The Gig Economy’s Storage Hustle

Kaleb’s self-storage side hustle started small.

Ten months ago, he started renting out a few nooks and crannies inside the apartment he leased while a student at Brigham Young University, along with an extra parking space that came with the rent. To do this, Kaleb used an app called Neighbor, which connects people who have extra space to spare with people that need to stash their things.

Now, thanks to Neighbor, he has completed a professional journey from college kid to part-time landlord-for-stuff. His properties include the trunk of a busted Cadillac (“Not just any trunk, but a Cadillac’s trunk,” his online ad emphasizes), a storage shed behind the home he now owns, and the side of a chain-link fence, where his tenants can lock bikes on a patch of unmowed grass for $4 a month.

“I had no money, so I was like, if I can make any money whatsoever, at all, I’m game,” said Kaleb, who lives in Provo, Utah, and asked that I not use his last name to keep his financial information private. So far, the app has helped him enter rental relationships with 21 tenants, who store RVs, automobiles, bikes, sweaters, and other random items on a month-to-month basis in his eight listings.

Neighbor bills itself as the “Airbnb for storage.” It was founded in 2017, undergirded by three fundamental truths: Most Americans have too many things; some also have too much space; many others don’t have enough. To address this spatial imbalance, most packrats must turn to the self-storage industry. Collectively, people in the U.S. are already spending $40 billion a year on renting these vaults within windowless facilities that sprawl alongside suburban highways. “Wouldn’t it be awesome, if we didn’t have to build all this excess space that just sits there and holds people’s stuff?” said Joseph Woodbury, the CEO and co-founder of Neighbor, describing the question Neighbor was built to answer. “What if we just more efficiently used the space we had?”

The self-storage industry is enormous, eating up 1.7 billion square feet in 2019—about 5.4 square feet for every man, woman, and child in the United States. There are more than 50,000 storage facilities in the U.S., triple the number of McDonald’s restaurants. Despite the high cost of a lease (an average of $88 a month, according to recent stats from StorageBeat) one in 11 Americans was locked into a storage contract in 2018, perhaps because they’re infamously hard to get out of.

But, vast as supply is, demand has far outpaced it. With storage facility occupancy rates at about 93 percent, “the storage facilities have all the power,” says Woodbury. Valet self-storage startups like Clutter and MakeSpace, which pick up and even sometimes package your things, have tried to fill in the gaps, operating more like an Uber-for-crap that gives your belongings a ride to the nearest self-storage park. But peer-to-peer storage startups like Neighbor, and smaller cousins like StoreAtMyHouse.com, offer a chance to bypass Big Storage entirely.

The platform was launched in Utah, and the state is still home to its largest user base. But around the country, Woodbury hopes that the platform can tap into the unique dimensions of the American housing crisis. As Millennials struggle to wedge themselves and their stuff into micro-apartments and co-living dorms, Boomers are rattling around in single-family homes that have never been bigger or emptier. Those younger people who do have extra space—like Kaleb, who had to first pay off his student loan debt before chipping away at his mortgage—are often looking for ways to monetize that asset.

On Neighbor, no space is too humble to rent. Sheds, garages, closets, and empty shelves litter the platform. Some users rent out unfinished basements, squirreling away the money they make to fund future renovations. The most popular commodity by far, Woodbury says, is parking spots. America may be drowning in parking, but those spaces are not all exactly where we need them to be. “A lot of people who have homes, maybe they fill their whole homes with stuff—they have stuff on every shelf—but they have this pad next to their house or extra space in their garage,” he said.

In New York City, one user rents out “a large part of the basement” of a Subway-slash-convenience store for $500 a month. In Berlin, New Jersey, a few spots in a semi-truck parking lot (run by Park Nation, a truck parking company), go for $167 each. In St. Paul, Minnesota, you can rent a whole bedroom for $90. Though the conventional self-storage industry is the very one that Neighbor is targeting for disruption, some mom-and pop-storage companies based in Utah have also found the platform useful, listing their vacancies on the site in order to get them in front of more eyes.

Bryce Mortimer, who owns a publishing company in Springville, Utah, uses Neighbor to rent out space in his 32,000-square-foot, Costco-style warehouse. He’s been trying to cut down on inventory—choosing to send orders out to a printer on an as-needed basis, so books don’t take up space on shelves. Now he can sell that empty void instead.

“As it becomes easier and faster to manufacture inventory, you don’t have to warehouse it all the time,” he said. “Having something that’s flexible like Neighbor … is a really great fit, because we have the space.” His biggest challenge is communicating to people how much inventory fits on a pallet.

Another Neighbor host, Sariah Masterson, lists four storage options within her garage, ranging from a $42-a-month “student gear” corner to a 2-by-11-foot shelf that goes for $19. She’s a self-identified #mompreneur who co-founded a web development school in Salt Lake City and crafts plastic toy food for kids on the side. She wanted to quit her job and stay home with her children full-time, but still had about $105 a month in student loan payments to cover. Renting out her garage now makes the family about $150. “It’s not a ton of money, but to us, it made a big difference. Now that bill’s covered,” she said. “I was just like, huh, that’s funny, this little app that has you store stuff in your house made this possible.”

At its best, storage-sharing represents a more passive manifestation of the gig economy, one that’s better suited for a broader subset of semi-entrepreneurs. Managing rentable space on the platform is far less labor- and time-intensive than driving for Uber, and doesn’t require inviting strangers into your home or properties, like Airbnb does. At the highest ends of the spectrum, Neighbor estimates that hosts can earn up to $18,000 in “annual passive income by hosting storage,” and save renters 50 percent off what they’d pay in a conventional storage facility.

But Kaleb, who’s been juggling his Neighbor hosting with a full-time job since graduation, reports that running his mini-storage fiefdom does require some sweat investment. Though he says he doesn’t spend more than a few hours each week managing his operations, he likes to be available to answer renter requests, which come at all hours of the day. He subdivides his storage shed for multiple tenants, so he doesn’t want to give out a key or passcode.

“You can never leave town or never go on vacation because someone is always calling you on the weekends,” he said. “So it’s more of a lifestyle cramp.”

His profits are modest. He rents most spaces for $20 to $25 a month and offers first-month discounts. (The Cadillac trunk and the chain-link fence make less money, but they’re Kaleb’s favorite rentals, because they’re so low-stress.) Over ten months, Kaleb has earned $977, total. That comes out to an average of $88 a month.

“The reason the monthly figure is so low is b/c many of my tenants turnover quickly,” he said in a message; many of his clients are Brigham Young University students renting short-term.

Another thing keeping earnings modest for hosts may be Neighbor’s algorithm, however: As I idled on an offer to rent out a bedroom closet in Mapleton, Utah, for $20 a month, a pop-up from Neighbor appeared, prompting me to put in a counter-offer at a lower rate. While researching the $500-a-month NYC convenience store space, Neighbor suggested I offer $292.56—almost half the price.

This robo-haggle feature swings into effect “if the space is priced higher than the recommended range,” Woodbury told me in a follow-up message. The suggested counter-offer price is set by the company at the high end of the recommended range, and the renter can’t customize it. “The host then gets the chance to accept or reject the price in the counter offer. While some hosts will still reject the counter offer and wait it out, the feature is designed to smooth over transactions and help more space get rented.”

Woodbury wouldn’t share exactly how many people are currently using Neighbor, but he did say that, if a gigantic storage facility were somehow built to accommodate the square footage now being rented out on the platform, it would cost $200 to $250 billion.

Still, it’s not enough: America’s appetite for places to stack boxes is vast. To get more people aboard, Neighbor just started rewarding users who refer the most (and the most active) friends to the app by covering one month of their mortgage or student loan payments. A winner will be chosen on the final day of each month, “in perpetuity.”

Winning this sweepstakes is probably not in the cards for Kaleb, he says—most of his friends and colleagues aren’t in a position to rent out their idle storage space, and those that are “would want something more lucrative.”

But for him, for now, this little extra money is worth his time. “If I wasn’t so poor and trying to pay off the debt I’ve acquired, I probably wouldn’t do it as religiously as I do,” he said. “As soon as my time is worth more in the open market, I probably would discontinue it.”