We are closing in less than 14 days and I keep chewing over this question: to forgive or not to forgive residents who owe rent? No-pay-no-stay will be enforced with an iron fist on day one - but the question is, do I forgive people who owe rent? I am considering doing so on the following basis (tell me if you think I'm wrong): The current owner has not trained his residents and has mismanaged the park his entire tenure (3 years) - taking late payments, taking payment plans, and for the last six months he hasn't even filed evictions on late payers.
I'm afraid that the residents who are far behind on rent, owing over $500-$2,000, might be decent payers if no pay no stay was enforced sternly, but will never be in a position to come up with $1500 or more now that they have been allowed to get so far behind. Furthermore most of these people own their homes and would thus, I believe, have incentive to pay the lot rent if their debt is wiped clean when we close.
As of today roughly 50% of 70 residents are at least somewhat behind on lot rent, which is about $300 per month plus water.
Of the delinquents, about half (15) are behind more than $500, and about 2/3 of THOSE (9) are behind more than $1500.
Delinquent total: 31
$500 - $1000: 7
$1000 - $1,500: 3
$1,500 - $2,000: 5
SO - what to do?
Partial forgiveness? "Pay $500 of your back rent and all is forgiven"
Total forgiveness? "Pay your rent from this day forward and all is forgiven."
Zero forgiveness? "Pay $2,100 or we evict you and then take your home if you can't sell it."
To be clear I do not care about the back rent I just want stability moving forward. I have been fortunate and successful in life and I do not want blood from a stone - if some poor working stiff has gotten behind because prior ownership did not enforce no-pay-no-stay I do not want to kick him onto the street or send him into some bad spiral of payday loans or hocking his mother's wedding ring to pay back rent he wasn't made to pay by the prior owner and now doesn't have.
I only want him to pay me going forward. In other words I'd rather not set folks up for failure trying to make them come up with back-due money that is impossible for them.
For context, the local housing and job markets are both very strong and our roughly $300 lot rent is very affordable compared to the alternatives - apartments and SFR rents. Also there are very few if ANY vacant mobile homes for rent within a 10-20 mile radius of our park. People would be FOOLS to not gratefully accept back-rent forgiveness and then be good payers on no-pay-no-stay moving forward. Not only is there little other available housing, winter is coming and it's rapidly growing cold. Being evicted is no fun this time of year.
I have no qualms of course hitting folks with 5 days and then evictions moving forward - I run apartments and no-pay-no-stay is the only way to succeed in that business as well. There will be ZERO tolerance for getting behind on rent after we take over. But with apartments I've never taken over a complex with a bunch of back rent and non-paying residents as in this mobile home park I have in contract.
Thanks in advance for your insight!