Closing on a park that hasn’t seen management in decades - one TOH is behind 1 yr!
Thank goodness - ALL TOH! Master metered, so Water, Sewer and Garbage is INCLUDED at these lot rents.
Market lot rent is 235 in the area -
Here’s the issue, newer folks are paying 140-150, a couple are 110 and there are a couple ‘little old ladies’ (according to the seller) are at 95. 95 lot rent - and that includes water, sewer and garbage…
Now, what to do…
My wife/partner says we need to ratchet it up 20-25/mo till we hit 195.
Some of my MHC buddies say 195 for all.
How are my ‘little old ladies’ going to fair going from 95 - 195 in one whack?
I would NEVER do a rent increase that more than doubled rent. How would you feel if your housing payment doubled. Small increments, $35/m tops. Give everyone the same increases yearly until they get to your target rent amount then level them off. It is a potential PR nightmare all to receive a couple hundred dollars extra a month.
Jim is correct. Your method is a sure fire way for the community to start pushing for rent control and your time being spent responding to politicians and news reporters.
You will want to stagger the increase and also probably inform your residents in advance of your intention to do so. Otherwise, you will likely hear noise from them again the following year.
Residents don’t like surprises or landlords that try and hide. Be upfront AND add value. Everyone in this industry should be held to this standard so it’s not legislated out by a few bad actors.
I totally agree with that. However, getting close to market, the holler-ers shouldn’t have a leg to stand on. But that doesn’t mean I won’t feel the wrath.
While your logic is correct, “just bringing rents to market”, the reality of getting there can be quite different. And these residents do have a “leg to stand on” in this day and age and they yield a lot more influence than seemingly many people imagine (legislation, rent strikes, etc.). And while you may win the battle, you don’t want to lose sight of the war. Just my 2 cents.
I had a park in a similar situation. I would split the difference between a huge rent raise and a small one. I would raise the rent to around 165, then next year 190, then 210, then 225, etc
I would start out with a big increase, and then taper down the rent increases each year
One thought is to meter the water and add that separately and a smaller rent increase. That way it doesn’t look like you are raising the rent that much.
As for the little old ladies, I have one when I told her I wasn’t raising her rent - she said “You better not”. No appreciation at all.
i would not raise it in small increments, i raised a park from 160 to 250 (which was market).
were they upset? yes
but we made improvements in the park PRIOR to the raise, to let them know we were trying to better their community.
i would probably install your meters and pass thru w/s/t 1st then , raise the rents.
Raised mine from $150 when purchased to $300 over the course of 3 years. Make improvements as you go along, simple things like mailboxes, cleanup, and lipstick where you can. It helps justify the increase. I send a letter out yearly discussing improvements made and to come along with a notice of increase 2-3 months in advance to brace the tenants for the increase.
You will find you will lose the folks that cause you problems. Take that time to clean up the lots and start your process of bringing in the tenants you want.
Don’t jump and be sure to look at the inside of folks cars who come out to look at your home and or lot. It will immediately tell you how they will treat your property if they are putting cigarettes out on their dashboard. Good luck and congratulations!
I agree with cablefed. Small increases will have you chasing the market rent for half a decade or maybe longer. I have a park that was at $135 2 years ago and market was $215 at the time (now market rent has jumped to $250!). We raised the rent $50 to $185 in one swoop AFTER we had done noticeable repairs to the park to justify it. Since then, we’ve done $25/year. The biggish bump in the beginning after lots of noticeable work, followed by smaller bumps I think is the way to go.
There is a cost to doubling the rent in one fail swoop. You just need to check in with yourself to see if you can afford it. That would be a difficult jump for your customers even if they know they are below market. Some customers cannot afford their own housing at below market rates.
