Self-storage operators can strategically charge fees for a variety of reasons, including as a measure to reduce tenant bad habits. For example, a renter may be less inclined to leave a large piece of furniture in your drive aisle upon move-out if they know they’re going to be hit with a cleaning fee as a result. Similarly, if they’re aware they’ll be assessed a $25 late fee if their bill isn’t paid on time, they may be less likely to pay late.
Collected fees also help you cover your expenses (for example, the cost of making collection attempts and hosting auctions) and increase your self-storage facility’s net operating income. This improves revenue and makes your operation look better on a balance sheet. A good fee strategy can also provide motivation for employees if you base part of their bonus on total fees collected.
Fees are an important part of self-storage revenue management. Let’s look at what you can realistically charge, legal considerations, how to deal with customer pushback and more.
Fees to Charge
There are numerous fees you can charge as part of a self-storage operation. Here’s a list of possibilities, depending on the contents of your rental agreement:
- Notice of claim
- Auction and/or advertisement
- Lock cut
- Failed autopay
- Non-sufficient funds (returned checks)
- Dumpster use
- Non-returned lock
- Equipment rental
- After-hours access
- Digital access (gate mobile app)
- Delivery service
- Convenient access to doors/elevators
When determining your fee prices, make sure you check your state statutes for any legal requirements, such as the maximum amount you can charge for late fees. For effectiveness, you want to ensure your fees are large enough to temper customer behavior but small enough to not harm customers or your facility in the long run. For example, if a cleaning fee is too high, it could prevent a tenant from paying rent for the month and lead to you to ultimately foreclose on someone who would normally be able to pay on time.
Some fees can be based on internal costs. For example, when determining your lock-cut fee, call a few locksmiths in your area to see what they charge. It’s a good idea to charge slightly less, so tenants have incentive to have you cut the lock rather than a locksmith if the time comes. This not only saves time and money, it also allows you to keep control of the situation.
As mentioned, some state statutes place limits on fees, particularly for late payments. Typically, a reasonable maximum late fee is no more than 20% of a self-storage tenant's monthly rent. Whatever figure you choose, make sure it complies with state law.
Any fees you intend to enforce should also be written in plain language in your lease agreement. Tenants will be bound to this legal document when they sign it, and their signature provides proof that they should have known about the implementation of fees if they occur. This then gives you the right to charge for noncompliance. If you haven’t informed tenants of potential fees and just hit them with a charge for failure to follow policies, however, they could become unhappy and retaliate by leaving a bad review for poor customer service.
Tenants will often get upset when they believe they’ve incurred fees that are unnecessary or too expensive. When a customer pushes back, simply state, “When you signed your rental agreement with ABC Storage, you acknowledged that you understood that if XYZ happened, you’d be charged a fee in the amount written in the lease.” If they continue to complain, show them a copy of their signed agreement and mention that their signature equals acceptance of all clauses, whether or not they remember them.
Among the most regularly charged fees in self-storage are late fees (first and second). Following through on applying these helps train tenants to make their payments on time and avoid unnecessary costs. If a renter doesn’t want to pay a late fee after it has been charged, offer to waive the fee if they’ll sign up for your autopay program.
Sometimes a warning and a deadline can help tenants avoid charges, such as a cleaning fee. For example, if a renter leaves trash outside their unit, give them the opportunity to remove it by 5 p.m. to prevent the fee being charged.
Always inform your self-storage tenants about any expected fees and what happens if facility policies aren’t followed. The best time to do this is during the rental process when you have the renter sign the lease. Go over each fee, explaining when they’ll be applied and why, so the customer isn’t in shock when charged.
If at any point you update your fees or policies, send all tenants an email with the new information, so they’re aware of the changes. This provides evidence that you attempted to inform customers of the new protocols. If a tenant claims they were unaware of a fee after it’s been charged, you might consider a one-time reprieve, depending on the circumstances. If you choose to waive the charge, do so only after reviewing the lease with them again.
Regularly enforcing your various self-storage fees can help increase net operating income and reduce bad tenant behavior. If you make it clear to customers that you’ll charge them when they fail to follow company policies, you won’t only create an easier environment to manage, you’ll have a safer, cleaner facility. In turn, this will help you increase property value and rental rates.
Of course, it’s also important to be fair with fee implementation. Not charging your favorite tenant to use your dumpster when all other customers have to pay to do so isn’t right. It also doesn’t provide incentive for that tenant to take their trash where it belongs—the dump.
Keep in mind, too, that if you’re known to waive your fees, tenants will have no reason to follow the policies laid out in the rental agreement. Site rules and the fees associated with breaking them should be put in place to make the self-storage manager’s job easier.
Allicyn Bowley is director of policy and procedures for Self Storage Science LLC, a provider of audits, consulting and property-management services. With 10 years of industry experience, she’s responsible for minimizing liability, ensuring policies are up to date and overseeing the company’s Colorado locations. To reach her, call 720.707.9277; email [email protected].