First in market to raise rents - opinions?

mobile home university
1

Thank you for taking the time to read and respond.

I have a potential purchase opportunity on two long term owner 40+ occupied space parks (different sellers) in a smaller midwest MSA city of 17,000 with stable population numbers over the past two censuses.

Park space rents are $110 and $120 respectively which is on par with comparable parks in the market. The “kicker” is the median fair market rent for a 2 bedroom apartment is $585 per month which indicates market lot rents have not kept pace with housing trends. The majority of parks locally have long term owners which may be a reason no one has taking the step or lead with increasing rates creating a “bubble”.

My questions to the experts on the forum are:

  1. Based on median apartment rents of $585, what would be a recommended target lot rent ratio or lot rent amount to be absorbed in the market?
  2. What has been anyone’s experience with a similar market and or process for laddering increases since there is no lot rent ceiling established?

Appreciate your feedback in advance!

2

“Ladder” rents… Target 40% of rental market or at least $200

3

What are the lot rents at other parks that are near by?

4

Comp market rents at like kind parks are same - $100 to $120 for comps. The friction/opportunity is the delta between market apartment rents and lot rents is extreme. Room to ladder rents over a period of time while remaining affordable and holding occupancy. We have all purchased parks with under market rents where the bar was set by a third party - ez. Your thoughts?