Has anyone given a Discount to your Tenants for paying the Lot Rent in Advance?If yes, what are/were the details?When we first purchased our First Mobile Home Park, we received a 6 Month Lot Rent Prepayment just before we sent out our Lot Rent Increase letter.We had contemplated sending the Lot Rent Prepayment back so that we could get the Lot Rent and the Increased Amount.However, we decided that ‘a bird in the hand was worth two in the bush’ and kept the Lot Rent Prepayment.This worked out well for us as we did not have to worry about this particular Tenant for 6 months :-).Frank has indicated that Lonnie Dealers have asked for Lot Rent Discounts if they have multiple Lots. However, Frank said that if they did anything at all that they would just give the Lonnie Dealers a Lump Sum Discount at the front.What are your thoughts?
Tenants pay in advance as it is a advantage to them not the landlord. They know they may spend the rent money on gambling or booze so they try to protect themselves from late fees.That is their problem not yours and does not deserve a discount. Personally I do not accept advance payments as it simply complicates my book keeping and serves me no purpose. I would rather boost my income with late fees than reduce my rents.
One third of our residents pay a year ahead and we give a $10 per month discount. The solution to Greg is raise your rent enough to offsite the discount and yes the incentive is great and we have NO ONE pays late and thus no late fees and my bookkeeping is a breeze! I have used the strategy for 20 years without any problems.
So let me get this straight Carl. One third of your residents will pay you lot rent a year in advance to save 120 bucks? So if your lot rent is say 200 dollars they are paying you 2280 to save 120 ? And you have been doing it for 20 years? And NO ONE ever pays a late fee? You are truly the greatest MHP owner of all time. One last question,have you ever been on the Jerry Springer Show?David
stout40, yes with 200 sites–very carefully check on incoming potential residents and we are dealing with people with this being their second and third homes–and there occupations are lawyers, doctors and lots of self employed people. Our average home value is over $45,000 with No rentals and No fulltime children. When you have over 30 years of experience why not own the best!!! Yes we have a marina so they can enjoy their expensive boats and swim on the beach. We have not owned a family park in 25 years and with my first park a snowbird park I love retied people and their punctual payment which since today is the 30th of Sept. I have received over 75% of the money as of Sept 30 and is not late till Sept. 6. Since I do not offer a boot camp nor are paid for my experience at this time I will not further explain our potential remedies for possible late payments especially with the JS question folly statement. Spent some time in the Tampa, Fl. area and then you might understand there are 4 and 5 star parks that collect rent ON TIME!!!
Sorry, not late till Oct. 6, my mistake-not perfect.
Why would a doctor or lawyer want a second or third home in a mobile home park? I don’t understand this at all.
I have people who pay me 6 months at a time, but no discount. Giving a discount because you may not have been paid on time in which case add a late fee.
Frank, since you are not a doctor or lawyer I could ask them why? The word quality 4-5 star property with all the amenities that a person could want in a get-away vacation place come to mind. Going to Mission-McAllen why have people spent thousand of dollars to have a winter home in a mobile park or a retiree spending a half million on a motor home to stay in an RV park. There are niche markets that appeal to retires and with 10,000 retiring per day I love that niche market that is yes VERY DIFFERENT FROM lower income people that are in most mobile parks. Apparently I am not preaching to the choir and thus since the question was do your give discounts we do and thus please stay on the subject of Kristen question so she has a broad voice of opinion on the subject. Kristen in a normal family park I believe less than 15% would be able to take advantage of the value. We constantly change our operation and do some experimenting but the idea was original from the Valley experience where over half paid for the season before they arrived and yes there was no late payments with seniors!!!
Greg, Carl & Brian Z, thank you for your comments!We do charge late fees starting on the 6th of the month, goes up on the 11th along with the eviction process starting.We just have had one person pay in advance in the past and another person who has asked about paying in advance.We were just curious how others operated.Thanks So Very Much!
My tenants often get themselves a big “windfall” with their tax returns. One family told me they got $2000, another got $3500 back. At the time a year’s worth of lot rent was $1320. In two tax seasons no one has paid ahead… although there are a few that talk about it. I frequently have thought about a rent increase to go into effect ~5/1 and if you pay ahead for a year you get the old rate. However the tenants smart enough to take advantage of the discount are not the tenants who are difficult to collect.
I think this has been discussed in a previous thread at one point. Something you may need to consider is that a bank mortgage typically (in my experience) will have a provision disallowing more than one month prepaid rent. If you accept 6 months up front (or whatever) you are likely violating your mortgage security agreement, which probably only matters if you are caught (i.e. default). But the bank will not appreciate that you defaulted with 6 months prepaid rent in your pocket and could come after you for fraud, as one (perhaps extreme) example.Brandon@Sandell
Lori Cooper & Brandon, thank you for your information!The Mobile Home Park that we previously accepted the Prepaid Rent on was Paid Off with NO Mortgage. Thus, there was NO Bank to worry about.Thanks So Very Much!