The current prevailing problem between self storage owners and tenants is that of tenants not paying rent on time. No matter how hard you try, delinquent tenants and late rents are an issue which you need to face every month. This causes a lot of problems on the financial front and leaves you with no choice but to sound firm to your tenants by charging late fees on the rent due.
Recently, Florida's rule on late fees said that as a facility owner, you can charge your tenants with a late fee when they don't pay rent on time. Besides Florida, Arizona, California, and many other states have also incorporated late fee rules. When you're faced with a tenant who has trouble paying rent, it becomes tough on your side for collecting payments on time. In order to keep up with your cash flow and recover administration costs, it is best to charge your tenants with a late fee for past due payments.
Now that you have decided to charge late fees, how much will you charge? The late payment fee is generally charged depending on your rental rates and unit sizes. The actual amount that can be charged in the late fee comprises the time you spend on looking over the vacant unit, and following up on rent collection through periodic rental reminders/alerts. On the other hand, the cost of putting up advertisements and sale notices for the vacant unit should not go in for the calculation of late fees.
In order to foster reliable relationships with your tenants, it is important to have an open communication with them. Depending on the late fee charges setup by your state, 6Storage helps you in customizing your lease agreement for a new tenancy. You can enter the late fee in terms of percentage or a fixed amount as per your needs - daily or custom day(s). With this option in place, you can charge say, a $15 on the 7th day a tenant is past due, $20 on the 15th day, and $30 on the 30th day. So we have a total of $65 in late fees each month, and these charges are recurring on each past due payment. On the other hand, you can also charge a late fee of 20% on the 8th of first month, and 10% late fee on the 2nd of the next month, and so on. This way, it becomes easy for you to maximize your returns while sounding reasonable to your tenants.
Do you also want to remind your tenants when their rent is due? We've got that sorted as well. 6Storage has a brand new feature, Automatic Rent Reminders , which helps you in sending rental/late rental payment reminders to ensure your tenants pay on time every month. Using these reminders, you can send out late/lien/auction notices to your tenants when they fail to make payments within the due date.
When dealing with delinquent tenants, it is recommended that you understand whether your tenant is new/old to your facility, has any prior history of rental payments, is communicating with you periodically, and has issues paying rent due to any financial commitments. It is also important to address all the storage policies and payment related issues clearly in your lease agreement including the rent to be paid every month, the acceptable payment method, how much rent is due, and the late fee charged. With constant rental payment reminders/alerts, your tenants will know how much late fee will be charged on the rent due and are more likely to pay their rent on time.