Looking for some perspective from folks who’ve been through this.
I bought a mobile home park where legacy lot rents were $160/month. True market in the area is $300–$350, and candidly, this park is one of the best in the market.
Here’s what I’ve done so far:
Year 1: 10% increase
At the 12-month renewal: increased to $225, but paired it with a two-year lease to give residents stability and predictability (well received/no one moved out)
Other material info:
50 pad park
new tenants start at $300
I will start the refi process in a little over two years (refi 11/2028)
So far, pushback has been minimal, and we’ve continued to invest heavily in the park.
Now I’m trying to decide the next move. Long term, everyone needs to be at market—but I’m trying to do it in a way that doesn’t unnecessarily tick everyone off or spike turnover.
I’m torn between:
Raising to $274 (a $49 increase — big enough to matter but small enough to not make the news), or
Going straight to $300 and ripping the bandaid of - getting closer to market in one clean move
For those of you who’ve walked legacy rents up like this:
Do you favor incremental but frequent increases, or
Fewer, more decisive jumps paired with longer lease terms and clear communication?
Would love to hear what’s worked (or backfired) for you in similar situations.
When we bought last park in late 2022 the lot rent was $150. Mkt was also $350 (it’s now $450-$500).
We sent a letter with a survey. The letter explained a. What we had discovered about the community b. What market rents were c. What we new had to be done and d. Included a survey of all tenants asking what the communities greatest needs werr, with our list for them to prioritize and add there own ideas. e. We provided a free new co2/smoke alarm to all who answered. We got > 75% response. It showed folks priorities were pretty aligned with ours.
We worked on the top priorities immediately, before any rent increases to show good faith.
We demonstrated a plan to work on deferred maintenance ID’d by the survey over time.
In 1/1/23 We offered folks several discounts from mkt to a. Move to electronic payment. b. Sign 1-2yr leases v mo2mo c. Get everyone leases to begin and pay 1st of the month.
Included some services we could do way more efficiently than tenants could. Ie lawn care - reduces neighbor disputes, saves folks money and space, no need to own lawn equipment and pay for upkeep and fuel. Also reduces hazards w no fuel stored and no amateurs using dangerous equipment.
We sent leases at market of $350, to start in 90 days, which they could reduce to $250 (still a $100 jump) if they did all of the above on a 2yr lease or $275 on a 1yr lease.
All but 3 took the 2yr deal 1 took the 1yr deal & we got a raise to $350 from $150 in a year 2. Stayed mo2mo and paid $350.
At 2yr renewals we offered $350 (a $100 jump) for 2yr or $375 for a 1yr lease and added quarterly pest control (which costs us less than $25 unit and eliminated a problem in our POH’s). Everyone took the $350 deal except the 2 mo2mo folks
We moved everyone up $200 a month in 2 years got control of yards and pests and NoOne complained.
Neighboring parks are now at $450 w/out any services for new tenants. Their yards look like hell and they are losing homes to demolition. We are told they have major pest problems….
In 2027 we will again move toward mkt which we expect to be closer to $550 with the services we offer.
We will still keep existing tenants at ~ 20% below mkt for 2yr lease and 10% for 1 yr lease and at mkt for mo2mo.
In short demonstrate you understand their needs by asking them. Inform them well in advance of mkt conditions. Do some of the work first before asking for more money. Offer them something addl, Provide discounts to get important lease terms you want and need. You could include bigger discounts, on renewals for folks who pay every month on time in full. You could survey every couple years….
before the 45% jump we paved the streets $28k, cut/trim/removed trees $10K, tripled street lights, new signage, painted mail shed and added lights, and added park security cameras. Currently we have begun a $5k renovation/beautification project of the entrance to the park, and i plan to add playground equipment, but i think i will offer some other options via the survey you recommended.
I would love to offer a discount for ACH but the fact remains 80% of my park do not have checking accounts. If there is a work around for park where tenants do not have checking accounts please let me know.
Lawn care could be a good one. Everyone is responsible for their own lawn, so obviously there is inconsistency.
Surveyed for needed improvements and desired changes
Develop a rent catchup schedule. New tenants from in-fill and turnover went right at market. Legacy tenants went on a catchup schedule - rather than what they were historically used to (10 bucks a year) - we moved to 20-30 dollars a year, in some cases 40 until they caught up in a few years. I could sleep at night, and any rent increase complaints were about the same amount as if they went up any amount.
Capital improvements happening right away, as well as communicating what we expected to be working on over the next few years (only things we KNEW we would be doing).
Make sure something was happening in each year of the rent catchup schedule (seeing your dollars at work)
Once we got everyone to market, we’ve been able to return to smaller, market based increases for all.
The only thing I would say backfired (kind of) is when we made our largest increase - Post pandemic, all the news was talking about inflation and we were feeling it in all our construction projects, so we planned the biggest increase. So we announced the increase, but in the notification we indicated it would go up “half now, half later” - so if I was raising someone from 400-440, I told them the second half wouldn’t take place until halfway through the year so they had time to prepare. Well, it looked like November 2022 Notification of 2023 increase , then “Jan 1 2023 increase (part one), July 1 2023 increase (part 2), Jan 1 2024 increase” (the normal annual increase) and i got quite a bit of people complaining “3 increases in one year”
In that case, I should’ve just raised it the $40 all at once.
I personally would be very hesitant to jump over 10% in a year without a real need to do so to cash flow. I know it can be a necessary business decision, but if you have to raise rents 150-200 bucks at one pop that’s awful hard on some people and I would think really hard on that.
Regarding discounts - I didn’t do that, I felt it defeated the purpose. Rather, if I wanted something done like signing up for online payment, etc… I stuck to more aggressive, but one- time credits, that way I could keep the value of rents intact.
yeah im doing my best not to jump more than about $70 and even when i do so im doing my best to reduce their monthly cost of living elsewhere (lawn care or pest control like @jsrm2022 referenced).
Your rents are dirt cheap and lower than cable TV payments. I would go to market in one step. Even at $300 to $350 the rent is cheap by average national standards, so I would not think you are going to draw media attention for that. I would even guess that nobody is going to complain because the tenants know they are being subsidized with the former landlord.
Do something to help improve the park first though - clean up debris, repair potholes, install a tenant web portal, etc., so there is perception that the extra money is going somewhere useful.
When we increase in Delaware, due to rent control, we are almost forced to do the big jump because we have to hire an attorney and carefully follow the government mandated legal process. We would not do that to go up 10% but we have done that to go up 100%.
$160 per month? Wow, thats like rural America circa 1985. Literally nowhere in America are LRs that low anymore. I am NOT a fan of jumping rents $100+ per month, but in your case, you are justified to do so.
Tenants have been taking advantage here. Rare thing.
I’ve had a park similar to this situation. Rent was $110 and market was $325. It is a nice park in a very desirable area. When we purchased the park, we gave them the full rent increase plan. We told the tenants month 1 they were going to $200, 6 month mark going to $250, 1 year mark going to $300, and at the 2 year mark going to market, which we told them would be in the $325 to $350 range (ended up being $350). They grumbled a bit, a handful admitted they had a sweet ride for the last few decades, and at the end only 1 person left. At that same time, we went in and did a few improvements to all of the parking areas, added nice fencing, and made a few people clean up around their home.
Be open with your plan, so some clean up, and the residents will be on board and for the most park okay with the process. They’re not simpletons, they understand it’s cheap.
