If you’re serious about getting more cash flow out of your rental, then you’ve got to take a fresh look at storage.
Tenants want storage. Scott Meyer, a thought leader in the storage industry, says 1 in 10 people use storage at some point in their lives.
The Big Picture on Tenant Storage
This topic of:
storage space is really too large for one post, but I need to discuss it all at once so you can get the big picture.
It’s an art to identify storage opportunities, so to be helpful I’m going define four categories just to get you thinking.
Do yourself a favor and practice categorizing the storage you see around your neighborhood. This will build the awareness you need to spot your own opportunities.
Four Storage Options for Your Tenants to Rent
Here are four buckets of ideas that you can fill with specifics for your building and your tenants.
1. Enclose Space to Make It Secure –
Look for opportunities you already have. Enclose nooks under the stairs or gap between buildings. Think of way to make space securable. These are the types of amenities you can ask for more rent for
2. Improve/Repurpose Storage Space to Make It Rentable –
Is your laundry room filled with your junk? If so you might be occupying space that could be better used for tenant lockers. In fact, you might be able to wall off the extra space and add a locking door. Then, all of a sudden you’ve created a secure space that’s in close proximity of your customer.
3. Create Hidden Storage Space and/or Add Wonder –
You can add value to any experience by adding wonder. How about a reading nook or window bench. Trap doors leading to floor storage, false walls leading to nooks, folding ladders leading to attic space, a space revealed by the touch of a button, all these tucked away spaces justify a custom experience and higher rent.
4. Buy/Build New Storage Space to Enhance Offering –
Have you heard of Tuff Shed? They are the small sheds that make you dream about possibilities. I can’t imagine who wouldn’t want one.
Breaking Down Tenants Storage Profit Centers
Let’s drop the tenant storage idea into a breakdown table.
|What||Add secure storage to your property for tenant(s) to rent|
|Difficulty: ●○○○○||Time Commitment: ●○○○○|
|Why||Tenants want storage and they are willing to pay for it.|
|Increase Net Income By||Renting under-utilized or newly created space is an easy way to make a ridiculous rate of return on a relatively small about of money.|
|Basic Components||* Add storage outside tenant’s residence
* Find or obtain securable, waterproof, fire-resistant space
* Make space exclusive to tenant renter
* A high quality locking mechanism
|The Extreme Version||Landlord rents tenant storage at a premium rate but allows tenant to sublease space to generate income.|
|Nontangible Benefits||The additional profit center (tenant storage) could attract tenants to your rental and improve your profits by helping to keep your vacancy rates low.|
|Steps to Implement/Test||* Look for opportunities to enclose or improve an open area and make it a rentable space
* Ask your existing residents if they are already paying for storage elsewhere
* Create storage that is in demand
Roy, who lives in Canada, rents his 215 sf laundry room for $125/month. He says this rate is on-par with local mini storage rates. Also, during the summer, he rents his 340 sf garage at $200/month but in the winter he grosses $750 / month by dividing the garage into 10 motorcycle parking spaces and renting them for $75/each. Wow!
Evaluate Your Potential
1. Do your current tenants rent storage somewhere? Ask them.
2. Do you have underutilized space that could be enclosed?
3. Think about garage space, enclosures or space above enclosures.
4. Do you have a carport you could enclose so it becomes a garage?
5. Do you have attic space that could be fortified and used?
6. Do you have a 10×10 plot at your rental property suitable for a storage shed?
7. Check your local Craigslist for used carports and carport kits. They range from $200 to $1,000 and people pay $50 and more for covered parking. It’s a smart move.
8. Got a small closet? Great, line it with cedar. Flip the negative into a strong positive by adding custom storage.
You’ll need to figure out how to handle the following:
1 – Tenant no longer wishes to pay extra for storage.
2 – You get complaints on how the storage space looks.
3 – How to write leases that accounts for fire-proofing or mandates storage insurance.
4 – Up front costs.
Want to find clever ways to draw in extra income? Then start from a position that you have storage rental potential – you just need to bold and irreverent – go uncover it.
Thanks for this great information. This is a clever idea & I will look more into it.
You got it Jay! More ideas to come.
Great insight, Al. Not only is this another profitable opportunity, it also presents a valuable service to the tenant. Thanks for sharing.