I am trying to decide on the percentage of credit to give for the trailer rental portion. I thinking of somewhere between 50 to 75%. I dont want to give it away but I do want to give a good incentive for the resident. Also I have seen that the repairs over $100 are added to the sales price?
Correct, major repairs are handled by the landlord, and are often, but not always, added to the sales price of the home. I had a used home that I had just purchased that turned out to have problematic plumbing. This was not discovered until after the tenant moved-in, so I felt I should make it right and re-piped the entire house at no cost. You’ll find your own comfort zone with what is the right way to treat people.I also give 100% value for all payments toward the purchase price of the home. Same reason. It just feels like the right way to treat people.Good luck,-jl-
We use 50% of the home rental amount as the credit amount, not because we don’t love our tenants as much as Jefferson, but because we have to pay out the property tax, insurance, and R&M out of that rent, so we feel that 50% is a more fair number. But it’s a free country and you can pick any percentage of credit reward that you want. Discover gives a “cash back bonus” of 5% for customer retention, so we think that giving away 10 times that amount is adequate. But remember that Jefferson’s parks are in Oklahoma, and the customers have trouble with math there, so 100% is easier (editor’s note: we also own parks in Oklahoma, so I was really just trying to bother Jefferson. I used to make fun of Brad Simmon’s parks in Kentucky, but then we bought one there and I can’t do that anymore. As we enter more states, it’s taking all the fun out of the forum).
Has adopting the “rent credit” method eliminated your asking for a larger down payment (lease origination fee)? What about advertising? Especially as it pertains to markets with low churn rate.Home ownership mindset lends itself well to high retention, low churn. while i understand that the lease can be structured to have the same results for the customer, what are the key words and phrases to effectively communicate the concept?
There is no “down payment” as it is a straight lease. You can have a deposit like any other rental agreement – typically first and last month’s rent plus a security deposit. You advertise under “mobile homes for rent” in the classifieds.There is no difference in customers buying a home with a mortgage and renting a mobile home – both groups only care about the amount out of pocket they need day one, plus the monthly amount. What separates the two groups is commitment – but not the type that most people think of. The commitment needs to be to 'fight to keep a roof over their head". When you deal with people with lower incomes, you quickly realize that any minor setback (illness, car wreck, loss of job) will throw them into disaster immediately, and the survivors are the ones that run out and get a second job, borrow from relatives, etc. Even if a customer tells you they will live in that mobile home for a lifetime, it means nothing if they have no “fight” in them when bad times hit, and end up throwing their stuff in a pick-up truck and driving off in the middle of the night.We offer a credit rewards system, which helps in retention as a customer, but does nothing to keep them if they have no “fight” in them.
Since you are not asking for upfront cash (something to lose). What are some screening tips to eliminate those without “fight”.
Make sure they have a job (which eliminates the one with so little “fight” as to keep a job). Nothing else really matters. I’ve had some “fighters” with horrible credit scores and some “quitters” with perfect credit scores.
We sell $1,000 - $2,000 rent credits up front with each house. Then 100% of their monthly house rent payments go toward paying for the house. That is how you insure you have a tenant with ‘fight’ in them to keep a roof over their head.-jl-
It is allowed (not a disguised mortgage) to have a renter pay let’s say 3,000 towards a home when they move in and consider it to be a rent credit.
I am asking bc I have that situation now.
Can rent credits be paid in advance and accumulate towards price of the home.
No, I think that would still be a disguised mortgage. You can only do two things under SAFE 1) rent 2) sell for cash. What you are proposing does not fall under either category. But I’m no expert on this (I’m not sure anyone is) so I’d contact your state MHA and see what they think.
Lease origination fees come to mind as a possible item that could be used. Books on Equipment leasing seem to offer many interesting possibilities for structuring deals…but appealing to the customer who is interested in a paid - for MH in a park in a way that they are familiar/comfortable with is another matter. MHPs operating as horizontal apartment complexes seem to comply with law; but that model doesn’t suit operators or our core customer base. The challenge is something similar to MH industry banishing “trailer” or “mobile home” from their vocabulary and then not being able to promote their product because no one outside the industry recognizes what a “factory built home” is. Of course the real threat of having the force of our government being used against us if our transaction is viewed as a “disguised Mortgage” makes it necessary to play this idiotic game.