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Thread: Delinquencies

  1. #1
    rbstewart3 is offline Junior Member
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    Default Delinquencies

    My facility has been experiencing erratic % delinquencies over the last year and a half. The range from a high of 6% to a low of .5%. What is considered a 'good' level for delinquencies (aside from the 0% that is probably more lucky than good).

  2. #2
    shaekirk's Avatar
    shaekirk is offline Moderator
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    Default Re: Delinquencies

    "They" say that below 3% is great, 3-6% is so-so and above 6% is muy mal.
    The customer isn't always right, the trick is making them think they are!

    Shannon

  3. #3
    JamestownStorage#8's Avatar
    JamestownStorage#8 is offline Senior Member
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    Default Re: Delinquencies

    Quote Originally Posted by shaekirk View Post
    "They" say that below 3% is great, 3-6% is so-so and above 6% is muy mal.
    "muy mal" lol...thanks shae! Fortunately at only 21% occupancy (new facility) I have 0% delinquencies...muy bueno!!!!

    Pat
    High Point, NC

  4. #4
    Tom Litton is offline Senior Member
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    Default Re: Delinquencies

    I might be able to shed some light on this topic. I have always calculated delinquencies in three ways, understanding that effective delinquent tenant management means keeping all three statistics within industry norms. They are:

    Unit Delinquency Rate: If you take the total number of delinquent units past due at the end of the accounting period (month) and divide by the total number of units rented and express as a percentage. For example, 48 units past due, divided by 544 rented will yield 8.8%, therefore, a Unit Delinquency Rate of 8.8%. Storage facilities should keep this statistic below 10%

    Lien Delinquency Rate: If you take the total number of delinquent units that are 30 days or more delinquent and divide by the total number of units rented and express as a percentage. For example, 21 units are 30+ days past due, divided by 544 rented will yield 3.8%. Storage facilities should keep this statistic at or below 5%.

    Dollar Delinquency Rate: If you take the total delinquent dollars, rent only and divide by the projected rent (rent roll) and express as a percentage. Storage facilities should keep this statistic at or below 25%.

    These statistics calculated this way can give a very telling picture. For example, if the Unit and Lien delinquency rate is normal but the Dollar delinquency rate is high, then the facility needs to hold auctions more often. If the Unit delinquency rate is high and the other two statistics are normal, then perhaps the late fees are too low or the tenants might respond better with billing.

    These formulas, by the way are not magic. My point is that delinquencies cannot be calculated just one way. The value of using delinquency standards is to create a workable formula and then tinker with ways to lower your delinquencies overall.
    Last edited by Tom Litton; 1st June 2010 at 02:10 PM.

  5. #5
    rbstewart3 is offline Junior Member
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    Default Re: Delinquencies

    Tom,

    Good insight - I like the various 'looks' you are giving this metric. Have you had a chance to develop any statistics for facilities in various stages of occupancy. We are about 3 years old and the economy has not been good for our ramp up - we are currently at 75% occupancy (units) - wonder how the level of occupancy impacts these statistics.

    I would think that the higher % occupancy, the lower the % delinquency - but I would love to hear from others with experience.

  6. #6
    Tom Litton is offline Senior Member
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    Default Re: Delinquencies

    I use these statistics when I audit facilities for others. They apply, regardless of occupancy. That being said, I have noticed that facilities in rent up tend to have slightly higher delinquencies than stabilized properties. I believe that this is due to the level of aggressive discounting that facilities in rent up tend to use to gain occupancy.

    Thoughts from others?????????

  7. #7
    Tom Litton is offline Senior Member
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    Default Re: Delinquencies

    Oh, by the way, if you really work at delinquent tenant management, you can easily keep all three statistics in check. Here is what I have learned from 40+ years of experience, albeit some of these axioms are based on statistical compilation and some on anecdotal observation:

    If your fee waives increase, your delinquencies increase as well.

    If you bill every tenant, your delinquencies will be lower. (Mail or email)

    If you make courtesy calls, your delinquencies will be lower.

    If you send courtesy text messages, your delinquencies will be lower.

    If you conduct at least 4 auctions per year, your delinquencies will be lower.

    If you push auto pays (credit card), your delinquencies will be lower.

    If you offer on-line payments, your delinquencies will be lower.

    If you make a phone call, every time a letter is generated, your delinquencies will be lower.

    If your rents are the cheapest in the market, your delinquencies will be higher.

    If you accept partial payments, your delinquencies will be higher.

    If your customers like you, your delinquencies will be lower.

    Just a few............
    Last edited by Tom Litton; 1st June 2010 at 09:10 PM.

  8. #8
    rbstewart3 is offline Junior Member
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    Default Re: Delinquencies

    On the axioms:

    On autopays, we push hard on these and have achieved a 72% autopay rate. What is a common autopay rate? We offer a modest incentive ($10 offset to administrative fee); do greater incentives increase the autopay participation?

    Some additional info on fee waives increasing increase delinquencies. We are selective on waiving late fees and tend to use with customers who have a very good payment record and not use it with customers who have a 'history' of paying late. We also waive late fees on customers who have several units (only charge one late fee instead of charging a late fee on every unit). Would be interested in how others are using the waiver process with their customers and how successful they are in keeping delinquencies down.

    Our objective has been to minimize auctions. We have found we recover a very low percentage of amount owed. Working with customers has proven to be very effective. Every customer who continues to talk to us and make progress in 'catching up' has caught up and become an on time customer or has left after they were 'current'. It has been a tough couple of years for many, and compassion appears to go a long way.

 

 
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