Wanted to see what strategies others were using for attracting and moving nearby homeowners to parks where you could intrigue them with a park nearby that has lower rent rates maybe free moving costs and other incentives to fill some empty spaces.
Any repercussions from the parks that they are leaving? Overall seems like it would be the easiest way to fill some empty spots over buying new homes and finding tenants to fill etc.
Thanks,
Ryan
The easyist way to fill lots is to purchase new homes and sell them in your community. Although poaching homes from other parks may seem easy you will position yourself in the sights of other park owners that may not hesitate to poach from you. You could reap what you sow. If you plan on staying in the business long term I would advise you to consider the impact of being a poaching park owner on your business reputation.
This is horrible business practice. I would strongly suggest you DON’T do that.
The MHP world is a small one - meaning if you develop a reputation for poaching homes, it’s not going to end well for ya.
Not only will you burn bridges with other park owners, and potentially create a target on your back, you may be also violating first right of refusal in a tenant lease for selling or moving of a home. Meaning the park owner can technically sue you - if you piss off enough people that could be your reality.
Bad business practice and horrible idea.
Would you want other park owners pulling homes out of your park? Exactly.
One thing you could do is ask park owners if they would sell you used trailers. There are owners out there who upgrade inventory from time to time and would part ways with older homes. You should approach park owners who are obviously making a decent margin selling new homes with that idea.
You definitely don’t want to actively poach. Having some incentives is ok but you don’t want to be the guy who buys a home out of a park because you saw it on Craigslist. Most park owners have experience with direct mail and wholesaling. You wouldn’t want one of those owners to start actively mailing your tenants and start a home flipping business out of resentment.
That may sound far fetched but I met an owner a few years ago who had a resentment against another owner in town. Every couple of months he would round up as many stray cats as he could find and release them in the other owner’s park. You don’t know what kind of can of worms you might open up if you start stepping on your neighbor’s toes.
Thanks very much for the feedback, what seemed an easy solution definitely doesn’t appear to be the best route for sourcing used homes. Thanks!
I will chime in. I have become more active in my states Manufactured Home Association and now I am on a first name basis with the administrators and board members and many park owners. I’ve been invited to their table at meetings at meal breaks, mingled with them at receptions etc. It is as jferrari427 said, it’s a small world as many businesses are. You get to make your own place and reputation in the business community.
That is a horrible business practice. Basically you are taking somebody’s customer from them, and at some point, they will take from you. There are no winners in this game. When a home of ours goes to another community, we call the other community and ask what happened. We are very cordial with them and will quickly establish whether they are poaching or a tenant decided to move on his own. If we see a repeat trend, we know the other park is less than friendly.
Competing on price is a very bad strategy. I would not recommend it. I would try to outdo everyone else and offer something a bit different. As an example, you may think Wal-Mart competes on price, but they do not. They have superior logistics compared to competitors, and that leads to a lower cost structure. A lower cost structure leads to a lower price. Just selling for a lower price without reducing your costs is a recipe for disaster. You need an edge somewhere just like they do. Perhaps you can market better, maintain better, refurbish better, or whatever. These thigs give you an edge.
By far the easiest way to infill is to buy brand new homes from the factory. You could rent them or sell them. It is better than poaching and much easier than bringing in older used homes that are a nightmare to refurbish.
All of the above aside, if we occasionally lose a home, we are not too upset about it. Latest one we lost was an old 1970s junker that would cost $5000 to demolish. The tenants were evicted and hired some fly-by-night operation to take it away before we could find out. We thus had a clear lot and didn’t have to pay for it.
I appreciate the feedback and clearly was a concept that’s not an acceptable practice. Duly noted and thanks for the response and information.
in regards to the used homes being so problematic if you could get something installed and rehabbed for half the price of new wouldn’t that make more sense?
Your decission depends on your market. If you can sell a used home and cover your cost or sell a new home and cover your cost the new home is prefered since it upgrades your community and attracts higher quality residents. In addition it is easier for a buyer to get financing on a new home as opposed to a used one. You want to avoid having to finance your buyers.
It all boils down to knowing your market and determining the future path of your community.
What’s the issue with doing RTO for tenants?
RTO is a good way to ‘finance’ homes for tenants. Make sure it is legal in your State. If not, you may have to structure the finance in a way that is legal.
Ryan, do you already own a park(s)?