We run at around 70%-80% expense ratio on our rentals. Mostly because the delta in most of our parks is $300-$400 over lot rent. I believe you can cash flow your rentals if you create a massive marketing effort, properly screen, and be constantly selling your existing RTO people. For instance, every month our RTOs get balance owed (buy it now) on their invoice. For the people we’d like to keep (those who pay on time, keep up with their unit, and haven’t given our manager any problems) they will get a heck of a deal at tax season. Sometimes as much as 50% off the remaining balance. I will usually get involved in this sales process by speaking with those people face to face when I am onsite those 1 or 2 times per year and have the manager continuously follow up thereafter.
When you take in $25,000-$50,000 on home sales during tax season in each community, then it’s probably what makes the homes business actually cash flow a little. Again, I do not like POHs but we know how to buy them right, market them right, and sell them right. If it takes 100 follow ups to sell one unit to a good tenant, then that’s what we do.
We also bill back for repairs on POHs that are in rent credit. I’m not sure where this logic comes from that you can’t. The only repairs that we don’t bill back for is yearly pressure washing, monthly filter replacement, and Kool Seal on the metal roofs. If the tenant doesn’t do the repair or accept the bill back, then we will find a way to remove them from the community. A person like that will not be an owner in our communities and we’ll start over with someone else who has the proper ownership mentality.