I bought a 53 space park in 2016 and inherited the onsite manager. He owns six homes in the park (one of which is his primary residence). He is indispensable to me as he is a jack of all trades, especially when it comes to fixing water and sewer line emergencies in the middle of the night. He is honest and does a great job maintaining the property.
That said, he is thousands behind on lot rent payments for the 5 rental homes he owns. Two are vacant for a year and in need of rehab (he doesn’t have the money to fix them). The others are running at about 50% vacancy. Last year, I “forgave” his balance owed as a Christmas bonus but now he is way behind again. While I would like to treat him as just another deadbeat tenant and take him to court, I really don’t want to take these older trailers (all in need of rehab) and lose him as a valuable manager.
First the only thing that is indispensable in your business is income.
You are actually paying this person the sum of six lot rents. The one he lives on and the ones he isn’t paying you rents on at this time. What is worse is you are actually allowing him to collect rents and then NOT pay you the lot fees.
Time to have an honest talk with him to explain that while you value his services you cannot allow this situation to continue and you would like to work out a solution. Be prepared for him to leave and for there to be a hassle over the other homes.
Always remember that you did not get into that business to make friends… it’s a business and needs to be operated that way. Be fair, be honest and be firm on your rules. But always be paid. Simple as that.
Jsmith pretty much hit the nail on the head. Mistakes happen, but allowing this to continue would just exacerbate the problem. You will find another manager and more importantly you will have the income that belongs to you.
You have lost sight of the fact you are operating a business and have lost control out of fear, desperation or loyalty. No place in business for any emotions.
Are you capable of turning it around.
Lots of people on this forum seem to jump to the idea that rules cannot be broken and you need to file eviction at the slightest misfortune of a person. I do not agree with this.
If this man is so valuable to you that he can fix any problem in any home, and is honest, I would work out some type of arrangement. Is is very difficult to find this type of person. Managers are easy to find. Maintenance people are hard to find. Finding both in one person is rare. Ideas could be 1) buy out the homes, 2) pay for the remodel of his homes and take the rent until balance paid off, 3) take title to the homes in forgiveness for past due rent. Ideas are limited only by your imagination.
I have a manager who is very competent and honest. I am so comfortable with him that I bought him a Ford Transit cargo van. He travels to various states and stays in hotels to do maintenance. He even has a group of helpers that he recruits for the big jobs. He occasionally has a financial or a personal issue, and I work it out with him. He has owned a few vacant units and I have forgiven the rent.
If I evicted him due to a minor glitch in his personal life, I would lose maintenance capacity across our portfolio making it a huge downside to the business.
Fact is that the vacant homes on which he is not paying rent are fallow. If you evict him, they are also fallow. In both cases, they still need the same amount of rehab work at the same cost. Thus, there is nothing gained by removing this person.
Good responses above. I also think there might be a nice way to go about a solution that’s a win-win. You definitely need to have a talk with him about the situation and that it can’t continue, but that you’d like to help solve his problems. I’m sure he doesn’t like being behind on rent, and you don’t like the awkwardness of having someone you value in the park not being able to satisfy their debt obligations.
One additional option that wasn’t mentioned above would be to offer to partner with him on rehabbing and selling the units. You would need to take title and pay for the rehab, with the intention of selling the units off and splitting the profits in some manner. For sure, the situation can’t continue for you to be a fiscally responsible owner and a good steward of the park, and he needs to know that. If he’s not agreeable to what you’re saying or to working together to find a solution, then you either presented it in a way that got him too defensive, or, most likely, he just doesn’t respect you and you’ll need to go the legal route to obtain possession and start preparing to find a new manager/rehabber.
I don’t think 2 years behind in thousands of rent is a minor glitch. As a new owner joematyk is being taken advantage of. As a inherited manager he probably has a high scenes of entitlement. When you understand people you can see it is extremely unlikely this relationship is worth trying to repair. Looks like he will is getting the same Xmas bonus every year.
All good input. I’ve decided to have him send me titles for 3 of the homes. I will pay for materials and he will provide labor (I will credit his hours to the back rent). Once I have rented and recouped my investment in a couple of years, I will sign the titles back over to him. If we sell them, he will share in a percentage of the gain (if any).
Maybe this is too generous but my parks enable me to live a very comfortable lifestyle. In the big picture, it’s really only a few thousand dollars standing between him and achieving his version of the American Dream. Will see if it works out.
Generous is not the word I would use to describe your plans. Although it is basically a good plan I would never sign back the titles to him. He has proven he is not competent at maintain them and is poor at business operations. Unless you want the cycle to repeat they should be sold once renovated (all five should be sold), recoup your money and have all TOHs going forward. If you share the profits, after you recoup your costs and his debt, I can almost guarantee he will p*ss it all away but it will be his choice what he does with it.
It will be a mistake for you to think you are helping him achieve his dream. Not possible and best for you to steer clear of misguided charity in this situation. No good deed goes unpunished in this business