2 Costly Mistakes that Uneducated Self-Storage Entrepreneurs Can Make

When you get pulled over for speeding and your defense is, “I didn’t know what the speed limit was”, the policeman is still going to give you a ticket. They don’t care if you didn’t know what the speed limit was because it is your job to find out before you drive on the road.

There are a lot of costly mistakes that you can make in self-storage and whether or not you knew that you could make them isn’t going to change the fact that you lost money. This is one of the reasons that you want to get as much education as you can and gather as much information about a property as you can before you buy it.

One mistake that I made was hiring cheap labor. I allowed my general contractor to hire a cheap excavator. I ended up having to redo the project later and it cost more than it would have if I had just gone with a good contractor in the beginning.

I learned that you have to get to know reputable people in the area that you are building your self-storage project in, especially when you are managing the property from a distance. Whenever you enter a new area, make sure that you get references. Make sure that you hire people who will do a good job that will last, even if it costs a little more upfront.

Another mistake that can be quite costly is auctioning off the wrong unit. I am not personally involved in the case I am about to cite. A woman rented from a storage facility in Illinois and told the owner that she had a large number of expensive items that she needed to store. The manager prepared an agreement for unit C-10. Unfortunately, the manager showed her unit E-11 and placed the lock on E-11 not C-10. The tenant for unit E-11 didn’t pay rent and so the storage facility sold the belongings to recoup the loss of $191. When the claim went to court, the tenant claimed that she was storing $150,000 in personal belongings, and that she was never told there was a limit on the value she could store. The final verdict by the court awarded a wrongful-sale verdict total in the amount of $1,217,000 which was upheld by the Court of Appeals.

There are two things that you should take away from this case. First you should highlight and/or bold value limits with your tenants. You should have them initial that this was explained to them. If you need to, you can have a section that allows for higher value limits if requested. Second, you also always need to show compassion and remorse when mistakes are made. Never stick your head in the sand and try to hide what you did. Instead, try to help the tenant recover any items that were sold.

There are many mistakes that you can make when you don’t know what you are doing, these are just 2 of them. Make sure that you put systems in place so that you don’t make costly mistakes with your self-storage facility. As always, happy investing.