Last week I started this series, which I think is critical for this year given what we see as the current self-storage landscape. Effective revenue strategies are going to make the difference between well-performing assets this year and ones that fall behind due to pressures on operating expenses, as well as macro-economic pressures which were outlined in last week’s episode.
Here is a link to it, Episode 487.
In this episode we will discuss another way to have a major impact on your cash flow, revenue, and a powerful way to increase the value of your self-storage project. It is being on top of and effective in collecting your delinquencies.
If you currently own or run a facility, do yourself a favor right now. Pull up last night’s daily close (you close daily, don’t you? If not, start today) or a delinquency report. What is the total delinquency owed? I mean all of it—the 0–30 day, 30–60 days, and beyond.
Now take that number and divide it by the monthly gross potential income your facility can generate.
Your target is a number of .05 or less. In other words, you should run a stabilized facility with a 5% or less delinquency ratio.
Believe it or not, I have seen facilities over 100%. But if your delinquency ratio is above 5%, that is good news because in the next few months you are going to increase your revenue—if you follow these simple steps. You may not have heard of delinquency ratio or 5%, but now you know.
Side note: What is the difference between a stupid person and an ignorant person? Well, an ignorant person just didn’t know something, and once they learn, they won’t do it anymore. A stupid person does the same thing even though they now know something they didn’t. So… if your delinquency ratio is over 5%, are you stupid or ignorant? Just having some fun… but making a point.
The reason your facility may be over 5% is not that important because you are going to change it, but it is usually because one doesn’t auction or auction fast enough, allows payment plans, or is weak in collections. Now that you know that, you will tighten this leakage up.
Here are some steps you can take to improve your collections.
Auctions
The day a person is 30 days (the usual number of days in most states) past due, they go into lien, and lien notices are sent out.
Come up with a plan if you want to. Our plan is you can pay 50% of what you owe and leave, or we are taking you to auction. But you don’t need to do this.
Never… never allow someone to pay a little a month to catch up (payment plans). You are not doing them a favor as they get further and further behind, and you are totally messing up the cash flow and value of your asset. If you are ever tempted to do this, reach out to me or anyone who has been through one of my Bootcamps.
Then use some online auction service and auction. Put that unit back into service. Don’t be afraid. Your store needs inventory on the shelves, and this is a good way to recoup some lost revenue quickly and have inventory to sell.
AutoPay
As much as possible, put everyone on autopay. I don’t discount pricing to do this. I just assume they are going on autopay and have them sign the form. If they protest, we just say that is our policy. If they still protest, I am not saying they can’t move in, but I inform them this is the best way to ensure they never get a late fee and are able to get into their unit.
We don’t send paper invoices. If someone still wants one, we charge $5 a month to send it. I think I need to raise it to $7 or $10.
I love autopay because we have about 80% of our revenue in our account by the 4th or so of every month.
Auto Reminders
Today it is easy to set up texts and emails to send auto reminders for those not on autopay. This should be standard procedure for you. If your operating software doesn’t offer this feature, you should either replace it tomorrow or call me and let me purchase your project from you.
Have Multiple Ways to Pay
Make it as easy as possible to do business with your company. If someone is not on autopay, make it possible for them to pay their bill on their phone through the auto reminders with a link.
Have a link to your website in every correspondence—email, text, and letter. Surely your website and operating system allow people to pay on the website. If not, replace it tomorrow or call me and let me buy your facility at a profit to you.
Late Fees
Never, never waive a late fee. You have multiple ways to pay and you offer autopay. If someone doesn’t pay timely, it hurts your business and they should pay for that. This falls under the domain of tough love, like you do with your kids… right? (My wife says I’m the weak link with dogs and kids.) Plus, it could make someone think twice about being late again.
Collection Calls
This is harder than ever to get someone on the phone today, but we still have someone making calls starting on the day the late fee kicks in.
This is where managed facilities have a slight edge in my opinion. Not that back-office people can’t be effective in collection calls, but we train our managers to have a relationship, if possible, with our customer base.
We look for a certain type of person when hiring—someone who can be trained to sell, who also has empathy and can listen.
You see, customers are often going through some change in their lives when they rent a storage unit (life changes are a demand driver for storage), and change usually causes stress. So our managers know many of the customers are stressed or anxious when they rent a unit. It makes a difference to our customers if they experience a listening and empathetic manager when they move in. More often than not, a bond of some kind is formed.
If a customer has a limited amount of funds in a given month, often—again, not always, but often—they want to make sure Nancy, or Fred, or whoever your manager is gets paid. Customers could care less about the integrity of our revenue stream, but often they don’t want to look bad with the manager if a relationship exists.
Also, every time a call is made and goes to voicemail, in the message the caller tells the customer a link is being texted and emailed to them with a link to pay.
Autopay (Again)
If someone is late more than twice in a year, they have to go on autopay or move out.
Consider that as a policy and have it in your lease so you can enforce it if you choose.
So stay on top of your delinquency ratio and institute policies that turn your collections policies and procedures into a facility that runs like a real business. After all, that is why you got into self-storage, right? To have a business that creates income and wealth.
I have seen people increase their revenue 6% to 25%+ with just these changes, before any price increase.
In 2026 this is going to be critical due to the pressures on our operating expenses we discussed in last week’s episode.
So enjoy the ride with your improved revenue this year and the value that creates.
