The Gold Rush, Personal Storage Unit edition

Storage unit auctions are often perceived as an opportunity to “strike it rich.”

The gold rush, the next big tech company success; dreams of obtaining wealth in a short amount of time. Everyone dreams of a big payoff on a small investment, but few make it.  The television show “Storage Wars” romanticizes the concept of hitting it big with the blind purchase of the contents of a storage unit. How much should you bid? Could that 10×15 unit be hiding junk, small treasures, or your retirement?  Should you outbid that person over there or wait for the next unit?

Remembering that a television show on any topic is going to take dramatic license and gloss over some of the more mundane aspects of the topic, here is a reality check when it comes to sales of unit contents.

The storage company wants … rent

All aspects of the self-storage business are governed by laws and statutes in the State of Colorado. Reputable owners and managers are careful to comply with those laws: their business reputation rides on good business practices and treating their customers with respect. The last thing they want to do is take temporary ownership of the contents of a unit.

The law governs all aspects of a storage unit auction.

As a matter of fact, no owner, manager, or employee is allowed to bid on the contents of the storage unit. None of these parties can profit from the sale of the contents of a unit at all. Their only goal in an auction is to recoup the money owed to them from rent, late fees, and the cost of holding the auction.  Holding an auction is time consuming, takes valuable time away from doing other tasks and very rarely garnishes the money needed to offset the money owed. Not to mention all the paperwork that such a sale involves. They would much prefer their clients paid the rent.

The excitement builds …

Some storage facilities hire a professional auctioneer to facilitate the sales. Before the actual auction proceeds, the potential buyers are allowed 5 minutes to inspect the contents, only from the outside. Why? Yes, it is dramatic watching people try to evaluate potential treasures with a mirror on the end of a pole and a flashlight, but the real reason no one is allowed inside the unit is simple: the Colorado lien statute forbids it (perhaps written that way to keep the process uniform and to prevent theft).

… then reality sets in.

The real work begins after a person wins an auction. Usually, they have to clear out the contents of the personal storage unit within 24 hours (it varies depending on individual facilities and their policies). That means they need a vehicle suitable for hauling away the contents quickly.  A pick-up or other type of truck is a necessity.

Physical fitness is a plus, people need to hustle to get the unit cleared out in time.

The real work starts

There are a few people (very few) who buy and sell the contents of storage units for a living. They may do okay, but it takes a lot of hard work to be a full-time “storage wars” warrior. Management refers to these dedicated diehards as “Regulars.” Many of them have full-time booths at various flea markets to sell the ordinary items like clothing, household goods, and so on.

Spending time selling the goods from a storage unit at a flea market.

For the potential high-ticket items, they need contacts.  People who can evaluate the value of an item, and—this is the most important part— taking the time (or spending the fees) to sell the potential high-valued item. Yes, an original computer or manual from the 1980’s is rare, but so is the market willing to buy such an item. The storage Regulars have to evaluate the cost of their time against the potential profit in order to make money selling the items from an auction.

In short, it takes a lot of hard work to earn money at buying the contents of storage units.

And what of the original owner?

If the auction did not bring in enough funds to pay for the delinquency, many companies will sell the debt to a collector. However, what happens if it brings in more money than owed?  Put another way, if the rent and late fees of a unit owed to the company is, for instance, $338, and the contents of the unit goes for $538 at auction, the $200 overage legally belongs to the owner of the contents, not the storage unit company. In such a case, a check for the overage is cut out by the owner and mailed to the tenant’s last known address by certified mail. If it returns and goes unclaimed for over a year, then the check can be destroyed and the owner’s obligation to the tenant is satisfied.

The end

The owner and manager of storage units are restricted—by law—to collecting only the rents and associated fees owed to them. Since an auction is a time-consuming process and one laden with paperwork, they much prefer the client stay current on their rent.

For a person hoping to “hit the jackpot” at a personal storage unit auction, it is possible to do okay but the chances of “hitting it big” are actually quite slim and the chances of losing money are more likely.  The average person will do better to spend their time just watching an episode of “Storage Wars” on television.