We are currently looking at a park that has a lot rent of $330. This park happens to be the only family park in town, but there are two much nicer senior parks that are charging $220 per month. Should we read too much into this? Or is this park likely way out of line? There is nothing abnormally spectacular about the area so our first impression when we talked to this guy was that it seemed a tad high.
Maybe run a test ad at the $330 price to gauge interest??
Could be the senior parks are just under market.
What is the 2BR apt. rent comp?
I have had this same thing happen on a park in Denton, Texas. My lot rent was $380 per month and the much nicer park next door was at $280 per month. My park had no amenities and they had a pool, clubhouse, and most every home had a carport. So how is this possible?
If you analyzed it, what happened was that my park had old homes that were all owned free and clear. The nice park had all new homes with mortgages of probably $400 per month. So while I was at $380 in total payments, they were at $280 + $400 = $680 per month – about twice my rate.
We co-existed just fine because my tenants were not nearly as prosperous, and we really were not competitive at all. But the problem came when I went to sell the park down the road. The buyer’s appraiser refused to believe that my park could be worth $380 when the nice park was at $280, so he “marked down” my rent to $280 in deriving his value.
I would definitely get a handle on the other parks’s rents, the SF median cost and the apartment rents. What you don’t want to have happen is that you are the highest rent in the market. That will gave you problems in raising rents as well as appraisals in the future. But if the other two parks are unusually cheap based on comps, then you might be OK.
1 Like