Friday I went to my first storage locker auction.  You’ve probably all seen the show “Storage Wars” and have your preconceptions about storage auctions.  Reality varies a bit from “reality TV.”  I wanted to share with you a few economic and social observations from my experience at a storage auction…

Shrewd Speculators

The majority of buyers at the auction were obviously very shrewd and knew what they were looking for and how much to spend.  There were a few colorful personalities in the mix of 25-30 buyers, but for the most part they knew when to buy and when to walk away.  The quiet ones were the most interesting to watch.  One gentleman in particular quickly snatched up three units for less than $50 total.  His strategy was to buy the lockers that no one else was interested in.

One of the commercial buyers was purchasing units for his resale shop.  He would typically pass by the open storage unit two times.  You could almost see him calculating profit margins and max bid as he was keenly analyzing the items in the unit.  He spent some of the bigger money of the day but also had the best resale system of anyone out there.

The price range of units was wide.  The cheapest unit went for $1 and the most expensive unit was over $1,000.  Half of the units sold for under $100 with most of the others selling for around $200.  The $1 unit was perhaps one of the best deals of the day.  It was filled with tax files from a CPA (more on that later) but had a Super Nintendo in the box plus several new pairs of women’s boots.  If the Super Nintendo worked, they go for $50-$75 all the time.  The boots would also bring quick money since they were new and in the box.  The unit sold cheap because there were 20 boxes of tax files that were an overwhelming distraction to the bidders.

Downward Spiral of Poor Financial Decisions

Storage facilities are the perfect showcase of the downward spiral of economic ignorance.  Rent on a locker typically ranges from $50 to $200 a month.  Of the 20 lockers I saw auctioned, I saw one locker with more than $1,000 worth of items inside.  Rent on that unit would have been in the ballpark of $200 a month.  After just a few months, the owner has paid more than what the items are worth to store them.  Replacement value on all the items I could see would be approximately $2,500.  The majority of the lockers didn’t contain enough items to justify more than a month or two of rent.  After a while, storage lockers just aren’t economically practical.

The Economic Reality of Storage Auctions

There is another reality of storage auctions that I didn’t realize until I had been to one.  Many units represent the economic failure of the owner, which is a bit sobering and sad.  Some of the units contained items from businesses that had gone bankrupt.  Others contained the items of people who could no longer afford the rent.

The sobering reality of this situation hit all of the bidders at one location.  The regulars followed a schedule of five auction locations set for the day.  I joined them at the 2nd stop near my office and followed through the final stop.  At that final location a young lady who didn’t look the same as everyone else joined the mix.  She was uninterested in the auctions and pecked away at her phone for the first four units at that location.  At the fifth unit she started bidding and continued bidding until she won the auction at $420.  She burst into tears when she won the auction.  We all quickly learned that she was the owner of the unit and couldn’t afford the back rent and associated fees.  Her last hope was to win the auction and reclaim her possessions.

Your Personal Information – For Sale!

Another interesting thing I observed was the large amount of personal data in the lockers.  Of the 20 units auctioned, 3 of them clearly had large amounts of personal/financial data stored in them.  The policy of this particular storage business is that all personal and financial files, as well as photographs are to be left in the locker for the company to deal with.  The owner on record will have a month and a half to come get the personal files at no charge.  After that the files will be thrown in the dumpster.

Did you catch that?  When the renter signed their contract, they acknowledged that their personal data (or perhaps yours) will be disposed of in the trash…without being shredded.  The economics of having a commercial shredding company come to site to dispose of the files would be cost prohibitive for the storage business.  Two lockers contained years of tax filing associated with a CPA and another locker contained personnel files and financial documents for a business.  Imagine what a disreputable person could do with all those social security numbers and signatures.  There was nothing to stop a buyer from taking the personal files with them.

My Purchase

I did buy a locker.  At the third location of the day I found a locker that was a good fit for me.  The majority of the bidders were distracted by another large pile of personal files.  In total my unit had 16 large boxes of financial data from a company that went bankrupt.  I bid on 6 computers, a monitor, and some other items I could see in the locker.  I wound up getting the unit for $30, or $32.50 once I paid sales tax.

I had 24 hours to clean out my locker.  I returned after watching the auctions at the final location.  I loaded up the computers and flat screen monitor and started digging through the other items.  There were 16 boxes of financial records, blank checks, personnel files, etc. that I set to one side of the locker.  The amount of information left in this locker by a bankrupt aerospace company made me cringe.

The surprises I found weren’t too exciting.  I found two large wheeled tubs (4ft x 2ft) that were filled with office supplies.  I pulled out a few items for our household and will donate the rest to our church.  There were also several hundred boxes of aerospace bearings that I will have to research to find out if I can sell or not.

Surprisingly, all the computers work!  I have already sold one which more than covers my expense for the unit.  I will donate a few to people who I know could use them and sell the rest.  My first experience with a storage auction was fun, profitable, and sobering.  I won’t be a regular at the auctions but it was a fun way to spend the morning on my day off.