How to Start a Self Storage Business: Step by Step
Learning how to start a self storage business means answering hard questions in a fixed order. Is there demand where you want to be? Can you get a site and approvals? How will you pay for it? How will you run it day to day? Skipping ahead costs money. The steps below follow that order, and each one points to a deeper guide on this site.
The steps at a glance
- Decide whether to build, buy or convert.
- Research your market and test demand with a feasibility study.
- Find and secure a site, and check zoning before you sign.
- Set up the business and write a self storage business plan.
- Finance the project.
- Plan your operations and software.
- Open and lease up.
Decide whether to build, buy or convert
There are three ways into the business. Each one changes your budget, your timeline and the kind of risk you carry.
| Path | What you get | Main risk | Where to read more |
|---|---|---|---|
| Build new | A facility designed to your unit mix and market | Approvals, construction cost and a slow lease-up | Cost to build a self storage facility |
| Buy existing | Tenants and revenue from day one | Overpaying, or inheriting bad records and deferred repairs | Buying an existing self storage facility |
| Convert a building | Shell already standing, often in a built-up area | Hidden building and code problems | Converting a building to self storage |
Most first-time owners compare at least two paths in the same market before committing. See buying an existing self storage facility if you want income from the start.
Whatever the path, write a business plan. The SBA describes a traditional plan with sections such as market analysis, funding request and financial projections. It notes lenders and investors commonly request the traditional format.
Research your market
Before you look at land, find out whether people near you need more storage. The SBA frames market research around demand, saturation and location.
- Demand: population, households and housing in your trade area. The Census Bureau's American Community Survey publishes yearly housing and population estimates.
- Saturation: count every facility within a short drive, plus anything under construction or approved. Call them and record street rates by unit size.
- Business data: the Census Bureau's County Business Patterns reports establishments and payroll by industry each year.
- Industry research: the Self Storage Association sells market reports and runs education for owners.
For anything you plan to finance, a third-party study is usually worth the cost. Our self storage feasibility study guide explains what one covers and how to read it.
Find and secure a site
Zoning decides whether you can build at all. The SBA notes that zoning is set locally and can restrict or ban certain businesses. Call the city or county planning office before you make an offer.
Look for road access a moving truck can handle, visibility from a busy road, and enough land for your planned building and drive aisles. Ask what the local code requires for setbacks, landscaping, stormwater and building appearance. Those rules can cut your rentable square footage.
Make any land contract contingent on zoning approval, a survey and an environmental review. See our self storage zoning guide for the approval process.
Set up the business
Pick a legal structure early, because lenders and permits need a named entity. The SBA lists sole proprietorships, partnerships, LLCs, corporations and cooperatives. It says LLCs protect owners from personal liability in most instances, but that protection has limits.
Many owners hold the land and building in one entity and run the business in another. Ask an attorney and an accountant whether that fits your situation.
Next, get an Employer Identification Number. The IRS says to register an LLC or corporation with your state before applying, and the EIN is free. Then apply for licenses. The SBA notes that state, county and city requirements depend on your activities and location.
- Form the entity with your state
- Get an EIN from the IRS
- Open a separate business bank account
- Apply for state and local business licenses
- Get builder's risk or property and liability insurance quotes
- Have a local attorney draft or review your rental agreement
Finance the project
Most first facilities are financed with a bank loan, an SBA-backed loan, owner equity, or a mix.
- SBA 504: can fund the purchase, construction or renovation of buildings or land, with 10-, 20- and 25-year terms. It cannot fund speculative investment in rental real estate, so confirm eligibility with a lender.
- SBA 7(a): has a $5 million maximum and can be used for real estate and changes of ownership.
- Conventional bank loans: terms vary by lender. Expect them to ask for your plan, a feasibility study and personal guarantees. [SOURCE NEEDED: lender documentation on typical requirements]
Plan cash for interest and operating losses during lease-up. A new facility can run below break-even for its first months. See financing a self storage facility for loan types in more depth.
Plan your operations and software
Decide how the facility will run before construction ends. These choices affect wiring, gate placement and staffing.
- Staffing: an on-site manager, a part-time manager, or remote management with kiosk or online rentals.
- Rentals and payments: online move-ins, autopay, and how you handle late fees under your state's law.
- Access control: gate keypads, door alarms and cameras, and how they connect to your tenant records.
- Records: the rental agreement, notices and lien process. See self storage lien laws by state.
Ask several management software vendors the same questions and compare answers in writing. Storagely's self storage software buyer's guide lists questions to ask vendors.
The Self Storage Association runs online training and a manager certification if you plan to manage the site yourself.
Open and lease up
The months before and after opening decide how fast you fill. Start taking reservations before the gate opens, and get your listings and website live early.
Track move-ins, move-outs and occupancy every week. Compare actual lease-up with the pace your feasibility study assumed. If you fall behind, review rates and marketing before you cut prices across the board.
Our opening checklist splits the last 90 days into tasks you can assign.
Frequently asked questions
How long does it take to start a self storage business?
It depends on approvals and construction in your area. Zoning alone can take months. [SOURCE NEEDED]
Do I need a feasibility study?
Lenders often ask for one, and it protects you from building in an oversupplied market. See the feasibility study guide.
Can I use an SBA loan for self storage?
Possibly. SBA 504 and 7(a) loans can fund real estate, but 504 excludes speculative rental real estate. Ask an SBA lender about your project.
Do I need an EIN if I have no employees?
An LLC or corporation generally needs one, and the IRS issues EINs free. Ask your accountant about your structure.
Should I build or buy my first facility?
Buying gives revenue on day one. Building gives you the design you want but a slower start. Compare both in your target market.
Related guides
Sources
- SBA: Write your business plan
- SBA: Market research and competitive analysis
- SBA: Pick your business location
- SBA: Choose a business structure
- SBA: Apply for licenses and permits
- SBA: 504 loans
- SBA: 7(a) loans
- IRS: Get an employer identification number
- U.S. Census Bureau: American Community Survey
- U.S. Census Bureau: County Business Patterns
- Self Storage Association