Hi, all. I’m looking at a small park - 25 lots, 23 occupied: 15 POHs and 8 TOHs. On the P&L, the eviction expense for 2018 is $2,601, with what appears to be at least 7-8 evictions.
I asked the broker (he’s a residential agent, not a commercial/MHP broker) about this, and if there was anything exceptional about 2018 (culling the herd, possibly) and his response was “with MHPs this size, you can count on an average of 1 eviction per month. That’s just the way it is”.
Lot rents at the park are $350, and he repeatedly told me what a rock star the manager is at running the park. I’m wondering how much of a rock star she is if 1/2 the park is projected to be evicted in one year. She’s also very well compensated: free lot rent, phone and utilities, plus an avg of $1500/mo for her to run the park and her husband to mow and perform basic maintenance).
Extrapolate that eviction rate out to a 100 unit park, and you’re looking at 50 evictions per year. The whole park would turn over in 2 years.
I call bull crap on that, but then it led me to question what a “reasonable” eviction rate is. I’m sure the mix of TOHs and POHs has an impact, as well as the type of park.
I would love to get some insight from others on this.
Their screening is probably the issue. They will let anyone in that can pay a couple months of rent and not check rental history & referrals, or verify employment / income. If the market is strong then no reason this cannot be tuned down to 10% or less per year.
Not going to be typical but few things to consider. One, when you take over a park , half the turnover may be something that is expected.
The market is going to be a factor.
Is the tenant base fairly transitory? Check market stability - employment on and off…
Jeff probably hit the nail on the head, screening is probably whack .
In my experience in parks this size in the markets I’ve been in, once stabilized. Maybe like processing 1-2 evictions a year.
This is going to vary a lot and a broad statement depending on the current tenant base, what star park.
At takeover though on a mismanaged park, all bets are out the window. I could see 1-2 evictions a month but by month six you should start to be getting better people in with your revised screening.
JulieK, Interesting question and likely a lot of variables from park to park and varying geographic locations. I can tell you what my experience has been and that can provide a point of reference for you.
I own two parks with roughly 50 pads in each. I have owned the one park for four years and have evicted just two tenants in that period. I should note that I have made agreements (i.e., offered help with moving expenses/waived a rent payment) with a small number of tenants to encourage them to move on. After implementing a more thorough screening process for new tenants (I believe this to be key) I have not had an eviction in two years. In the second park, only owned for 6 months, I have had just one eviction but there will likely be another one or two as I work to stabilize the park.
Hope this helps. Good luck, sounds like there are challenges, but also some opportunities with the park you are looking at.
@Deleted_User_ME Good questions and points. I think in this situation it likely comes down to poor screening as all of you have said.
I’ve talked to a number of MHP owners after doing a couple of mail campaigns and you can tell the ones who screen well/manage the park well (or their managers do) and the ones who don’t. The latter love their parks and are proud of what they’ve built, the others say something like “you really want to own a mobile home park? why would you want to do that?” or go on and on about how awful the tenants are.
@MickG Great insight and much more in line with what I would expect from a stabilized park. I do believe there may be some opportunities here. LOI was submitted today. We’ll see where it goes.
Primarily factor, as mentioned, is screening. It is the difference between owning a trailer park and a Mobile Home Community. Additionally you will find there is a slight uptick in evictions when dealing with renters of POHs. They have no attachment to the community and less to lose if evicted.
The manager is likely your primary problem.
Thanks @Greg. I believe that to be the case as well. Interestingly enough, the manager earns a hefty income for 22 lots because of performance-based bonuses/incentives earned. It seems like tenant quality isn’t considered in that bonus criteria
We have 2 different locations 21 in total. They are kept and have only had 2 evictions in 5 years.
We are selling due to my husband getting older and he has been doing this his whole life.
Usually tenants if you are on top of it will be compliant with rules and regulations. Every so often like anywhere you will get a “problem child”.
