Lot rents and market rents

I bought a park that was significantly below average quality for the area, with lot rents that were at or slightly above market.

As such, I intended to leave lot rents as they were for a few months.

However, the park is located in an area with astronomical tenant demand. without advertising. We have a waiting list of people who want to move in, and have filled out applications and gotten preapproved

As such, even though we’re slightly ‘overmarket’ it feels like the entire market is too low. Is there any significant reason the park’s lot rent shouldn’t be be bumped up a few % this year?

I’d say ‘no.’ No reason they shouldn’t be bumped up if demand is really there. What number of responses do your test ads pull? What does the average 2BR apartment rent for in your market? Probably your lot rents should go to half that amount, perhaps 60% of that amount in a stronger/coastal market.

To your continued success,

-Jefferson-


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Thanks for the response Jefferson.

I was already quite familiar with the market and knew tenant demand was extremely strong, so never bothered to run test ads.

The average 2BR on Rentometer is $722, so currently my lot rents are on the higher side at 52.6%. A rent raise would put them at around 54-55%.

However, I wonder if even the apartments are ‘undermarket’ as I suspect the reason why I have a waiting list just from people driving through the park is because low income earners can’t find any place to live, there just isn’t enough supply of affordable housing in the market to go around.

Market value is what someone will pay for it, not what your competition charges. Checking the competition is just a way to get a feel for the ballpark value.