Rate Increase

mobile home university
1

Purchasing a park where lot rents are far below surrounding comps by as much as 60% to 100% below. The tenants have not had a rate increase in many years. I plan to raise rents once I purchase the park. This is an all age park and all homes are owned by the tenants. There are no rent controls in this state/city and state has very good landlord laws. My questions are:

  • How soon after purchase would you recommend the rate increase?

  • How much notice would be sufficient before increase goes into effect?

  • Would you increase rate to lowest nearby comp all at once which is about a 60% increase (about $50 more per month), or some smaller % and keep increasing in increments until the lot rents reach market value?

2

I don’t know your specific park or market, but I’d do the rent increase in either one $50 jump up front, or in two $25 jumps (one now, and one in a year). You need to consult with your state MHA on the required advance notice to increase rents in your state – but it’s normally around 60 days. I would do the first increase immediately, as most people expect a rent increase upon change of ownership.