I am in the process adopting Frank & Dave’s rent credit program for my Park. I am reviewing through their paperwork from the latest boot camp and attempting to adapt it to my situation.
My question is: if the entity that owns the park and the entity that owns and rents the homes is different do I use two rental agreements? One for the lot lease and one for the rental of the home since they will be paid two different entities? Their paperwork has the home and lot lease agreement as a single document. If the whole payment is made to the park entity does that entity then pay the home lease amount to the entity that owns the homes? If so, does there need to be an agreement between the two?
Many thanks – Tim King
Tim -
For both asset protection reasons and ‘clarity-of-accounting’ reasons, you should own your homes in a separate entity. You should collect all home-related rents into your ‘homes entity,’ and pay all home-related expenses from it, and keep it entirely separate from your ‘land entity.’ Additionally, this will make it easier for you to get a bank loan when your real estate P&L is pure and separate from your ‘wheel estate’ P&L. Finally, you’ll also be able to collect extra late fees - you can now charge late fees for two entities.
Please see this post for more on asset protection: Mobile Home Park Investing Forum
Best,
-jl-
While I am not one to advocate a process different than Dave and Frank use, we use two separate agreements, two payments, and in some cases we even separate the times they are due. We also look at the process of removal for non payment differently. We tend to only evict on space rent, we do not even add in the charges for past owed home payments.
I do not have the latest list of documents used by Frank and Dave, but maybe I should ask for a set so I can review any changes and see if maybe- we are missing something.