I am in the process of converting to an RTO Program much like Frank n Dave’s instead of selling MH’s and caring the note. I recently had someone call me that only wants a short-term six-month rental with only first and last months down. Ideally I am not looking for short-term rentals and a little leery of someone only looking for six months. Am I overlooking an opportunity to get a butt in a seat even if for the short-term or should I hold out for someone at least planning to stay longer than that?
Many thanks for your feedback - Tim King
Take the 6- month deal. It gets the revenue going and you never know, it might end up being more than 6 months. What’s to say that you’re multi-year tenant in the bush won’t run off after 6 months anyway. At least the guy has a plan, which means he may be more responsible on paying and behaving.
Definitely take the guy. I’ve even offered to take people for 3 months with a larger security deposit and/or a $100/month premium over the regular rental rate, which is already $100/month more than my RTO rate.
I believe your decision should be based on a concrete business plan. Getting a short term tenant may be fine if you are financial strapped but could interfere with a yet unknown RTO tenant that may show in the near future.
If you have the flexibility either way then chose as you please but keep in mind the more short term tenants you deal with the higher the chance of tenant problems.
Ask yourself why they want a short lease, are they being evicted, are they buying a home, or are they running a con hoping to move in pay first and last and no more.
Screen them the same as you would any applicant.
I would take into consideration the condition of the home. If it is all shiny and new, I would not do it – it would cost too much to put it back into that condition if the guy treats it like a rented mule. In apartments, I’ve had to replace carpet that was only a few months old.
I am still learning the ropes of this business, but I can tell you the big problem with the low income apartments business, is the make ready costs; you think you are making money only to discover some crew moved out in the middle of the night leaving you with a disaster that will wipe out months of profits.
What I have my eye on in the MHP business is all the old 70’s homes in my parks. It seems that at some point they will be dropped in my lap where I have to pay to have them disposed of and then a big capital infusion for a replacement home just to get back to where I was. That capital infusion could wipe of many months of savings. I am hoping they will be staggered enough so as not to be a huge problem but, as I say, I am still learning the ropes.
I would not worry about the 1970’s homes, as those normally mirror modern room size and floor plans (particularly the later 1970’s product). The homes from the 1960’s, although well built, have unappealing room sizes, layouts and bathrooms, and those may become more hard to sell in the years ahead. However, if your park is geared towards affordable housing – which all of ours are – we are selling basic “shelter” and we can sell out of anything we have that has a roof over it. If you look at the titles on the 1960s and 1970s homes, and compare them to the modern homes, you’ll notice that they weight more. The older homes, in my opinion, were built more strongly and actually have a longer life. But as we all know, if they are maintained, they have no end date on useful life, just like a stick-built home.
If I were you, I would wait for someone to apply for the long-term rent. Long-term tenants are more reliable, and the general rule is following: the shorter the term, the more risks you get. Moreover, it is easier to find a long-term tenant on websites like Rentbery, that work only with long-term rental.