It’s that time of year to consider rent raises for the new year. Given high inflation in 2022, I’m curious what other mobile home park owners are thinking about for fair rent raises - e.g. the standard 5% raise, or something more due to inflation?
We like to do our rent raises in August and matched inflation figures that were accurate at that time. We got our typical complaints from a handful, mainly the elderly on a fixed income. Collections stayed the same as they normally are. Business as usual.
Great question: I’d be inclined to check local rent increases in your local market place over the past 12 months and raise rents accordingly. If you live in a large metro area something like this might help you gauge: Zumper National Rent Report.
I also like to look at “Fair Market Rents” as an indicator, but these are likely going to be on the low side during times of fast rent growth.
Just some ideas…
I think the first question is how much did your expenses increase this year, as a result of inflation? That can help you answer your posted question in terms of fairness.
I’m still under market for MHPs in my areas so I’m continuing to do rent raises as I have each year. I don’t think about it in terms of % but it works out to about 8% ($20-$30 depending on market). I’d rather do a consistent amount each year that try to go large in high inflation years and small in other.s… $20-$25 each year works. That being said I am changing my water metering in 2 parks this year and aligning my water rates to regulations so will end up not raising lots rents but separating w/s which will add $35 or so.
We like to raise June 1. Just after tax refunds come in and winter costs go away. State of VT has an 8.8% arbitration limit this year so we’ll be doing 8.8% since we’re under market rate there. Honestly our costs haven’t gone up 9% so in our other parks that are closer or at market we’ll be doing $10-$20 depending on how much work we did in them
Inflation is REAL.
2020 Big Mac: $4.59
2021 Big Mac: $4.93
2022 Big Mac: $5.15
The Big Mac index | The Economist
Wow! 9% increase for a Big Mac…
My opinion is that you are late to consider rent increases for January 1, You can make it happen, but need to work quickly.
We begin the process in June each year by conducting a market rent survey of the competitors in our markets and looking at inflation data. Then we begin sending letters at least 90 days in advance to tenants in rent-control states, 60 days in advance for Section 8 tenants, and 30 days in advance for everyone else. We target rent increases on November 1 of each year so the new rent hits before people blow their budgets on holiday gifts.
Our rent increases that just went into effect ranged from about 5% to 10%. When calculating the increase you should look at inflation and market separately. For example, if you only go by inflation and you are low, you will always be low. If you are high, then you will be priced out compared to market. I would look at both and go as high as possible without exceeding market by too much.
IMO: I think the condition of the Park, infrastructure, homes and etc should be what decides to increase, adjust or lower the rent.
We purchased a few months back and have notices to folks. We had to redo all park rules and leases as they were lacking. We went up $70 per month to bring the base rent to $360. All other fees increased for late fees, pet fees, parking fees and material violation notice fees. All new residents will be higher that come in will have a higher base rent plus they will reimburse the park for their sewer charges. We were a little late and originally planned for November , but effective Date is December 1.