To start a self storage business, you choose a market, decide whether to build, convert or buy, write a plan with your own numbers, form a legal entity, secure funding, and then set up the systems that let the facility run with little staff. Costs vary too much by land, building type and town for any average to help you, so this guide shows you how to build your own budget and test it before you spend money.
This guide is general information, not legal, tax or financial advice. Talk to an attorney, a CPA and your lender before you commit.
Step 1: Decide if the market can support a facility
Self storage is a local business. A town of 4,000 people can support a small facility. The next town over may not. Before you look at land, answer four questions.
- How many competing facilities are within a 10 to 15 minute drive? Drive to each one. Write down unit sizes, street rates, whether they have drive-up units, climate control, and how full they look.
- Are the competitors full? Call as a customer and ask for a 10x10. If everyone says "we are out," that is demand. If every facility offers a month free, that is not.
- What drives demand here? Homes with small garages, apartments, farms, boat and RV owners, small contractors, college students, military moves.
- What will people pay? Collect the posted rate for each common size. This becomes your rent assumption.
Do not trust a rule of thumb you cannot check. Write down what you see in your own market.
Step 2: Choose how you will get in
| Path | What it means | Main upside | Main risk |
|---|---|---|---|
| Build new | Buy land, get permits, build units | Modern layout, you choose the unit mix | Long wait before rent starts, cost overruns |
| Convert a building | Turn a barn, shop or warehouse into units | Often cheaper per square foot of rentable space | Fire code, zoning, odd column spacing |
| Buy an existing facility | Take over units and tenants | Rent starts at closing | You pay for the income, and may inherit problems |
If you are weighing a purchase, read buying an existing self storage facility. If you want to estimate whether a build pencils out, use the feasibility calculator.
Step 3: Check zoning, permits and local rules
Call the city or county planning office before you sign anything. Ask:
- Is self storage allowed on this parcel, or do I need a special use permit?
- What are the setback, fencing, lighting and signage rules?
- Are there fire code rules for buildings with many doors, sprinklers or fire lane width?
- What are the water, septic and stormwater requirements?
- Are there impact or permit fees?
Put these answers in writing, and make any land purchase contingent on approval.
Step 4: Write a plan with your own numbers
The SBA describes two formats. A traditional plan has nine sections, including an executive summary, market analysis, marketing and sales, funding request and financial projections. A lean plan fits on one page and covers partners, activities, customers, channels, costs and revenue. If you want a loan, a lender will usually ask for the traditional version, so start there.
Your financial section should include:
- Your unit mix (how many of each size) and the rent per size
- A month-by-month lease-up forecast: how many units you expect to fill each month
- Fixed costs: loan payment, property tax, insurance, utilities, software, lights, gate power, internet
- Variable costs: repairs, marketing, payment processing, credit card fees
- A cash reserve to cover the months before you break even
Worked example (illustrative only)
Say you plan 100 units. The average rent is $95 a month. At full occupancy, that is 100 x $95 = $9,500 a month in potential rent.
Now say your monthly costs are:
| Cost | Monthly (example) |
|---|---|
| Loan payment | $4,200 |
| Property tax | $600 |
| Insurance | $350 |
| Utilities and internet | $300 |
| Software, marketing, card fees | $400 |
| Repairs and reserve | $400 |
| Total | $6,250 |
Divide $6,250 by $95 and you get about 66 units. Those numbers are made up. The point is the method: your break-even occupancy is monthly costs divided by average rent, divided by total units. Here that is 66 of 100, or 66 percent. If it takes you 18 months to reach 66 units, you need cash to cover the gap while you lease up. Try your own numbers with the feasibility calculator and the unit mix calculator.
Step 5: Set up the business entity and tax IDs
Most owners put the property and the operation in an LLC, but the right setup depends on your state, your lender and your tax situation. See entity and licensing for self storage and speak with an attorney and a CPA.
An EIN is the federal tax ID for your business. The IRS says you need one to hire employees, operate a partnership or corporation, or pay certain taxes, and that applying online is free. Be careful of sites that charge a fee. Apply directly at irs.gov.
Also check whether your state or county requires a sales tax permit, a business license, or a retail license for selling locks and boxes.
Step 6: Fund it
Common sources include your own cash, a bank loan secured by the property, and SBA-backed loans through lenders. Banks typically want to see a plan, your personal financial statement, a down payment and a feasibility study or comps. Terms differ by lender, so ask three of them for a written term sheet. Read self storage financing for the questions to ask.
Step 7: Build, convert or close
Whichever path you choose, keep a written budget with three lines for each item: your quote, the actual cost, and the difference. Get at least three bids for construction and ask each contractor what is and is not included (site work, concrete, doors, electrical, paving, fencing).
For a new build, plan on these items in addition to the units themselves:
- Entry gate and keypad
- Cameras and lights
- Office or kiosk (optional if you run unmanned)
- Signs on the road
- Locks for sale
- Internet at the gate and the office
Step 8: Set up your systems before you open
You do not need to hire a manager to open. You do need systems that handle the work a manager would do.
- Software. Pick a system that takes online rentals, collects rent by autopay, tracks late fees and gate codes, and holds your leases. Read how to choose self storage software. Stitch Storage is self storage management software for independent owners, made by Hive Asset Group, LLC. Starter is $39 a month for up to 50 units, and Pro is $99 a month for unlimited units, with a 0.3% platform fee on rent processed. There is a 30-day free trial with no card.
- A lease. Use a written lease reviewed by a local attorney. See writing a good self storage lease.
- A lien plan. Learn your state's process now, not when the first tenant stops paying. Start at self storage lien laws by state.
- A website and Google listing. Get a Google Business Profile live before opening day. See Google Business Profile for self storage.
- Insurance. Talk to an agent about property and liability coverage for the facility. See self storage insurance basics.
Step 9: Price and lease up
Start with rates close to what nearby facilities charge for the same size and features, then adjust as you fill. See self storage pricing strategy for a simple method. Be careful with deep discounts. A first month free brings in tenants but also brings in people who leave when it ends. Read self storage move-in specials before you decide.
A basic opening checklist:
- Every unit numbered, with doors that open and lock
- Rates entered in software, with photos
- Gate and keypad tested with a real code
- Cameras recording and viewable from your phone
- Road sign and a banner that says "Now Renting" with a phone number or web address
- Google Business Profile verified
- Lease, rules and late fee policy written and approved by your attorney
- Insurance bound
Step 10: Keep learning
The Self Storage Association is the industry trade group, founded in 1975. It lists education, a manager certification program and a legal resource center for members. State associations also hold events. Reading what other owners in your state do about liens and leases is worth the cost of a membership.
Common mistakes new owners make
- Using an average from the internet instead of local rates. Your town is not the average.
- Forgetting the lease-up period. Rent does not start at full occupancy. Budget cash for the slow months.
- Skipping the lien law. If you cannot legally clear a unit of a non-paying tenant, you lose rent. Learn it first.
- Building too many climate controlled units, or too few. Check what nearby facilities have and what they charge.
- Underestimating time. Even an unmanned facility needs weekly checks. See how to run a small self storage facility.
Next steps
- Spend one afternoon calling local facilities and writing down rates.
- Run the feasibility calculator with three scenarios: slow, expected and fast lease-up.
- Call the planning office about zoning.
- Talk to two lenders and one attorney.
- Start your free trial so you can see how rentals, autopay and gate codes work before you build.
This page is general information, not legal, tax or financial advice. Review your plans with an attorney, a CPA and your lender.