very owner in the self-storage industry understands delinquencies and collections are part of the game. So how can you keep an open policy of welcoming customers of every walk of life while mitigating the risks and downfalls that accompany those unable or unwilling to stay current on their rents? A host of modern tech options can help, but for some managers and operators, the true key to success and financial balance might mean a change of perspective.
When Weissman pointed out this meant they would be renting trucks for cash, the company head waved away his concerns.
“We started with 10 trucks. I said, they’re going to be gone,” says Weissman. “It might be a month, it might be three, but they’re going to be gone. To make a long story short, one of the first trucks we rented for a $150 deposit out of Cincinnati ended up in Las Vegas. And that’s how we started taking credit cards at Public Storage. I’m indirectly responsible for credit cards being taken in the self-storage industry.”
Adding flexibility in payment methods was a major step in reducing collections. Today, those options include cash, check, credit card, Apple or Google Pay, Venmo or Paypal, and even payment via QR code/text at the facility gate when a security code triggers a locked unit. However, the biggest development in keeping customers current has been autopay.
“Autopay is definitely what we prefer,” says Natolie Ochi, president of SKS Management LLC, which has a portfolio with 28 facilities in California, Nevada, and Hawaii. “When it’s automatic, the customer won’t face fees or get behind. We try to keep our managers from spending that time on the phone, so we try to make it as easy as possible. If it’s not autopay, it is linking with a text to immediately pay, automated payment via the phone, click and pay in whatever method they want.”
With a larger percentage of units being rented online, capturing credit card information for autopay is common.
“I’m an advocate of ‘You have to sign out of autopay,’” says Weissman. “New customers go onto our website, enter a credit card to rent a unit, and get charged every month unless you ‘click here’ that you want to pay manually. It’s an assumed autopay, with an option to not autopay. Psychologically, most people don’t even notice. They just gloss over it and click, click, click, we’ve got it. A good facility is probably running 78 to 80 percent of their customers on some sort of autopay program, so you’re only dealing with payment collections for the other 20 percent. It’s also much easier alerting about rate increases, because it just gets charged on ACH or credit card every month.”
Pogoda Companies goes as far as including “percentage enrolled in autopay” as one of the five metrics for annual management bonuses.
“We’re relying too much on technology, instead of ‘Hey Joe, this is Randy; I don’t want to have to cut your lock and sell your stuff. Come on, do something here. Let’s figure it out,’” says Weissman. “Have that human touch, and remember this is a service industry where you can talk to the people straight up and find solutions.”
In such busy times, advance warning by text, email, or phone regarding impending late fees are usually well received, but tech can’t do it alone.
“Frontline employees or call center agents need to be well trained and show empathy in their voice,” says Ochi. “You can be firm, but at the same time you can also be kind. I recommend our managers help tenants work out some kind of plan rather than being very strict with the law (full payment or nothing). I want to empower them to make decisions within reason, and if they make a mistake, then ‘Gosh, that was a little too generous; next time don’t do that.’ We learn from it. I really hate it when somebody says, ‘I’m sorry. I have no authority; I just work here.’”
One-off situations can happen to anyone in life, but you don’t want to get taken advantage of or have your managers expending all their time on a handful of challenging tenants.
“You are doing them a favor by reminding them of the process and trying to find a way to get their goods back to them. Keep detailed notes in the management software of calls, including any reason they are telling you why they are not paying,” says Carol Mixon, president of SkilCheck Services, Inc., which manages storage properties; conducts feasibility studies; creates training, operations, and lien manuals; and operates a mystery shopping sales evaluation specifically for storage. “For example, we had a customer who was constantly going in and out of lien status, and the notes said that his mother had died and that was why he was paying late. However, according to our notes in the software, his mom had passed away six times in three years. That is a really good reason to keep copious notes.”
“Owners spend thousands and thousands of dollars on marketing, but they’re afraid to spend the money on collections,” says Weissman. “You could have a facility with 800 units rented, but if only 600 people are paying you, you have 200 units with people’s stuff in it that are handicapping you as an operator.”
Getting trouble tenants and their belongings out of your facility to make room for paying customers needs to take priority over any personal feelings of right and wrong or what seems “fair.” Negotiation, regardless of outstanding fees or owed rent, is a win if it helps attain that goal.
“The goal of an auction is not to make money,” says Weissman. “In every state, you have to give extra funds back to the customer or the state. The goal is to get your storage unit back and not pay to get the unit cleaned up. If you can cut a deal with a customer to leave that’s going to pay you more than what you’re going to get at auction, why wouldn’t you do that? I don’t think enough people work with a customer in that regard.”
The cost of clearing and cleaning a unit has to be factored into your decision process. Even extreme-sounding measures can make a lot of sense when you run the numbers in the name of maintaining a healthy business.
“Just waive the fees and get them out,” says Ochi. “There are many situations where you’ve already cut the lock and taken photos—you know it’s just junk. If nobody buys it, we have to call 800 Got Junk to take it to the dump; it’s just so expensive. Smarter to say, ‘Your stuff is important to you. Get it out; let’s call it a day.”
In some cases, even this generous move can be more of a problem than customers can handle. Two common qualms include “How can I move my things?” And “I can’t afford a rental truck.”
“In rare occasions, I have even said, this person’s such a problem we’ll just pay for their U-Haul truck,” says Ochi. “Get your stuff out. You just have to take the personal injustice. You think to yourself, I have to pay for them to get out when they owe me. But it makes sense in the long run because it would cost way more than $50 to $100 in labor and fees to haul that stuff out and take it to the dump.”
Accepting these kinds of out-of-the-box solutions might be tough to swallow at the time, but maintaining this fresh perspective will pay off when your storage facility is filled with reliable, stress-free, and paying customers.