution of Self-Storage

Back in the ’80s, the self-storage industry was vastly different—if you built it, people would come. Today, however, it’s much more competitive. Location, marketing, and sales strategies are essential for success. Mark highlights that it takes time and careful planning to find the right location, and it can take years before a facility opens. However, those willing to commit to the process can reap substantial rewards.

Investing in Self-Storage: Costs and Timeframe

What Are the Costs for Someone Looking to Get Into Self-Storage?

Mark explains that the investment needed to open a self-storage facility varies depending on the scale. Small facilities might cost between $500,000 and $1 million, but larger, more profitable facilities—those that attract corporate buyers—require a more significant investment. At Storage Authority, they focus on building facilities between 50,000 to 100,000 square feet, which can generate annual profits ranging from $200,000 to $1 million.

How Long Does It Take to Open a Facility?

The timeline to open a self-storage facility is approximately two years, with the most significant variable being the time it takes to find the right land. Mark advises that while some may find land quickly, the process can take up to 12 months. Once the land is secured, the design and approval process takes about six months, followed by eight months of construction.

The Simplicity of Running a Self-Storage Facility

What Is the Typical Headcount?

Operating a self-storage facility is straightforward compared to other businesses. Typically, a facility requires one full-time manager and a part-time manager to cover weekends. Vendors handle most other tasks, such as maintenance and supplies. As the business grows, an additional employee might be needed, but overall, the staffing requirements remain minimal.

Why REITs Prefer to Buy Rather Than Build

Despite the immense profitability of self-storage, large Real Estate Investment Trusts (REITs) often prefer to buy existing facilities rather than build them. Mark attributes this to the need for REITs to quickly deploy large amounts of capital and their focus on long-term returns. For private investors, however, building from the ground up can offer more substantial returns, especially when REITs are willing to pay a premium for high-performing facilities.

Selecting the Right Location for Your Self-Storage Facility

What Indicators Should You Look at When Choosing a Site?

When selecting a location, Mark advises potential investors to examine local self-storage facilities. Are they full? Are they charging premium rates? The goal is to rent up fast at premium rates, so identifying areas with high demand and low supply is critical. Tools are now available to assess square footage per person in a given radius and determine whether the market can support additional storage units.

Building a Self-Storage Facility: The Process

How Does the Build-Out Work, and How Do it Help Franchisees?

At Storage Authority, franchisees receive comprehensive support, from initial design criteria to ongoing training. The facilities are specifically designed for absentee owners, with features like kiosks that allow for 24/7 rentals. Mark and his team review each facility’s plans to ensure they meet the brand’s high standards and are optimized for efficiency and profitability.

The Business Model: High Margins, Low Headcount

Self-storage offers one of the highest profit margins in the franchise world, with minimal labor costs and a high return on investment. Facilities typically operate at around 90% occupancy to maximize profits, and while some self-storage facilities boast being full for extended periods, Mark explains that such operators are likely losing money by not adjusting rates and maintaining that 90% sweet spot.

Pre-Marketing Initiatives for Self-Storage Facilities

What Are the Pre-Marketing Initiatives?

Storage Authority engages in community-focused guerrilla marketing before and after opening a facility. Managers are encouraged to participate in local events, distribute branded materials, and foster relationships with other local businesses and organizations. This hands-on approach helps build a loyal customer base and positions Storage Authority as a trusted local brand.

The Ideal Franchisee

Besides Capital, What Else to Look for in a Franchisee?

While a franchisee must have at least $1 million in liquid assets, Storage Authority looks for individuals who are committed to dedicating six hours a week to their business during the development phase. This level of commitment ensures that franchisees remain engaged and are able to coach their management teams effectively.

Conclusion

Self-storage is a lucrative industry with high margins, low labor costs, and the potential for significant long-term returns. For those willing to invest both time and capital, Storage Authority offers a path to multi-million dollar assets and generational wealth. If you’re interested in learning more, Mark encourages you to do your research and reach out to his team to explore the opportunity further.