For anyone operating Self Storage facilities... what % of NOI do you see coming from the collection of late fees? Trying to figure out a good ballpark number to use for a pro forma.
Tagged for future reference.
we have 3 facilities of varying sizes and our late fees typically run between 1-2.5% of total revenues. It depends on the location of the facility and the demographics of the market as to how many late fees we typically generate each month.
I manage one. Late fees (2 of them) total up to 3.5% of gross revenue.
@Steve Cheslock it is important to look at what you want your expected delinquency to look like. If you plan to have say a 40% delinquency rate, you should collect a lot more late fees, but you will probably not have a stable facility at that rate. If you plan 5-10% delinquency in your numbers your late fees will be much more reasonable. All of our facilities run between a 2-8% monthly delinquency rate. I went back a few years and looked at the numbers and these values have been consistent for us over the last few years.
I realize this thread is a year old, but wanted to add that counting on late fees for ANY pro-forma is bad business, in my opinion. I collect a lot in late fees for various types of property, but I charge off more in bad debt. If you are counting on late fees as a revenue source, you are 1) planning on running your business poorly and 2) setting yourself up to pay too much when you buy it.
I enforce late fee payment every chance I get, don't get me wrong, but I see it as an offset against defaults.