I own 2 parks, each was purchased as a turnaround park. I have made some good improvements with these parks, but I still have a ways to go to get them where I want them. Wondering what items you concentrate on first, then what items next.
First I identified and got rid of the worst tenants by offering to buy their homes from them, I then fixed these houses up and got good tenants in them. I then did little things that the tenants could see such as patching potholes, improving drainage, filled empty lots etc. I then raised the rents to $20 under market. Both parks cashflow nicely now and have for years this way. I still have some issues such as tenants that refuse to follow the lease, too many cars, pet issues, roomates not on the lease, junk in yards etc. I can’t seem to get these changes made. I send lease violations, I knock on their door to discuss these issues and nothing seems to change. How can I get these tenants to follow the rules? I could end their lease, but that costs me cashflow as now I have a lot thats not bringing in rent each month. What have you found to work in these cases?
Also, if I can get past that hurdle ,what else can I do to improve things at the park? I’m thinking of seal coating my road, nicer sign at the entrance and some nicer poles and signs within the park just to increase the eye appeal of the park. I would love to move out some of the older homes and get newer nicer homes in their place, but thats hard to justify when the current old home is bringing in rent every month? I’m looking into watermeters, I believe they could help cashflow alot.
How do you decide what to do in a turn around situation? Am I thinking correctly here with my ideas or should I be doing other things to turnaround the park?
I wouldn’t mind owning this park for 10-20 years if could get it to have some great appeal which would allow me to increase rents even more and cashflow the heck out of it. Right now, I just don’t think it has the eye appeal to really maximize rents but am having a hard time justifying pumping money into to get that eye appeal.
Kind of a rant, just wondering if my focus is right? or if anyone can help me with ideas to get this part better tuned.
I’m far from an expert, but a few thoughts and suggestions:
-Perhaps try issuing written warnings, followed up by fines for rule violations. If the rule violation is particularly egregious, you shouldn’t lose much cash flow by evicting the resident. Unless the home is total junk, they’ll either sell the home, or you can take title and resell the home. You’ll take a one off hit to cashflow, but the turn time shouldn’t be much more than a few months.
-I’m a huge fan of a lot of the improvements you’re doing, as they’re cheap and make the property look better.
-Sealcoating may be reasonable. It won’t last too long, but it will look good and extend the life of your roads. I’d ask a few paving experts to come out and pitch some suggestions on what to do.
-If your park is in a really strong market, you may be able to sell new homes at close to cost, meaning it won’t cost much (beyond time) to junk the old homes and bring in new ones. Doing so will make your park look a lot better. Otherwise, another option is to require that the old homes get reskirted and sided in vinyl. With a good vinyl siding and shutter jobs, a 1960s home can look almost as good as a new home.
New homes make the park look better, and attract higher quality residents. A park full of nice homes and stable residents is easier, more profitable, and more fun to operate than a run down park full of problem residents.
I would begin by remedying the issue of tenants not complying with the lease/community rules. You have dropped the ball and sent a signal to your tenants that you are a weak manager. They believe at this point that they own you and are not necessarily wrong. The first step is to determine if you intend to enforce the rules or not. If you do not intend to enforce rules remove them from your lease. Rules that are not enforced will be deemed as being void.
Send notice to tenants not in compliance and get rid of one or two of the worst offenders. Send out notices to all tenants making it clear that any tenant not in compliance will be evicted.
Once all tenants get the message and are in compliance you can then put on the lipstick and complete raising rent to full market. There is zero logic in having rent $20 below market in a MHC. Tenants will never move over $20. Raise your rent annually in keeping with costs and market. Remind yourself you are not running a charity.
Strict enforcement of the rules will be the best improvement you can make. Good tenants appreciate it more than you can imagine.