Don’t Be Daunted by Self-Storage Collections! Follow These Strategies and Tips to Master Bad DebtDon’t Be Daunted by Self-Storage Collections! Follow These Strategies and Tips to Master Bad Debt
Late rent payments can be frustrating for self-storage operators, especially in an economy where more customers are struggling to pay bills. But all is not lost! Dive into this article and discover expert strategies and practical tips to boost your collection efforts and turn delinquent accounts into a thing of the past.

As a self-storage operator, you don’t just rent units, maintain the facility and provide excellent customer service; you’re also in the business of chasing down late rent. When a tenant misses a payment, it triggers a series of actions that can range from swiftly resolving the debt to auctioning off the unit contents. It can be daunting, but conquering collections is part of ensuring your operation runs smoothly and the business succeeds.
“It would be like rewarding bad behavior if storage operators didn't attempt to collect all bad debt,” says Penny Casassa, property manager for Columbia Self Storage, which operates two facilities in New Jersey. “This is something that all companies do, so why should self-storage be any different?”
Collections are key to maintaining your facility’s financial health. If you’re nervous about them or simply don’t like the process, the following best practices will help you better manage delinquent accounts, so you can get the money owed and move on to other tasks.
Why It’s Critical to Collect
Cash flow is the lifeblood of any business. In self-storage, monthly rent is at the heart of every revenue-management program, and it’s critical to make sure it’s paid on time. When it isn’t, the shortfall can impact many aspects of your operation, both in the short and long term. Lost revenue can hinder a company’s ability to pay staff and cover operating expenses. It could lead to the postponement of capital expenditures and even cause changes in annual forecasts that reduce the overall value of the asset.
“The collection process is an important part of an operator's revenue because budgets are created based on assumed revenue from rents,” says Geoff McGregor, president of McGregor Interests Inc., a commercial real estate investment firm that operates the Lockbox Storage brand. “Without rent collected, budgets will not be met and the return on investment falters.”
Collections have taken on an even greater importance in our current environment in which self-storage occupancies are ticking lower and signs of an economic slowdown have operators turning over every rock for revenue.
A Proactive Approach
Start the self-storage collections process early each month by reaching out to tenants before payments are due. If you provide billing invoices, send the first notice detailing charges, due date and payment options 15 to 20 days in advance as a courtesy reminder. Follow up with another friendly notification one week before the deadline. This’ll ensure you aren’t scrambling at the end of the month.
While delinquency-prevention strategies are completely up to your discretion, once the rent is late, your actions should be guided by the self-storage statutes in your state. That said, a general approach is to contact the tenant before day five of their delinquency to alert them about the upcoming late fee and when they’ll be locked out at the gate and their unit. If the rent remains unpaid for 45 days, send an auction notice and start the lien-sale process.
Tenant notices should be sent via every possible means of communication including email, text, phone and even traditional mail. Send links in emails and texts to make it as easy as possible for customers to pay. Keep all interactions professional and friendly. Remember, they’ll still be your customers after they pay their balance.
“When it comes to contacting tenants, be sure to have a provision in your rental agreement for them to provide consent,” says Scott Zucker, a partner at Weissman Zucker Euster and Katz P.C., which has represented self-storage operators for 35 years. “Keep in mind that local and state laws may dictate the verbiage and timing of some or all of collection communications.”
It’s important to create scripts for your team’s collections efforts, as it helps keep the conversations focused. It’s easy for a manager to get caught up in the emotion of a phone call or email with a tenant and veer off course.
Also, remember to protect any sensitive tenant information such as gate codes or addresses. You should only share account information with the tenant who signed the rental agreement and not a family member, friend or coworker who may have access to their phone or email. Never call someone’s office and tell a coworker or supervisor that their employee owes you money!
Getting a Response
The sooner you start enforcing late fees and sending lien notices, the quicker you’ll get a response from your late-paying self-storage tenants. Often, a customer is embarrassed about owing rent, so they won’t answer a phone call but will respond to a text or email. Still, some won’t answer at all.
While hosting a webinar for the Texas Self Storage Association, Denise Bowley, owner of five facilities and third-party management firm Self Storage Science, shared a trick her company uses when customers don’t acknowledge notices. “We will call them with urgency in our voice, identify ourselves and say we need to talk to them about something very important regarding their storage unit,” Bowley says. “They usually think it's because their unit has been broken into, but we let them know it’s about them being late and their payment is due. They almost always pay. However, that’s a trick that will only work once per customer.”
Many state self-storage associations offer resources that detail step-by-step collections procedures, legal articles and other information. Consult with a legal professional if you’re unsure about your state’s laws.
Handling Uncomfortable Calls
Attempting to collect past-due payments can be unpleasant for you and your self-storage customer. It’s important to remember that most tenants don’t intend to be late. A lost job, illness or other life event can cause someone who’s always paid on time to fall behind. Then there are those who forget about due dates and others who simply can’t be bothered to pay on time.
Collection calls are especially difficult and require good listening skills. While it can lead to “too much information” moments, let the tenant tell their story. Avoid making threats or engaging in harassment. Rather, be calm, detailed and diligent.
“Be understanding that tenants who begin to swear, cry or make threats are having other issues in their lives and you may just be the easiest outlet,” McGregor says. “Stay calm, stick to the facts and ask empathetic questions. Never take things said by an upset customer personally. These conversations require more patience to achieve the results being sought by the operator.”
Legal Considerations
The Fair Debt Collection Practices Act regulates how debt collectors communicate with customers. While it mainly addresses third-party agencies, there are federal rules that apply to anyone who collects debt on behalf of a business. This includes self-storage facility staff. It’s crucial to understand these laws so your operation is compliant. Consider having your process reviewed by an attorney. To be safe, include all collections letters, call scripts and other communication.
“Getting paid for rental of the space is primary to any operator. All I can do [as an attorney] is make sure they don't step into the landmines within achieving that goal of collecting revenue, and these days there seem to be more landmines,” Zucker says. “The recent interpretation of the Florida Consumer Collection Practices Act, which restricts the hours when a customer can be contacted by a debt collector, has caused a lot of anxiety about rent collection and revenue management.”
The Florida legislature amended the state’s Consumer Collection Practices Act last year. One of the biggest changes was prohibiting debt-collection communication between the hours of 9 p.m. and 8 a.m. Though the law only applies to businesses in the state, similar legislation could eventually be enacted in others as well.
Knowing and following federal and state regulations not only helps you avoid legal trouble, it ensures a fair and respectful approach to pursuing self-storage debt, which can improve relationships with your customers and maintain your business reputation. Failure to follow these laws can result in civil penalties.
Consider Payment Plans
When the collections process advances to direct communication with the tenant, approach the discussion with clarity and empathy. It’s important to listen carefully to their situation and offer flexible options that align with their ability to pay.
On one hand, offering a payment plan demonstrates a willingness to compromise, which can foster goodwill and increase the likelihood of recovering the amount owed. On the other, managing individual payment plans take additional administrative effort. It also extends the time it takes to recover the past-due rent, which can affect cash flow. It might even encourage some tenants to take advantage of the arrangement and further delay payment.
“We used payment plans during the pandemic, but I’m not a big fan of them because they create a lot of extra work and they have to be enforced,” says David Edward, senior vice president of Ojai Oil Co., which operates the Golden State Storage brand. “If you’re not careful, the new rent owed is building up faster than the old debt is being paid off and the tenant remains behind. Sometimes, instead of setting up a payment plan, we’ll negotiate a payoff and have the tenant vacate the unit within five days, especially if it’s a popular size that we know we can quickly rent again.”
If you opt for a self-storage rent payment plan, clearly outline the terms, including amounts, due dates and potential penalties for missed payments. This ensures both parties are on the same page.
Find Help If Needed
If you don’t want to handle your own self-storage collections, there are software programs that’ll automate the entire process for you, from crafting messages to scheduling and sending notices. There are also tools that use artificial intelligence to deliver your communication through automated calls.
Some self-storage operators hire outside agencies to pursue outstanding debt. In most states, you have this right, though the results may be mixed. By outsourcing, you free up staff time and motivate customers to submit payment. Plus, a professional has more time and resources to devote to these efforts than you do, so they may succeed where you can’t. However, agencies are often incentivized by commissions and may focus more on larger, easier-to-collect accounts than smaller ones. That said, even if the odds of collecting the debt are low, it’s better than letting a tenant get away with paying nothing at all.
If you’ve exhausted all other efforts, an agency can be a good solution. First, evaluate their success rate and weigh the potential costs and benefits. Generally, resolving the debt and having the self-storage tenant vacate can be more effective than taking them to auction, as there’s always the risk of claims of a wrongful sale.
Final Advice
Here are some additional tips to streamline your self-storage collections process and improve your debt-recovery rate. Remember, state laws and regulations may limit or dictate how you execute one or more of these strategies.
Always have your tenant’s most current contact information.
Strongly encourage tenants to sign up for autopay, even if you need to offer an incentive such as 20% off the first month rent or a free lock.
Absorb credit card fees as a courtesy.
Offer digital platforms to make it easy for tenants to pay.
Set your initial late fee high enough that it serves as a deterrent. Just be sure to check your state laws regarding fee limits.
Establish a target for collections as a percentage of the monthly rent due and award a bonus to property managers if this target is achieved.
Review collections notices and policies used by companies in other industries to ideas for your own efforts.
Achieving a 0% delinquency rate at your self-storage facility is probably impossible. However, your goal should be to implement policies and processes that’ll eliminate as many delinquent accounts as you can. This helps protect your revenue and cash flow while maintaining a stable and successful business.
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