We are looking at a park that needs some work. It’s a smaller park (40 lots). We don’t have a problem with having to do some revamping in the park…The hesitation we are having is that there is a large park (200+ lots) right behind it. The entrance is right next door to the smaller park entrance. The larger park looks like a pretty clean park. I think this could go either way…hurt or help us. I’m not entirely convinced about moving forward since I have not had to deal with competition literally in my backyard. I don’t know if anyone has had any experience with the competition being so close while turning around another park?
I would think your friendly competitor to be an asset. They will drive traffic right to your front door. Presumably your lot rents are lower…? Assuming that to be the case, I think you’ll have no difficulties filling your community if you are offering a (soon-to-be) clean park with decent homes at slightly lower rates than your neighbor.
Still, be sure to do your homework on the economy and housing stock as outlined in F&D’s books (buy/read if you have not already, plus come to the next Bootcamp).
My 2 cents worth,
P.S. I receive no proceeds from anything sold on this site. Unfortunately.
For you to happily co-exist, your smaller park is going to have to have a lower lot rent and a lower home rent. Since they probably have amenities – and you don’t – you can’t be in a position to be more expensive. If your numbers do not allow for being significantly lower in rent, then you’re probably going to get clobbered. The position you want to be in is to let them draw the customer to the area, and then you steal the tenant from them by offering lower rent. Of course, lower rent is not the whole ballgame. You will have to offer a park product that is as clean and nice as the large park. But the successful small park has to be like the Dollar General store next to Walmart, offering the same thing for less.
Great thanks:) Right now the lot rents are about $30 less a month and luckily for us, they don’t have amentities as far as a pool or park or really anything…just cleaner. FYI…we got the Frank and Dave due diligence book when we were buying park #1…and it helped tremendously:)
We’re in a similar situation. We bought a 56-lot “turnaround” park in March. Behind us is a 300+ lot park. We can easily undercut their rent, so we don’t view them as competition, even though they do have a pool. But something I think you should definitely consider is the quality/condition of the park. If it’s a “bad” (poorly run with loose screening criteria), you’re going to have all kinds of problems on your doorstep and that’s going to reflect on your park and your ability to draw quality tenants.
Our park was the worst in the County (so I’m told), so we could only improve. But as we’re striving to clean up our park, we’re having a problem with people from the other park who cut through ours because it’s a shortcut to town. We’re finding that these people are causing problems in our park. Unfortunately, we can’t fence the area where they cut through because a public street divides our park (we own on both sides of the street). So even if we fenced our property, they could just use the street to gain access.
It’s just something else to consider. If it has a bad repuation or a lot of problems, I think it could be a detriment to you. On the other hand, if it’s a nice, clean park and you can undersell them, it could be a good thing. Just my .02