I’ve got a strong lead on a park that has 19 POH. Average rent (lot + POH) is about $330.
If I sell the tenants the homes (for $1 or $100) but set the lot rent at ~$260 or $270, that’s a win-win right? It lowers tenant monthly payments (not accounting for maint) and increases my cash flow. Market rent is about $220 or $230.
City water/sewer, all bills sent directly to tenants.
Am I missing something?
I saw the other threads that said future buyers and appraisers will only count market rent, and understand that.
Are there also tenant-owned homes in the park? I’m looking at a similar situation on a park that has about 2/3 POH. My only hesitation is that it will be a fairly big jump in lot rent for the 1/3 of tenants who own their own home (some of who are still making payments on their note). If you can clear that hurdle ( or if there are no TOHs in the park) your idea seems like a winning proposal.
Yes, there are two tenant owned homes. I also thought it would be a big jump for them.
I have it in contract and starting to really look hard at comps now. If market is truly $220, I wouldn’t feel too bad about increasing lot rent from $170 to ~$190 or $200, because we are also doing some cosmetic work on the park.
If market is 220-230 it should be no problem going 230-240 and ease it up over the next couple of years to 260-270.
I would contact the other park owners in the area and let them know that way if they are at all business minded they will do the same. We try to keep all park lot rents about the same in our area. That way as park owners we drive the market as opposed to the market driving us.