We are purchasing a park 60 lots, 45 occupied, 17 of them are at $200 a month lot rent, the 28 that have been there longer are at $160. Area lot rents are from $160 to $210. Would you raise all of them to $200 for a year or so and then raise them again, $10-15. OR, would you raise everyone to $210 and see what the market does next year? It seems that a $50 raise to the $160 tenants may be too much.Any thoughts are appreciated.Leighnae
How old are the homes? How old are the tenants? What are the SF prices? Apartment prices? What utilities are included in the rent of the other parks that you did your comps on? What utilities does your park include in the rent?
Frank asks a lot of good questions. Just understand that if all your lots are not at the same level, you could be accused of discrimination. If some lots are materially different (e.g. larger corner lots) that’s fine to charge more for those. Just be consistent.Good luck,-jl-
Thanks Jefferson, Frank, most of the homes are from the 90’s, I don’t know the age of the tenants but as far as I know they are all working class. Median price on SF houses is $76,600. Trash is included in the other parks and ours as well. Average rent for 2 bedroom apartment is $650.Thanks for your help,Leighnae
If the homes are paid for, the tenants can withstand a rent increase better. If the homes are from the 1990s, then they may or many not be paid for (are you sure they’re from the 90’s? That sounds kind of weird – not many parks were built in the 90’s, so where did the older homes go?). Based on everything you’re saying, I’d go to $199 on those that are not already at $200, and then take them all to $210 the following year. $199 sounds better than $200,and at least the ones already paying $200 will have no push-back at all. Nobody is going to pay $5,000 to move their home over a $30 rent increase, but you still want your tenants to be happy and think that they are getting a good deal.