We are just exiting the “It will get worse before it gets better stage”. We’ve just about finsished getting rid of the trouble-makers, losers, non-payers, drug-dealers, harpies, bad-a$$es, etc. We have only lost two tenants due to economic reasons, and one of them arguably because we started enforcing lot rent payments. We’ve been backfilling into two classes of trailers.
The first class are the cheapies inherited with the parks. We tore down quite a few of those and kept the best (a very relative term), mostly older 2BR’s. We sell those with zero or little down (“recession specials”) for about $125 per month for 2-4 years, perhaps a bit more if we do any serious rehab. They have started to fill with people who really like the idea of a quick paydown and owing only lot rent. We have very little in these homes, as the purchase price assumptions allocated very little value to the homes on the economic side (disctinct from the tax allocation). Any payments are gravy, getting and keeping lots filled is the real upside. We’ve sold about seven of those in the last six months and have about four of them left. Bear in mind that four of those were existing renters converted into owners, so those resulted in a wash as far as occupancy was concerned.
The second category of home would be the 3BR 199x that we move in, cost about $7,800 to buy, move and lightly rehab, generally looking for $1,000 down and $250/m for 5-6 years. Those sell almost immediately (lot rent is $200). We’ve sold about three of those (with six more pending move-ins) in the last six months. We make OK money on them, but again, the real goal is to fill lots. We have not yet had to evict anyone who has bought a home from us.
One of the parks (only 12 lots out of 60 total that we bought last year in September/October) is tucked into a nice little neighborhood. We just poached a mobile from a park about 1/2 mile away. That park is run by a real jerk of a PM, he’s tried to charge us for a “mandatory state inspection” that didn’t exist and threatened to “pull our trailers based on improper foundation”. He even had a doctored up form that was supposed to be “official”. As the “quotes” might indicate, we laughed at him and his fantasy authority and told him to run away or we would taunt him again - real piece of work, that guy. Anyway, we financed a move ($2,000) for one of his tenants at 0% interest. The tenant owns his home free and clear. We are going to blitz the acceptable (to us) homes in that park with offers for a 0% move, word is that the tenants hate the PM. Can’t imagine why!
Overall, our occupancy has remained steady, but the quality of tenant has improved. We lost losers and have not had problems with any of the new tenants so far. We have about 25 lots left to fill of 60, parks are doing a bit better than break-even on cash flow after all expenses and debt payments, which is pretty good given that everything we do with these parks is debt financed, aka zero down. And that’s BEFORE we fix some issues with the water…
Post Edited (03-19-09 04:45)