I am closing on a 57 home park in 4 weeks. The rent has not increased in 7 years. Pad rent is way under market value. What is a reasonable increase without ruffling any feathers? I am thinking $10 per month. I was thinking for tenant who have been there for less than a year I will let it slide until their 12 month anniversary.I am also thinking to introduce myself and new property manager to every tenant. Would this be a good idea? Immediately after that leave the notice for rent increase… Thanks guys
What do other parks charge in your market, and do they include utilities? You should use this one time opportunity to bring your rents close to market but a bit below it. It is a good idea for you to identify yourself as the manager and not the owner so you can always state that you have to answer to a higher authority. All the best!!!
Thanks for replyI am having a hard time finding out what market rent is. There are several parks in town but I cannot find any listings online or contact numbers. Is going to the park physically and look for contact info posted or even ask a tenant for a contact number my only alternative?
Just drive though the park and start up a conversation with someone out walking, etc. tell them you are looking for a place for your mother and ask a few questions
The a good way to get a list of parks is to do a google maps search for your park and then hit “directions” and put in “nearby mobile home parks” then select after the “did you mean nearby mobile home parks” and you should get a listing of them with the distance from your park. Then google each one of them and you should get the phone number of each park. If that does not work, then call the city inspector and the town to see if they have contact info. You can also try mobile home and parts dealers and your state mobile home park commission as well. As Dean suggests, if you live nearby then you can visit each park and ask questions.BTW, when you get a park manager on the phone be sure to tell them that you are moving into the area and are interested in either bringing in a home or buying one from them. Then ask about the lot rent and if that includes utilities. Good luck!! Bob
Just for the sake of information- I have raised lot rents as much as $100 in one swipe to get close to the local comps. When we raise space rents in a big way- I am sure to include parts of the rent survey so the tenants know if they move- they will pay more. I will also include a mover or two they can call, along with the prices to move and set up… I am sure to state these are the least expensive movers we could find in the area.
I don’t understand your basis for stating that rents are way under market if you haven’t determined what the local competition charges. No increase since 2007 isn’t enough information. The lot fee = 1/3 of standard grade 3BR apartment rent might get you some idea, although “standard grade” is subjective.If you are significantly under market; say $50, you should raise rate by $50. As previously mentioned, this is your best ever opportunity to reset the rates.
Thanks for the feedback allSCS… I just feel pad rent for $150 per month in central Ohio that includes water, sewer and trash is WAY below market… Should be closer to $200…
Just found out that pad rent right around the corner about a mile away is going for $280 with exactly the same water sewage etc… Difference is their park is mostly tenant owned home where my park is about 1/3rd tenant owned. I feel safe raising the rents to at least $165…
Market rent $280, you want to charge $165. With 57 lots you are prepared to be charatable and give up $6555 per month in potential income. Not exactly my personal business management practice.
In my opinion you are missing an opportunity as a new owner to push the rents to a more realistic level. Feeling “safe” at $165 is not taking full advantage of your reason to be in business. Residents expect change with new management and will adjust. It is also an opportunity to weed out those that may have checkered rent payment history. I would push it much higher than $165 if the other parks are at $280.
If you are in business to make money you are starting off far too soft. Pull the band aid off quickly.
I would jack the rents to market within two years. $230 now and $280 next year if that level is warranted.
I agree with Greg. You can put in the notice that the amount is still significantly under the competition. That will soften the blow.
You don’t have to tell them what the competition charges…they already know. Many have friends in other parks so your tenants know they are getting a good deal. A strong increase right away is the way to do it. In fact, a rent increase is almost expected when new owners come in.
Remember, you are in this to make money from your investment, not be friends with the tenants.
I pushed rents in a park in Grapevine, in 60 days, from $100 to $275 per month. The letter I wrote showed the name, address and phone number of every park, as well as their rent (all of which were $325+/month). I did not lose one tenant. I agree with everyone regarding pushing the rent to market and not holding back. The last type of landlord you want to be like is Fred and Ethel Mertz from I Love Lucy – going on vacations with your tenants. You’re tenants don’t have to hate you (you should provide a good deal) but they should never like you (which you can only get if you have below-market rents or fail to evict).