I currently have a park under contract in which the seller currently uses a third party mowing company to mow the park. The cost annually is approximately 20k to mow about 15 acres. This represents about 10% of gross income. I understand a majority of park owners likely will pass this cost on to the tenant at some point. We plan on doing a rent increase immediately and continue doing the mowing at least for a year. We are likely going to increase lot rent by 40-50 dollars which is still under market. I do not think we can do a rent increase and discontinue mowing service in the same year.
Is there any advantages to continue to include the mowing? All I can think of is the park is every lot gets mowed at the same time.
What would be your priority increase lot rent or discontinue mowing?
How have other handled a situation where the park is below market rents but is paying for mowing?
Mine would be the rate increase. That way you get the money and you make sure the park looks good (versus waiting for the tenants to mow). The park I bought last year I made it their responsibility to mow and had a 20 rate increase, so you just have to go with your gut and what the market will bare.
I think one important question is how many lots are there meaning are the 15 acres all homes or are there sections of land that require mowing that are not the tenants responsibility. How much does the equivalent mowing charge come out to be per lot. Or asked another way will you have any mowing expense should you not decide to mold the tenants lots
There is 60 lots and comes out to about 10 dollars a lot. If the tenants mowed their lots, I would still have about 3 or 4 acres that would require mowing.
As a new owner I would want to implement as many changes as quickly as possible. There will be resentment regardless so I prefer to get it over with asap. I would raise the rent as quickly as possible per the state landlord tenant regulations. I would also be introducing new park rules and that would include the tenants taking care of their own lawn maintenance. I would continue cutting for no more than 4-6 months to allow the tenants to purchase the necessary equipment. The community rules would make it clear that maintaining their lot to community standards would be mandatory.
In regards to lawnmowers I would offer to get a bulk purchase price on electric mowers and sell them to the tenants at my cost, possibly over time.
This is a rather large park. My parks aren’t that large. However, my experience is that when you let the tenants take care of it, they won’t. So you will have lawn heights all over the place. I recently went to see a park where that was the case. Some tenants were cutting their grass consistently, and others seldon, and others never. In your case though because the park is so large I would think you would still have to cut a large portion of the grass. Either way. Raise rents. You don’t have to give the tenants a breakdown of your P & L to prove your point.
I have a very similar park. 40 lots on 30+ acres. It’s one of the qualities that make people love the park and was actually my first deal. I made the decision that there was no way to maintain quality control across the entire park without having the mowing done myself. Was thankfully able to find a solid contractor/rate. People know it’s costly so I would suggest building into a rent raise and continuing to ensure quality control.
The way I insure tenants take proper care of their lots is to have in my park rules that if not maintained I will have it cut and charge $40 per cut. I let my contractor, that cuts my common areas, know which lots need cutting, about every two weeks, and pay him the $40. A few of those and a eviction notice to a tenant that refused to pay and all tenants got on board fairly quickly. They now all do it weekley during the growing season.
It makes no differance what responsibilities you want tenants to take on by inforcing your community rules it is not difficult to get everyone onboard.
When a community owner decides something can not be done what they are saying is that they personally have no desire to inforce their community standards. It is not the tenant that is the problem. The tenants simply need to be trained.
Agree with Greg 100% on this. You’re the boss here. If they don’t mow their lawns and follow guidelines they get a letter/fine depending on severity. No change? Eviction/non-renew their lease. Yes there will be a learning curve as the tenants are “trained” but I suggest strictly enforcing your parks rules. These folks will walk all over you in a heartbeat if you don’t.