With all the press these days concerning Mobile Home Park investors buying up parks and then raising rents sometimes double and triple what they were, I believe there is a lesson in all this.
The lesson is Don’t Over Pay for a Park and you will not have to double or triple rents in year one! That is the only way I see this when I read story’s like the one below.
Time Out Communities doubles/triples rents
First rule in renting, you have to have renters to pay the rent for you to be in business. My thought is that if the park doesn’t work with a modest rent increase in the first year - not double or triple - you are probably paying too much for the park. NOW - on the other hand if these owners paid a fair price for the park and are just being PIGS about rent increases - well shame on them!
So back to my lesson - be the investor whom comes in and doesn’t double or triple rents because you can, instead be the investor that comes in and increases rents strategically over time and still makes a descent profit along the way. And DON’T OVER PROMISE your investors returns that ONLY happen if you double or triple the current rents. In my experience that doesn’t work out well for anybody.
Another issue may be Due Diligence in the front end - did these owners really do the best DD they could and if they didn’t and missed something and now they have a huge expense to pay, well again shame on them for the lack of DD. I don’t know if that is the case.
These are just my thoughts and comments only - I would love to hear your comments.