Pre-Auction Preparation

Before going to our first auction, I wanted to learn as much as I could about this new thing. That's typical for me ... when I become interested in something, I want to dig into it and really understand it. I wanted to understand where the auctions were held and when, what the process and rules were for them, how quickly the stuff had to be cleaned out and the like. I wanted to scope out what options we had for selling the stuff found in the units. Most importantly, I wanted to get a feel for how to determine what to bid.

What I found out, I found almost entirely on the web.

Turns out in Southern New England, all the auctions are managed by 2 different companies. And, their scheduling is often set up so you can attend a whole slew of them in one day. For instance, between 10am and 3:30pm yesterday, there were 6 auctions scheduled in one geographic area that made it possible to attend them all.

The most important rules are 1) units bought are paid for in cash only, 2) in addition to paying the winning bid to the storage company, you also have to pay 10% more to the auctioneer and pay sales tax on the bid, 3) a deposit is required, typically $50 or $100, to the storage company that is returned when your unit is cleaned out, and 4) the unit typically needs to be cleaned out within 24 or 48 hours.

When the auction is underway, the process works the same for each unit sold. Someone from the storage company cuts the lock with a bolt cutter. Then, all the potential buyers get an opportunity to stand at the entrance of the unit and look over the contents, often shining a flashlight into the murk hoping to get a good look into the depths. No one can go inside the unit and nothing can be touched. After we've shambled past, the bidding begins and typically takes about a minute. The winning bidder puts his (almost no women are in this business) own lock on the unit and we move on to the next one. After the auction concludes, we settle up with the storage company and the auctioneer.

The true art of the auction is how you decide what to bid. One excellent recommendation I found online was to take 1 of 2 approaches, depending upon how crammed with stuff the unit was. If not too crammed, it suggested you guesstimate the value of all the items you see that you think you can sell, total those guesses and divide in half. That's your max bid for the unit. In the case of a crammed unit, again tally up the value of the items you can see and value and bid up to the total of your estimate. One issue with this approach is that a good portion of the stuff in the units is in boxes so their contents and value are a mystery. Both on the Storage Wars and Auction Hunters tv shows and in online reading, I found suggestions for how to guess at the value of the unit using some general guidelines. People who've packed up their possessions in sturdy boxes and arranged them neatly in a unit probably value what's in them more than the unit where they've haphazardly shoved stuff higgledy-piggeldy into the space. Also, trash bags are made for holding trash, not things of high value. Lots of trash bags in a unit are not generally a good sign.

The final consideration I wanted to get a handle on before our first auction was where we'd sell the stuff we acquired. Most of the contents of these units will be household items, so I figured we needed to find second hand or consignment shops that carried furniture and the like. Googling located a couple very near me. RC (my brother) and I checked them both out in the afternoon following our first auction. One of them is over 8,000 square feet, had tons of furniture and household items in general. Since we've brought stuff there, we found out they also have an online reference for reviewing your sales to date, which is very helpful. There are lots of other stores that specialize in different categories of used goods, such as clothing, sporting equipment and audio equipment. These will be good spots for unloading some of our haul. Of course, for collectible items that are not easy to sell locally or have a relatively high value, we'll use eBay. Selling items through an eBay auction requires a good amount of work - taking photos, composing descriptions, researching similar items to determine pricing and how to promote our piece -- so I plan to avoid this approach when the item isn't anticipated to be worth at least $100. Craigslist is of course an option, but I haven't ever used it, so I will need to get familiar with it to figure out when it's the best option for selling items.

With all this accomplished, I felt ready for our first auction.

NEXT - our first auction

Why Storage Units?

I admit the idea of purchasing the contents of abandoned storage units to resell them never occurred to me until a few months ago, when I watched Storage Wars on tv. Storage Wars is a "reality" tv show that follows 5 individuals as they purchase, clean out and resell the contents of storage units in California. I knew there were storage unit businesses, after all you see them all over, but I'd never thought through what happens when someone doesn't pay their rent and the unit needs to be cleared out for a new paying customer.

When I watched the show, it seemed like a fun and potentially profitable enterprise. I knew the show was focusing on the most rewarding units, since the "finds" definitely made for the most interesting viewing. More interesting to show a find of valuable baseball cards then junk that needs to go straight to a dumpster somewhere. And, the tally of income and expenses for the units was completely out of whack, with no consideration made for costs other than the unit itself. How about the time of the folks buying the unit? Cost of traveling to and from the units? Cost of sales? And so on ....

But, I thought it would be a fun thing to do. And, I had the time since I'm unemployed. In a moment of complete serendipity, I mentioned to my brother that I was interested in buying storage units. He was too! And, by the way, he's unemployed, strong, and has a mini-van and trailer. Most importantly, though, it's always more fun to do this kind of thing in partnership with someone else. You have someone to share the experience with. And, everyone has their strengths and weaknesses; working together we can exploit our strengths and ideally mitigate those weaknesses.

Next up: pre-auction preparation