There are a lot of Auction Hunters and Storage Unit Pickers out to strike it rich.
I enjoy the auction and picker shows. How much is reality and how much is staged for the cameras? There’s a half a dozen shows about people searching for treasures buried in dusty lockers. How could this many people be so successful at this gamble? If it is so easy, why isn’t everyone doing it???
The storage auction shows follow guys earning their living buying unclaimed property and reselling it for a profit. They make storage auctions look like a great way to make some fast cash; they show these guys spending a thousand dollars buying a unit and making five thousand dollars from reselling the treasures they find inside.
The Producers are out to make good TV. They tend to gloss over the dud units and hours spent sorting through particle board bookshelves, end tables, and bags of dirty clothes. They also don’t show you very many units that the bidders lost money on.
Storage Auctions are not for novice bidders
If you’ve never been to an auction, I don’t recommend a storage unit sale for your first time out. Most people bidding at storage unit auctions are well seasoned auction veterans, and will eat you for lunch if you don’t know what you are doing.
Most Auctioneers that sell storage units do other types of auctions as well, and you can go to a sale or two to feel out the auctioneer and their bid calling style beforehand. Pick out a nice estate sale or community auction to go to if you are unfamiliar with the bidding process.
Buying Storage Units at auction makes for dirty, dust covered days of manual labor
I can tell you from experience that it is hot, sweaty back breaking work. I’ve been going to Storage Auctions for more than ten years.
If you want to be successful buying storage lockers at auction, you have to have a plan
Buying the units is just a fraction of the operation. You’ve got to have the capital to buy the units upfront, sort and move the contents, someplace to warehouse it, a marketing plan, maybe a retail storefront, employees, liability insurance, state and local licenses, and more. Ultimately, it all comes down to the bottom line. You are in business for yourself to be profitable. You have to have a business plan.
Pace yourself. Learn as you go, and have realistic expectations. Be prepared to fail. I have heard some Storage Auction Experts admit that they lose money on 80% of the storage lockers they buy.
Always have a cushion – Don’t let one bad buy end your career
Don’t go all in. Period. Always have some capital set aside in case you crash and burn. Be prepared to lose every dollar you bid; and more.
You can see the backside of the dresser, the top of a beautiful headboard sticking up behind it, and a couch so piled up with stuff you can’t see the other end of it. It looks good, you go all in, and when you start unloading, you discover things aren’t as they seemed. The dresser has no drawers, the headboard has a hole in it, and the couch looks like a dog gave birth on it. You went all in? How do you feel about flipping burgers You have to spend money to make money, but you don’t want your dream of being your own boss to end on one bad bid.
Buying storage units at auction is a form of gambling
Any good gambler knows that it is Assessment of and Management of Risk. With time you gain wisdom and will become more adept at predicting future occurrences based on past experiences. People are creatures of habit. What they do at this sale is what they will do at the next. Learn to predict what your competition will do by watching them at every sale. Always be studying your competition.
Do Your Research
In Ohio, storage unit auctions are public auctions, and the auctioneer is required by law to make public notice of the sale. This is to give the property owners the opportunity to settle their debt with the storage facility and claim their property before the auction. They print the name and usually the last known address of the person or persons responsible for the unit. These notices are usually made in the classifieds of the local newspapers.
The storage unit may be rented in a company name or the owner of a small business. A simple search engine inquiry can sometimes turn up social network sites that the unit owners are registered on. All sorts of information can be found via social networks.
Familiarize yourself with the Auctioneer and make sure you know their rules
Most auctioneers will have a written copy of their policies and rules regarding the sale. They may include it in the public notice or have it on their website. Be sure to ask any questions before the bidding starts.
Storage Facility Managers would rather collect back rent than auction the unit. The pre-auction advertising may say 15 units to sell but on auction day, you find that they have less than originally advertised. This isn’t the auctioneer’s fault. Auctioneers are usually paid by commission. They want as many units as they can get to sell, and they want each of them to go as high as they can. Check with the storage facility manager or the Auctioneer when you arrive at the sale to verify how many units will be available that day.
Most storage rental companies require auction buyers to place a deposit on the unit, and give you a timeline for clearing the unit, generally 48 to 72 hours. Be sure to have enough cash set aside to cover the deposit; and have a plan to have it emptied out before the deadline.
Cash is King – Most storage auctions are cash only.
Know what the laws say about what you can and cannot sell
- Furniture and Mattresses – In Ohio, upholstered and fabric covered furniture such as couches and mattresses must be fumigated and tagged. Be aware of the cost of the fumigation kits, and the time spent fumigating, and you may decide to stay away from them at the sales. You can’t spray it down with air freshener and call it a day either. If you don’t believe me, get a black light.
- Cars, Motorcycles, Snowmobiles and Mopeds – In Ohio, motor vehicles all come with titles. From dirt bikes to commercial trucks. Without the title, you will have a hard time selling it for anything other than parts.
- Firearms – Do you have a Federal Firearms License? I’ve seen guns handled differently in different jurisdictions. Make sure you know the federal, state and local laws regarding firearms before you think you’ve made your big score.
- Counterfeit Goods – Better make sure that watch or purse or shoes are legit. Ignorance is no excuse.
- Recalled Merchandise – If it’s been named in a recall action, you can’t sell it.
- Hazardous Waste – Old Paint, industrial chemicals, prescription medications, batteries, mercury filled thermometers; the list goes on and on. Remember that you take the good with the bad at a storage auction, and this chemical spill may be your responsibility. Handle it right. Be the environmentally responsible one and dispose of any unwanted items or hazardous waste the right way.
Don’t Drag It All Home
You house will look like you should call the people from the hoarders show, or your wife may make you go live in a storage unit. Have a plan for what you are going to do with it.
Most of the TV guys seem to have 2 things in common: obnoxiously large pickup trucks and warehouses to keep their auction finds in.
Turn It and Burn It
The longer you hold on to an item, the longer your cash is tied up in that piece. Fast turnover is the name of the game in storage unit auctions. Develop relationships with collectors as well as specialty dealers. While you are assessing the contents of the unit, ask yourself “Who do I know what will buy this?”
Keep track of your time
Optimize your labor hours to increase your profitability. How long did it take you to load out the unit and unload the truck when you got back to the shop?
How long were you at the sale? You will want to know how many hours of labor you have into this endeavor when you get to doing your books.
Fair Market Value
It’s hard to say for sure what any unit will sell for on any given day. With the recent popularity of the storage auction shows, there are more would be bidders at every locker auction. The more speculators, the higher the bids will go. As a general rule, I’d say if you don’t have at least $500 to spend on a unit, stay home.
I hope that I have given you some things to think about before you quit your day job to strike it rich at a storage auction
It is not as glamorous as the Reality TV Producers make it out to be. There are scores to be had and money to be made buying dusty lockers and digging out the treasures that someone left behind. Know what you are getting into before you buy your first unit. It takes time to learn what items are easy sellers and which items will sit on your shelves for months while you search for a buyer.
Think your ready for a storage auction???
Do your research
Be Prepared if you choose to bid on a storage unit at an auction.
Storage Auction Checklist
Auction Day Tips
Selling Your Storage Auction Treasures