Promises, promises. How to put it in writing?

Hi everyone,I want to make an offer on a MHP. Current lot rent = $215. The seller vaguely says that he “plans” to increase the lot rent to $250.In the offer to purchase contract, I want to have a clause saying that the seller will give notice to all the tenants that the lot rent will be increased to $250 asap.Question: Can I put a clause like this in the offer to purchase contract? How would you word it? If possible, please give me the exact wording to use.Thank you very much!Jacob.

Jacob -You can put anything in a contract that is not illegal.  While what you are asking is unusual, it is not illegal.  I would word it as follows:"Within one week of the date of this contract, Seller will notify all tenants on the property that their lot rent will be increasing to $250/month effective at the first of next month, or as soon as the law allows."Make sure you are not paying a price based on $250/month lot rents.  You may loose a few tenants, you just don’t know.  On my first park, I just asked the seller to increase rents during our closing period, and he did so happily.  So I’m not sure why you want to make this a part of the contract, but that’s your call.To your continued success,-jl-

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Thanks Jefferson, that helps a lot. Without the increase in rent, the numbers look ok, but they look great after the increase. And I hear what you are saying; there is a risk that I may end up losing one or two tenants.I hate to buy the park, and then raise the rents on day 1. I’d rather have the seller do it, and then I would not look like the greedy new owner. Is that just lame on my part?Maybe I should do as you did- ask the seller to increase the rent during the closing period. But I am worried that he will not do it. Thanks again, Jacob

Really GJS why not be responsible since you are saying you do not want to look greedy.     If you are in the park business and an increase to $250 is  in the ball park what makes you think in the future with a raise you would not be greedy.     Try a different mind set–you are the owner and being above what other charges does not make you greedy it just might not be good business sense.     I personally do not set my rates based on others–somebody has to make an upward move and I really do not mind being near the top–it is a business and we are here to make money.

GJS,Have you done your marketer research, is $250/lot is a fair rate (or a marketer price) in that area?  If the seller is right, then feel free to bring the rent to the marker price.  It’s a business, period.

If you are not comfortable with what people think of you then you are entering into the wrong business. As a landlord you will always be a focus for their resentment so step up to the plate or rethink your future.   

you guys are giving some tough love… “step up to the plate or rethink your future.” Please bear in mind that the seller said that he is planning on raising the rents to $250. So why not put it in contract and try to keep him to it? That will save me the hassle of doing it, and then I will have much better cash flow from day 1. Also, I think that if I can avoid raising the rents on day 1 by having the previous owner do it instead, I may find it easier to raise again after 1 year. ShanTX, you are right, I need to confirm what the market rent is in the area- I am doing my own market research now.

GJS,Also, please double check with the state’s Landlord regulations to see how often that landlords can raise the rent.  If I were you, I would find out when was the last time the current owner raised the rent, if it was less than 12 months, I would raise it after it is closed, or do it alternatively, such as letting the the tenants pay some utility bills.  If the current owner has not raised rent for a while, then Yes, bring the rent to the market price before or after the closing.  It’s your call.  I have to say I agree with Greg as well.  As a business owner, you need to be “fire proof”, you will see.Good luck!

GJS, you really need to think about what Greg said carefully–I tried to tell  you politely to put on your big man pants.        There will be always someone complaining and being MR. NICE will not win the ball game or solve difficult problem.     In our situation residents ask my wife since she is so diplomatic and they know when it is my turn it is total straight talk and no 10 times around the bushes to arrive at a solution or compromise.        We raise our rents EVERY year  and believe me if that is a problem they are welcome to move.    Number one this is a business!!!

The tenants will not understand or know who raised the rent.  The only thing you are gaining is liability of not following all the rules properly.  Just do it yourself day one.  You need to learn how to run the park, and this is the most important, and first step.  There is always going to be “squawking” and you need to know what to expect and how to manage it sooner rather than later.  If you lose tenants, you are going to lose them either way.  If you accept responsibility you can defend your rent increase which sets the tone for the future much better than “the previous owner raised the rents.”  You should raise the rents every year a token amount if not to at or a little above “market.”  These are my thoughts – not meant to scare you but encourage you.

Almost every seller I talk to says their rents are either “under market”, “the lowest in the area” or “they will / should have / or could” raise rents. Why haven’t they? Could be poor and tired management, but you really need to check out rents in the area yourself.

It is obvious you are not an experienced landlord based on your timid approach to business. Business decision should never be based on what residents think.
This is/can be a very tough business that can chew inexperienced landlords up. You need to understand that business decisions must be made without feelings or the weakness of compassion. If a decision needs to be made you do it and move forward.
You are in business for only one purpose and that is to make money for yourself. You are a landlord not a friend or social service housing provider. Ideally bad tenants should fear you, quality tenants should respect your decisions and the rest can think what they like.
Establish strict but fair business practices and stick to them.
Regarding rent I raise mine when ever it is legally allowed - once per year and when a home sells.
Trust me when I say that raising rents will be the easiest thing you will need to do in operating your business.
Enforcing strict community rules/standards and evicting will be a much greater challenge.

Follow up info… I bought my first park in June - it is not the park that I had first posted about in March 2015. I raised the lot rent from $160 to $180. I plan to raise the rent every year. Thanks for all your advice.

@GJS , Congratulations on purchasing your first MHP in June!

I missed this post from March.

I am both a MHP Owner and a Real Estate Broker-In-Charge.

It may be a moot issue now, but in reference to writing in the contract to have the Seller raise the Lot Rents before closing is not necessarily a bad thing (if it passes your State and Federal Laws).

I highly recommend anything you want done in a Real Estate Transaction be put in writing in the Ratified Contract (as oral contracts are often forgotten or remembered incorrectly to the advantage of the other person).

Owning a MHP does toughen your skin a bit.

My Husband is on the frontlines dealing personally with the Tenants. Thus, my Husband tends to be more sympathetic to the Tenants. However, after dealing with them one’s sympathy does turn into a reality check.

We wish you the very best!

If you haven’t seen it, Frank and Dave’s response to a Tenants’ Rights Group and some city council members in Austin TX regarding their management (clean up, improvements, sub metering of water, raising rents) is a great educational piece for any owner. Maybe Frank or Brandon or one of the Park Store team can post it.

The item that Kurt is talking about is a case study that we put together on a rent raise in Austin and the bizarre way it was perceived and used for political purposes. It’s pretty lengthy, so if you want a copy email me at and I’ll email it to you. There’s no question that there is a subset of tenants that will hate any park owner for raising rents, or simply being a landlord in general. However, about 90% of the tenant base appreciates the park being maintained to a higher level, and are happy to pay more rent than have the park decline as a living environment. We have learned that the 10% subset of the park tenants are unhappy regardless of what you do, so you should not even think about them when making park decisions, as they do not accurately reflect the majority of the park. This same 10%, I might add, are also the same tenants who don’t pay their rent on time, or obey the park rules, or keep their property in acceptable condition – essentially your worst tenants. For them to have any voice, they’d have to fix those three behavioral problems first (which is never going to happen).

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