we have decided to sub meter utilities. Current lot rent is 200$/mo if we figure the current utilities averaged out garbage, sewer, and water it would increase about 66$/mo. My question to the many MH geniuses on this site is, should we reduce rent to ease the pain and creep it up slowly or let them feel it all at once? anyone have a good answer please feel free to add your input
Thanks
Brian
My changeover was gradual. I paid the 1st 3 months of trash service for anyone who signed up by a certain date, though the switch was mandatory. For new folks, I told them in advance we were planning to submeter. I still pay water for 2 tenants who are good, but barely making it.
Submetering water, even if you don’t charge intially, is a good idea because you can spot leaks & also see who is over-using. I explain that it isn’t fair for folks who are conserving to pay for those who are careless. I also tell tenants that most parks are switching from paying utilities.
I don’t ever recommend reducing rents. If necessary, give them something as a bonus or reward, but keep the same $$$ coming in. You can tell tenants the rent was going to increase X dollar$, but because of the change, the increase is going to be decreased or delayed.
Tye
Brian:
I am going to totally disagree with Sailor’s advice. Sorry Tye:-)
Starting 8-1, all residents in my community will be sub-metered for water. Most people were paying $240 for lot rent and I am lowering everyone to $210. Why, you gasp in utter astonishment, would you do such a thing? $210 for a SW is right at the top end of the market in my area where no utilities are included. My manager helped me arrive at this amount after she did a survey of other communities in the area. I really feel that if I go over this mark, people will move out.
I’m still not losing anything. In fact, I am ahead $1,200 per month on net cash flow after this change occurs. Lost some rent but got rid of a much bigger expense. The residents are happy and the value of my community just went up $144,000. Everyone wins.
Rolf
Rolf, there is usually more than one way to achieve the same result. What I did worked for me, & your changeover method may also work well. My concern would be that you might get tenant resentment when you inevitably DO raise the rents back up. It could raise the whole utilities issue again. By pre-paying the 1st qtr’s individual trash collection instead of lowering rents, I took the wind out of the sails of what could have been a rebellion. I also didn’t miss a single annual rent increase. This year times are even tougher, so some of my increases are only $5, just to keep tenants in the habit, & to prevent them from thinking their anniversary dates slipped my mind.
Another plan I have is to encourage my tenants to register to vote. Not only do I feel that voting is the obligation of every citizen, but it is a good reminder that the landlord isn’t the primary source of their economic woes.
Tye (who isn’t about to change being opinionated now that the gov’t is sending her official correspondence referring to her as “elderly”)
Brian,
My first thought with what you posted is not to get the meters in so much as what is driving the price per pad so high… Is the $66 average normal for your area? Our units tend to use around $20 in water and trash service runs between 7-12.50 per unit which totals 27-37.50. (our tenants pay for trash)
You might just live in a more costly area and your price could be normal there but it seems over all to be high to me. If there is a problem that is causing you to send $26+ per pad down the drain it needs fixed!
One of our parks had waterline problems, needed low flow shower heads, and every unit needed the toilets retro fitted, the average water bill was running $300+ for 7 units. ($43 per) We upgraded the water lines ($1000) installed low flow shower heads, and replaced the flappers, and added an 8th unit to the water system… water bills have come down to an average of about $100 ($12.50 per unit) after we did the upgrades, we were also able to get a discount from the water company for water conservation & keeping the water in our name. They said to many park tenants skip owing them money and it was better for them to have us paying it (We have to install city approved meters that they get to keep, it was kinda weird being told by someone they don’t want to get something for free!)
Our total cost was right around $1200 plus a little for labor to upgrade the park with water conservation items and new water lines (we installed black rolled line encased in concrete at road crossings with rented equipment) giving us a return on the investment of somewhere around 200% and an equity gain of around $20,000 on this little park.
Even on owner occupied units I recommend installing low flow shower heads and new toilet flappers on every unit, integrated with installing individual meters I think this can bring HUGE returns to park owners. Why install new items when they are going to pay the bill? It’s a feel good factor and reduces the total consumption which most owners are going to have to pay before they collect the bill back money.
It’s up to you if you are going to reduce the lot rent but I don’t see a reason, if the tenants feel they are getting something good out of it ITSTEAD of a rent increase I don’t see a reason to reduce the lot rent. My approach would be the excess water consumption has left us with two choices… Raise the rents or install meters so that everyone only pays for what they are actually using and I even got the partners to let me pay for adding a couple water saving devices to your home for you…
Best wishes,
Ryan Needler (who humbly remains the monkey that does “the man’s” dirty work)
well, heres the breakdown $9.00/unit for garbage, $27/unit for sewer, these prices are fixed. water averaged out for 6 months is about $30/unit, I think water will go down drastically when units are submetered because i think some are running water all winter to keep pipes from freezing
Brian
I don