I am just taking over a new park in NY and I have gotten a lot of good information off of reading these posts and look forward to learning more with MHU.
I have a good lease for a lot rent only situation; however, there are several POH and we have tenants and the same lease was used for these tenants. The lease doesn’t work for tenants of homes. Does anyone. Have a lease they are willing to share?
It’s a 39 unit mhp with approvals for 120 units and I’m going to be expanding and building. Any advantage or disadvantage to having mostly POH besides the cash outlay of buying the homes? It seems a better long term revenue option then selling or just doing lot rent?
@Arnieleto Yes, on paper it would seem like POHs are a good idea. I’d encourage you to search through several of the great threads on this forum for the experiences several owners have lived through with POH. For us, the biggest reason we don’t like POH is the type of tenant MH rentals seem to attract. Across our portfolio on lots where we have tenant-owned homes we are seeing annual turnover of <3%. In our units that are POH, that number is closer to 30%. When we have drug problems or other illicit activity that pops up occasionally in the parks - 80%+ of the time it comes from a tenant in a POH. There is just something about owning your own home that makes for a more responsible tenant.
Another consideration is the operational bandwidth POHs will chew up. We can run a 100-space park with tenant owned homes all day long with a park manager working 20 hours a week. If that same park were POH we would require a full-time maintenance person and the manager would probably be doing 50 hour weeks. MH taxes, moving tenants in and out with inspections required (in some states) every time the home turns, rehabbing, maintenance calls, etc - in the end our profit on the homes will be $0 if we are lucky (unless they are newer homes, then we may make a buck or two).
We do POH and we will continue dealing with them since they are a necessary evil in this industry - but given the choice, I would never actively seek to take more POHs on.
I have a rent credit agreement that you are welcome to look at if you’re interested.
I’m incredibly frugal, but spending the money to join your state’s manufactured housing association is money well spent. M.H.A.s will normally hook you up with free access to a lawyer all the paperwork you need that is specific to your state. In NY, a state with a reputation for tenants rights, that may be especially helpful.
@Arnieleto
We prefer a nice 50/50 blend on our POHs and TOHs in our parks. Yes there is maintenance but would encourage you to evaluate the rental demand in the area. Take care of the homes and stay up on maintenance.
Roger
My mentor pounded into me to avoid POH at all costs. The folks who live in them don’t care, because they don’t own it. And when anything goes wrong…slow running drain, plugged toilet, ceiling water leak…they’ll either ignore it, allowing the problem to get terribly bad, or they’ll call YOU to get it fixed. Nope. Never. Never. Never. Just rent out the dirt. Very little can go wrong with that. And having POH will also make the park more difficult to sell, cause folks, on average, don’t want them.