I’m preparing to close on my second park next week. It’s been terribly mismanaged and I’ll have to raise rents quickly. Rents are below market at $200 per month and there hasn’t been an increase in about a decade. Nearby rents down the road are $260 (no utilities), and are up to $290 and $310 in a couple of nicer nearby parks. Park is losing about $16-20K per year on water due to broken meters, underground leaks, and poor meter reading. Some meters are broke and not being read so bills are being paid at a minimum charge of $28.50.+1 penny per gallon over 3000 on the meters that work. This sounds too cheap.There are also water leaks that need to be fixed underground. I will be working on that soon after closing with American Leak Detectors.I was thinking of raising the rents to $240 or $250 and also raising the water/sewer charges as the park is losing a lot of money on the water/sewer bill backs.So would a $40-50 increase in rents plus charging a higher fee ($10-12 more) for water/sewer base rate to cover meter reading and maintenance be reasonable?
One of your first jobs is to fix all leaks and then figure what is really fair for water and sewage costs and rates BEFORE raising that area. Raising the lot rent is solely at your choice but if under priced why not be equally priced or above.
You need to do the following:1) Have American Leak Detection (not some random plumber) find your main line leaks and fix them.2) Have a licensed plumber come to the park (the same one that fixes the main line leaks above) and take off the clean outs at 10 AM on a weekday and find the homes that are leaking water internally, Then have him come back at 5 PM to those same homes and fix the leaks.You now have all the leaks fixed.3) Convert your park to the RUBS system (if allowed by law in your state) and abandon the meters and the meter reading.4) Raise the rent up $50 and push the water back on tenants using the RUBS system, so that you are now in-line with the market comps.5) Keep raising the rent at least $10 on the anniversary of that first raise – so the park stays in-line with market rents.
Yes, I’d say so. You might consider a $20 increase now, plus the correct water billing, and then the remaining half of the lot rent increase in a year.Your call,-Jefferson-
Thanks, you guys are awesome.Frank, can you elaborate on the process you’re mentioning with regards to “clean outs”? I’m not sure I’m understanding you completely.Another issue I must fix is there is no professional trash service. One of seller’s employees(from another business) picks the trash up with a pick up truck and takes it to the dump. Of course animals are getting into this trash and creating a mess. I’ve got 3 bids for trash bin service from Rumke, WM, and Republic and they all are coming in at $16-$17 per bin per month. Considering I have rent raises and water costs to pass on what would you recommend as a solution for this?I’ve contacted Refuse Specialist but they won’t get me a quote for a negotiated discount until I sign an agreement. How much can I expect that they might save me? I’ve also considered a dumpster as a less expensive solution.
You can call the dumpster company yourself and compare rates. Can you put the dumpsters up by the entrance? If so, it will save thousands on your roads.What I’m talking about on the clean outs is that, when the customers are not home, there should be -0- water going down their personal sewer line to the main line. In some cases, you will take off the clean out and hear Niagra Falls instead. That’s because their toilet flap is broken (or missing), or the sink faucets won’t shut off, or a million other stupid things that tenants do. These leaks will cost ten times more a month in water than they cost to fix.