You’ve got a tenant who’s months behind on rent with late fees piling on. With an occupied storage unit that’s generating you no money, it seems like the only way out is going to auction. Even then, you won’t make back what’s owed by selling off the delinquent tenant’s belongings, and they’re sure to leave a negative review before it’s all over.
It’s a lose-lose situation. But your self storage manager can stop all of this from getting into a worst-case scenario with a proactive toolkit. The best bet against delinquency in self storage is to prevent it entirely.
Delinquency isn’t just about missed payments. You can’t please everyone, but your most valuable marketing asset is a happy tenant–and when a happy tenant moves out, they’ll spread the word about your storage facility.
On the other hand, a tenant who had their storage unit auctioned isn’t likely to have anything nice to say about you, and they’ll tell their friends and neighbors a very different story about you.
So our goal is to avoid auctions.
The best way to do that is by solving them months before they’re even on the table.
There are plenty of reasons why a tenant might not pay rent, but don’t discount the simplest explanation: they forgot.
On the one hand, your manager can’t exactly improve a tenant’s memory or organization skills.
But they can introduce a workaround.
Self storage autopay is your best lever in the face of tenants who forget to pay their bill. It’s one less thing for them to organize, and one less opportunity to miss a payment.
Just mentioning that you have autopay available on your website isn’t enough, though. A tenant who plans to sign up later may be the same kind of tenant who really did mean to pay their bill…and then didn’t remember.
Instead, offer an incentive for signing up for autopay. Whether it’s a special rate or a feature you intended to offer anyway, tenants will get a boost of motivation if they feel like they’re getting something out of taking the extra time. You can even build it into the move-in process while your new tenant’s signing their rental agreement.
Shane Rhyne of Northshore Pellissippi Storage uses his 12-month rate-lock guarantee to encourage autopay. In order to lock in a year of consistent rates, tenants sign up for autopay for the whole term. The best part of it, as Shane puts it, is that it “costs nothing to implement.”
Creating an open dialogue about their due date keeps it on your tenants’ minds.
Send automated reminders using your Property Management Software or another automation service. Self storage automation makes things easier for your manager and means one less thing to remember.
Keep these best practices in mind:
You can adjust these best practices as needed. If your tenants respond better to texts than emails (most do) then it’s reasonable to make both reminders a text message.
You might find it helpful to only remind autopay renters when their card is about to expire (a common reason tenants on autopay miss a payment). Proactively catching card expiration won’t just avoid the hassle of having to collect a late fee. That tenant will see that you’re looking out for them, winning you more of their trust.
Sending these reminders has another benefit: you’re creating a record that you notified your tenants in a transparent, easy-to-reference way.
Automating payments or reminders to your tenants helps reduce delinquency, but it won’t give you the full picture.
The reality is that sometimes tenants are going through tough times or struggling to make ends meet. These tenants are more likely to miss payments.
Your property manager can’t solve big life events for tenants. But they can make those events better – or worse.
Even just offering empathy to a tenant who’s struggling can boost the chances they’ll pay when rent’s due. When you’re a neighbor to your tenants, they don’t see you as some faceless organization who just wants their money every month.
Ultimately, if tenants feel they can talk to your manager, they’ll feel more at ease bringing up any looming financial issues they’re facing.
Reducing delinquency is, unfortunately, not a means to remove it entirely. Despite all of your reminders and checking in, people forget, mismanage their time, or fail to balance their funds. It happens.
But given that our target remains avoiding auctions, your manager can see a missed payment as a signal to do damage control sooner rather than later.
Missing a payment is embarrassing. Not having the money for it is even worse. And as much as it may feel personal that your tenant didn’t pay, it’s best to remain professional and respectful. Your tenant may be going through one of the worst periods of their life, and pressing them in a way that makes them defensive will turn rent collection into a battle.
Showing empathy doesn’t mean letting someone take advantage, of course.
Set policies that give space when a tenant needs it. At the same time, create a clear process for your manager and your tenants.
Sometimes a tenant just forgets. Nobody’s perfect. And in those cases, sending a reminder may be all that’s necessary. Some tenants will shrug, pay up, and move on.
It’s best to send a late reminder two to seven days after the due date’s been missed. If you’re making this a part of your lien process, some states have lien laws that specify when you send it. Otherwise, you can decide how much time you want to put after the reminder you sent on the due date.
Sending this reminder also creates a record that you gave your tenant notice of their late fees, which will help you if your tenant decides to dispute the fees.
It’s up to you whether or not your storage facility offers a one-time forgiveness for late fees. Our Operator Toolkit even offers an easy-to-use template for informing tenants that you’ll cut them some slack - and that you can only do it once.
And a tenant who’s genuinely in a tight spot and not taking advantage will remember your kindness. It’s the kind of move that can turn a renter into a champion of your self storage business.
If you’re not clear, though, you can quickly find yourself having the same conversation next month. That’s why we recommend clearly stating that you’re only doing this once. Make sure everyone who works for you knows the policy, and that it’s easy to understand by all parties.
Your manager will often be the one offering the one-time forgiveness. When and how it gets used needs to be the same every time. They need to keep a clear record of who’s been offered a one-time forgiveness to avoid inconsistency.
A one-time forgiveness also gives you a chance to see if this missed payment was truly an isolated incident or a growing pattern.
The goal here is to give empathy in a way that doesn’t cause more friction down the line.
As much as you’d like to help your tenants out when they’re struggling, there’s only so much you can do. But that doesn’t mean there’s nothing to do.
You can’t make a tenant remember to pay their bill, but you can set them up on autopay. Bringing that up after a payment’s been missed is a good way to offer a tool to assist someone and shift the conversation to the future.
Maybe you don’t want to reduce a tenant’s rate, but you can help them move to a smaller unit. If budgeting has truly become a struggle, your manager can help a tenant brainstorm which items are absolutely necessary to store. If you really want to go above and beyond, pay for a moving truck.
Ultimately, if you have a tenant who’s bound to miss more payments or struggle to pay at all, they’re sitting in a unit that you could be collecting rent on. Which brings up our next point of order.
You’ve given reminders. You tried to help your tenant proactively. You offered a one-time late fee forgiveness. And still your tenant didn’t pay.
Ask yourself if this is going to be a trend. And if the answer is yes, catch it now before your tenant owes multiple months of rent.
As Lee Creech of Northshore Pellissippi Storage puts it, sometimes you just have to go to auction. But for people who are struggling, the goal is "Let’s find a way to get you out.”
Because it’s not just bad for the tenant. That’s rent you could have been collecting on a storage unit.
At this point, your state has a policy for going to auction, and it is a route you can take. But it’ll drag on, and you may not make back what you lost on that overlocked unit sitting unrented for months.
There’s another option.
Either this tenant is taking advantage or is truly struggling. In either case, get them out.
You have a few options for how to do this:
Take a minute to think about your demand environment. If you have people waiting in line for a storage unit, cutting a tenant’s rate may not make sense when you could get full price.
But if demand is low or you’re in a slow season? Even if you offer 50% off while your tenant’s getting things sorted out, it’s more than you’ll make on a vacant unit. Read more about how to set storage unit rental rates here!
Consistency matters here. Your manager already makes plenty of judgment calls throughout the day. And the last thing they want to do is create the impression that your billing or late policies aren’t transparent or consistent. At the same time, they need a lever to pull to avoid a unit sitting overlocked and unrented for months.
That’s why you need a clear policy in place for late fees and tenants who intend to stay, while having a backup policy for tenants who you foresee going to auction. It can save you a headache later.
When your manager excels at proactive communication and customer service, they reduce delinquency and keep the hassle of auctions away.
Your manager’s best bet is keeping up with existing tenants and staying connected to them. Help them out by creating a system for keeping tenants informed of their due dates with automated reminders. Give your managers the resources to relocate a tenant who can’t pay. And make sure you have a system in place for spotting a pattern of delinquency before it goes on for too long.
At the end of the day, your goal goes beyond just avoiding auctions. It's to maintain good relationships, keep your units full of paying tenants, and keep bad situations from growing. It’s to extend grace and empathy to tenants in a way that works for them and your business.
And that’s a win-win for everyone.
Managing a self-storage facility means having the right outlook and smart techniques that keep you moving forward. Learn more ways to set your manager up for success:
