Rent Increases

Hi everyone.

I bought a park where the lot rent of $250 had not been increased in probably 10 years. Its in a weak economic area, and most of the competition is following suit…scared of tenants possibly leaving. But the way I see it, it’s very unlikely that any lot rent paying tenant is going to leave, even if I raise the rent substantially. I would like to see it at $350, but am wondering if thats just too big a jump at one time. Would I be better off upping it say $65 or so now and wait a year or two to get it to $350 or just do it all at once

Your opinion and experience is greatly appreciated.

loaded question… while you might be right everyone would not exit right off the bat- other owners might target you to draw tenants away. I have a park in a part of Indiana where space rents are $360.00 in other parks. I still need about 10 homes- so I keep my space rent at $250. Guess what- about every 3 months I get someone wanting to move a home in. I pay for the move, and they save $100/month on space rent. Last home came in about 3 months back, I am reviewing a doublewide that wants to move in right now…

Let me say for the record- I do NOT like being the most expensive park in the area. High space rents make your homes a target for people to move them out, and it also drives the price of the homes down, making it even easier for them to be pulled out. I would sit tight, trim the fat in the expenses and just cash checks…

Frank & Dave say lot rents can go to 1/2 of what an average 2BR apartment rents for. However, my experience (in Oklahoma - your mileage may vary) is that lot rents go to about 1/3 of what an average 2BR apartment rents for.

So what does an average 2BR go for in your neck of the woods? If it’s $500, I’d say you can’t sustainably take your rents to anywhere near $350/month. But if the 2BRs are renting for $900, I’d say you can go to $350 (but still might break up the rent increase into two $50/month increases - one now, one in a year).

My 2 cents worth,