13 Jan 2026
Seven (7) Self Storage Misconceptions (some old, some new) that will cost you dearly if you are not prepared.
The self-storage industry’s reputation as a simple business has driven a rise in interest from first-time investors, real estate investors, entrepreneurs, and institutional capital. Headlines highlight double-digit revenue growth, and online gurus promise passive income with little effort are everywhere. These idealized images can result in poor land choices, bad design, major delays, and huge cost overruns during development and construction, and lead to further losses after opening.
Let’s separate fact from fiction by exploring seven (7) critical misconceptions so you can avoid the minefields and make more profits.
Misconception 1: Self-Storage is Passive Income
Self-storage is semi-passive compared to owning most businesses, or a 9-5 Job. It takes work to develop or buy a self-storage facility and oversee your manager. Often, it takes several hours a week during development and the first year, as you learn the ins and outs of self-storage profits. But after that, it becomes much closer to passive income if you have a proven system in place. The owner has to hire and lead the facility team, and several vendors that are required to operate a self-storage facility.
The most successful facilities are high-end hospitality businesses. A great manager actually allows you to charge more and make more than an average manager. A great manager does not just happen by accident. They must have ongoing training and motivation, including detailed manuals, systems, accountability, regular training and weekly meetings with the owner or supervisor.
Misconception 2: You need to find a good deal on land.
This is simply not true. It is more important to find a great property than to find a deal on land. There are a lot of great properties out there, but it takes a system to find. Unless you want to save a few bucks up front to cut your profits in half, don’t build just because you own the property or it is cheap.
You must use a multiple-point checklist that includes reviewing: the neighborhood, usable land, traffic, demand, pipeline facilities, utilities, wetlands, competition locations, competition rental rates, access, population, zoning, land price and more. There is a huge difference in profits between 10,000 cars a day and 25,000 cars a day or 12,000 or 25,000 people in the three-mile radius. There is no doubt you need a self-storage land expert on your team day one to make sure you are buying a great property for your needs.
Misconception 3: Build it, and they will come.
This was true in the eighties when we had virtually zero self-storage compared to today. Even in the 90’s, many self-storage facilities were built on “leftover land” and were successful.
Now that it is clear that self-storage is one of the most successful real estate investments/businesses, many large, sophisticated Real Estate Investment Trusts (REITs) own self-storage, increasing the need to consider the competition and demand before you build and then out-service and out-market the REITs. The REIT’s biggest advantage is that they do not have a learning curve, and they have more money to invest than you and I. The good news is the REITs have significant disadvantages, including that they are not nimble and not customer-friendly, allowing well-designed and well-managed facilities with a proven marketing plan to outperform the REITs.
Misconception 4: Smaller sites perform as well as larger sites.
Many years ago, smaller facilities had a high 10-plus cap rate, where decent profit could be made. This is no longer the case as there are so many people looking to buy small facilities due to their budget. Now, large and small self-storage facilities have similar prices per square foot, but small facilities have much higher overhead expenses per square foot, making good profits is much harder to come by.
Larger sites spread fixed costs across more units, which supports stronger cash flow and profits. They create options for dynamic pricing. They support amenities that renters expect in competitive markets and as such, can charge higher rent.
Misconception 5. The industry is saturated.
Many assume the window for new development is limited because based on driving down the road and seeing new facilities open. The data tells a different story. First, people don’t realize 85% of renters come from a 3-mile radius, so oversupply is local, not universal.
Smart developers focus on 3-mile micro markets. They study maps. They run drive times. They compare visibility, traffic, and local barriers. A city may look like it has too much or not enough self-storage, but until you run the 3-mile data. Now it is much easier than ever to review 3-mile areas due to the many self-storage apps available to us.
Misconception 6: I need to hire a management company to run my self-storage.
Unless you have extensive experience, time, and a sophisticated system in place, I would not recommend going it on your own. There are just too many land mines. A Management may be a good choice if you have zero time. But don’t forget you have to manage the management company.
Nobody is going to have your best interests in mind as you do. So, if you are considering doing it on your own or want to spend some time on your facility, but do not want to make it a full-time job, a self-storage franchise is a great opportunity. A Franchise provides many advantages not most owners would not have on their own or with a management company.
Misconception 7: Since I don’t have experience, and since it takes experience to get started, I should avoid self-storage.
Self-storage takes 3 major things: Money, Experience, and Time.
It is Important to remember that all the money, experience, and time don’t need to be yours. There are options where teams provide different levels of each of these 3 items. Most newcomers have limited time because they have full-time jobs and no experience. And many newcomers get a 15% down SBA bank loan that includes funds for carrying costs until the break-even point.
Self-storage offers strong opportunities for new investors/developers with clear expectations, accurate data, and solid systems. Misconceptions push investors toward poor sites or unrealistic projections. The right approach removes noise and focuses on fundamentals. When you understand the work, the capital structure, and the market details, storage becomes a strategic path to long term income and wealth.
Garrett Byrd is VP of Business Development at Storage Authority LLC, which offers a
self-storage franchise model guiding owners through finding land, development and
operation. He has more than 20 years of experience in real estate and self-storage
management. To reach him, call 941.928.1354 or email garrett@storageauthority.com
