Sure. It’s mainly a personal preference though. I’m not particular interested in RV parks as they are a significantly different business model than MHPs. Also, Illinois is a very blue state with negative population growth. The fact that there are high taxes, very tenant friendly laws(that doesn’t really make things easy for us), and a net migration out of the state are all good reasons for me to stay away.
But again, that’s just my personal preference.
Nothing in the article (aside from company name) has anything to do with RVs…
A side note, Florida has many parks that are now resident owned and will never?? be available to park owners (could that be more in vogue in the future). Illinois is really an area that needs to be watched carefully as well as California with a net lost of population, very high unsustainable debt, and very high taxes–these states tend to indicate what can fly since voters that potentially control elections there are less than middle class. People can now vote their pork barrel needs and have the middle class pay for it and politicians love that mentality (easily controlled). We have just got feed back from our yearly increase—very positive since they see and experience the improvements and have a very pleasant environment. Just raising the rents because the people can’t move and allowing the place to be nasty hurts the face of the park business for all–we need to be the best park owners possible so their experience is exceptional . I still say the large operators like Sam Zell and others will lead to government intervention for the poor and the smaller operators will take in on the chin (Ouch) and partially because of greed!!!
Just looked up Illinois MHP laws. You weren’t kidding about them being tough!
Anyone with Illinois experience have suggestions on the 2 year lease requirement?
I just googled around and it seems that tenants can waive that right if they want a shorter lease…
" Leases within mobile home parks must be at least 2 years and in writing. The owner and tenant can agree to a shorter lease, but only after the 2-year lease has been offered."
I wonder if you can give the potential tenant an option of a 2 year lease, must be paid in full up front, or offer them a month-to-month?
You have to offer it unless tenant waives the right. Many a tenants waive the right. Has to be signed off they acknowledge this.
Then on rent increases, you still have to comply with notice of 90 days. Then on a 2 year lease , you have to identify the rent increase from year 1 to year 2 specified in the initial lease.
This is the basics of it , you can readthe whole thing for the ins and outs but just because a tenant accepts a 2 year lease does not indicate that you are rate locking for this term.
Hope that clarifies some things on this topic.
Can you explain your statement that just because the tenant signs a two year lease the rental rate is not locked in? How are they waiving their rights?
The lease I’ve seen (possibly Frank and Dave possibly not), the lease term is provided and says that year 2 of the 1 year lease there will be an increase of xx$ or xx% , there are specifics that need to be covered in IL so its recommended to know the details , thats just going off the top of my head.
I am very familiar with the 1 and 2 year leases for POH. I was inquiring about the month to month leases mentioned above…where is the knowledge , and security for the tenants (whether they rent or own the mobile home?) what the cost will be beyond the M2M lease? How do they know if the rent will be in 6 months? Or a year ?
Have never used any type of lease for 0ver 30 years. The tenants are M2M plus they also can move their homes out with a 30 day written notice to management or we can have them out with a 30 day notice. We have a yearly increase every year and believe our residents expect it. Park owners are private enterprise that have a profit motivation for existence and have a choice as to how and when they have increases unless state statues state otherwise. As to Shamrock I know no business that guarantees their price for a year that we deal with and the last time I checked a tenant is not forced to stay in a certain park–you are free to move to find the best deal possible!! Tenant owned parks in Florida are now moving back to private ownership—I know WHY!!!
It is not easy, nor affordable for most mobile home owners to “move homes out of parks.” Even Frank has said this is an advantage to investors. Many mobile homes are left “abandoned” annually when residents can’t afford to pay continuous sky rocketing rents, can’t sell, and are forced to just leave their property at the park and move out.
I would assume that with M2M you could have rent increases multiple times per year? Tenants can’t plan as to what the increase percentages might be. To me this is a complete lack of security to long term good tenants.
Rent increases intervals are often/usually governed by state landlord tenant regulations and restricted to 12 month intervals. Tenants do not have security from market driven rent increases. Rent levels are not guaranteed for tenants or investors. For a investor a good tenant is one that can afford to pay market rent.
I understand what you mean. But please understand that people who can no longer afford the new park owner’s goal to increase rents to market level can’t always sell their homes and move. Why? Because the new owner will not approve the buyers a seller has found. I recently met an older owner who last year tried to sell her mobile home (she had lived in the park 20 years), and was approached by three different buyers, who had the money. Nine of the three potential buyers was approved by the park owner, so this older woman is stuck in the park.
I merely am saying it’s not as easy as you all think it is for people to adjust to rapidly increasing lot rents, nor sell their homes and move.
I think RV Horizon knows to hit while the iron is hot. Sellers market peaking? IL same as CA, NY, bad news for taxpayers, good for the 47% non-payers.
Shamrocks94
This is one of the primary reasons why mom and pop park owners must apply annual rent increases. If they do not their rents fall below market and then when they sell the new owner invariable will increase the rent to market. By keeping rents at market yearly tenants have time to make decisions that rapid increases do not allow.
Mom and pop owners that do not maintain market rents do a disservice to their tenants.
Greg, are you saying lot rents shou,d equal the same as apartments? Because to me that doesn’t make sense. Renting the lot at local apartment still means roof replacements lawn care, and other expenses are incurred. happens, There really is no true equity for the home owner. Mobile home living has historically always been cheaper then renting an apartment. It makes sense. So it the industry trying to bring up the owners costs to the level of apartment rates in a given location?
I’m trying to remember but I thought the barometer was lot rents hover around half the rent of a garden variety 1/1 apartment. Some markets may vary significantly but a rule of thumb to consider.
Mobile home lot rents should be at market as established for mobile home lot rents in the area. Nothing to do with apartments and not tied in any way to apartment rents.
Frank Rolf disagrees with you.