The following is a guest post by Sarah Rexman.
When people stop paying their bills for their storage units, the storage company can auction those items to try to make up for the delinquent rent. One person’s loss soon becomes another person’s gain.
Enterprising individuals and business owners around the country are taking advantage of storage auctions to turn a few hundred dollars into thousands of dollars … potentially. Bidders can’t see what they’re buying until they’ve won an auction. Before that, they are only allowed to peek inside the open door of a storage locker – they can’t go inside or open up any of the boxes.
Not every locker is a winner, and not all gambles pay off. But when locks contain valuable items, they can bring in high dollar.
If you think this treasure-hunting business model would appeal to you, here’s what you need to know about making money with storage auctions:
Get Your Feet Wet
Don’t just dive in to the storage auction business and hope for the best. Learning how to evaluate and bid on lockers is a skill that requires both experience and intuition.
Learn what you can by attending a few storage auctions before you start bidding. Just go to listen and learn.
Watch what experienced bidders do to check out the content of the locker, then pay attention to how much they bid and when they decide to call it quits. Listen to their remarks to see if you can pick up any insights.
The more auctions you attend, the more you will learn about how to spot a locker with good potential and the appropriate amount to bid.
Develop a Strategy
Once you know what to look for, you need to develop a bidding strategy.
Decide ahead of time what kinds of items you will try to win. Do you think there’s a market for electronics where you live? Or do you think it will be easier for you to sell collectibles online? Make sure you know what types of items you will be able to sell and for how much, then plan your bidding strategy appropriately.
You should also decide where you’ll bid. The area where a storage unit is located can tell you a lot about its potential contents. Units in areas that are poor or run-down are not as likely to hold valuable items.
You can’t win an auction then head to the ATM, and you can’t pay for an auction with your credit card. You have to come with the cash you are prepared to spend. That means that if you come with $100 and a unit is bidding for $300, you can’t bid. Plan to bring a little more than you might like to spend in case you see a locker that has the potential to bring a good return on your investment.
You should also arrive with a truck or trailer to haul the items you win, or should plan to have access to one within 24 hours of the auction (the time limit to clear out items after most auctions). If you only plan to build on small units with boxes, you may be able to get away with hauling your items in your car. Otherwise, plan to bring a truck.
Quickly Determine Value
Since you can’t enter a storage locker or inspect its contents before bidding, you have to develop other strategies for determining value.
Before you bid, quickly scan the contents of the locker from the doorway to add up a rough estimate of value. Look for large, valuable items such as furniture, electronics or tools. Note the condition of the items: Are the boxes neatly packed and stacked, or do you see tears, stains, or other signs or disrepair? Do you see name brands on the boxes or labels? Do you notice any strange smells, indicating water damage or other rot? The answers to these questions can help you determine value.
You can also find out what you can about the unit from the owner of the facility or the auctioneers. Sometimes, they may be able to tell you a little about the owner or the contents.
Set a Cap
It can be easy to get caught up in the moment and to keep raising your bid at an auction, especially when you feel committed to winning a particular locker. If you are to be successful at creating a business out of storage auctions, you have to get the most return for your investment, which means spending as little as you can and selling for as much as you can.
Once you have determined a rough estimate of the value of the locker, set a bidding cap for about half that – and then stick to it. Sure, there may be a box of diamonds hiding out in the back of the locker, but you don’t know that, and gambling on such propositions will ensure that you quickly lose all your money.
Stick to a smart bidding strategy and you’ll soon see a return on your investment.
Find the Best Places to Sell
After you win your auction, you have to find buyers for your goods. Not all items will sell in the same venues. Determining where to sell your items is key to getting the best prices for them.
Flea markets and swap meets allow you to sell a wide variety of items, particularly household items that will be common at storage auctions. Craigslist is a great venue for furniture, electronics, and other big-ticket items. Ebay can be a great outlet for collectible items.
If you are unsure about an outlet for your goods, or you are unsure about the value of an item, be sure to have those items appraised. You may find that what you thought was just a knick-knack is actually a piece of art worth thousands, and you may find that the appraiser is a willing buyer.
Just like with any other business, becoming successful at storage auctions requires a lot of research and hard work and a little luck. Learn what you can about the business by attending several auctions, then develop a bidding strategy and cultivate good markets to sell your wares. Over time, you may be able to open your own consignment shop or auction house, or you could just enjoy independent living.
Sarah Rexman is the main researcher and writer for bedbugs.org. Her most recent accomplishment includes graduating from Florida State, with a degree in environmental science. Her current focus for the site involves researching how to get rid of bed bugs in bed bug hotels.