A guy saw I have some homes for sale in my park. He would like to buy a couple and rent them out. I proposed buy a home elsewhere, move it into the park and buy one already in the park.
Homes in the park rent for $700 including $265 lot rent, so $435 for the home.
He has some apartment and single family rentals and would find the tenants. I would have approval.
What do you think of this?
How would you structure it?
If the tenant sublets from investor, then we have problems enforcing park rules and evicting - been there when a tenant subletted without telling us against rules.
Tenant pays investor for home rent and park for lot rent?
Investor pays park, but write up agreement so tenant is resident.
Park collects from tenant and pays investor? tax issues?
He is leary of seller financing to a tenant.
Should the park get a percentage of The $435 for the giving the opportunity and keeping an eye on the property? If so, how much?
I have three homes for sale and several vacant lots so I would like some investors to get some homes in and some vacant homes rented.
I had such an arrangement with mixed results. Basically I collected the tenants rent and then sent the MH owner his lot rent. We charged him a fee and we rented and maintained his units. He paid all the maintenence bills.
We no longer have this arrangement as he owner sold his units.
I have a similar situation in my park. Investor with sublet.
I first screen the investor and then screen any individuals they wish to sublet the home to. I have a very strict screening policy insuring only qualified individuals are permitted to sublet and I have a sublet signed agreement with the investor including all of their responsibilities.
My lease is strictly with the investor and hold him 100% responsible for the actions of the sublet.
This insures the investor lives up to my standards. Sublet pays investor and the investor pays me the lot rent.
I find this system works best as it places the full responsibility on the investor to insure the sublet is living up to the park rules otherwise the investor receives a eviction notice. This system discourages irresponsible investors from thinking they are investing in a “trailer park” and protects me from having to deal directly with the sublet tenant. The investor is responsible for evicting their own tenant not me.
I have found from experience that if I do not thoroughly screen both investor and sublet that in most cases a sublet tenant in a mobile home community is the lowest caliber of tenant imaginable.
Greg, just the kind of insight I am looking for. Any chance you could send a sample of your detailed agreement? Do you have the resident sign anything?
Greg, just the kind of insight I am looking for. Any chance you could send a sample of your detailed agreement? Do you have the resident sign anything?
I can’t find a copy of my agreement. Lost a load of forms in a hard drive crash.
My “detailed” agreement simply states (identifies): Agreement between park owner (name) hereby referred to as landlord and tenant (name) hereby referred to as tenant. Identifies property address and lot number, etc.
It states that the the home owner is legally responsible for the actions of all sub tenant and that the owner is responsible for insuring that the sub tenant will adhere to and follow all park rules.
All adult subtenants must agree to provide all necessary information required to permit the park owner to perform a credit and back ground search. Sub tenants must meet requirements of park owner before being permitted to sublet.
Permission to sublease in no way releases home owner (tenant) from any obligations, responsibilities, or duties as set forth in homeowners lease agreement.
Any action on my part as the park owner in regards to his tenants actions will be taken against the home owner. Further states Home owner will be responsible for all lot rent and fees to be paid directly to park owner by home owner.
The home owner signs a separate lease agreement with me for the lot rental.
I also have the sub tenant signing a letter of understanding that they are also responsible for following all park rules and are in fact tenants of the home owner.
I have had one experience with this. Terrible deal for all parties concerned. Investor was mad at me. Renter was mad at investor. My partner was mad at everyone. A detailed contract couldn’t have hurt however I hope to not do it again.
This is a very difficult issue, as it works differently in different parks and different parts of the U.S. We have this type of arrangement in our parks in the northern Great Plains and Midwest, and it works fine all day long, as the customers drive Hondas and pay their bills like clockwork. Would it work well in Louisiana? Probably not. In more hardscrabble areas, the quality of the tenant gets pretty bad, and virtually nothing works. Bear in mind that you will always get a lower quality tenant as a renter, as opposed to a buyer. So if you are already starting off with buyers who have five teeth and a banjo on each knee, then how can you expect that things will work one notch down? However, if your tenants who are buying the home drive decent cars, and have attractive yards, then one notch down still works fine.
We only do this in our small park in Nebraska and it works just fine. However, I agree with Frank - it depends on location and circumstances. My approach is - give it a try and if it doesn’t work stop doing it.
We have two people who do this. The previous owner of one of our communities - and he’s a good manager. We tell him we MUST approve them - and he still sneaks them in - we immediately evict - no questions asked. He is almost broke of that habit now. He pays whether it is full or empty - he pays lot rent.
The other guy is a real guy - in fact he is a dealer. He buys some repos, he buys some new homes and brings them in - GREAT relationship.
We show, we approve them, We manage the money for him. We usually keep the down - unless it is a big down on a new home $3500-7000 - I just give that all to him — I am grateful for the new home and keep it sweet for him.
On the older m/m homes, we show, we approve, do all the paperwork, they send two checks to us, we log it and forward it on. That way he doesn’t need to do a thing.
If it goes non-performing, he pays nothing and we just remarket it. We’ve been lucky though - people like those new homes.
We have had a couple of homes get bought in our community and sub-let. We are in Oklahoma, and it seems to have worked out ‘fine’ - e.g. sub-tenants are no worse than the ones we rent to directly. We insist everyone fill out an application and be approved, and we do evict immediately if/when we become aware of an illegal sub-lettor.
We have also worked with one outside professional investor who has purchased a few of our very best homes with tenants already in them that we have a long-term relationship with (one is a RTO about 1/2 way through to owning her home, and another is a long-term senior couple that rent and have never missed a payment.) We fully service the house - all collecting/depositing of rent, all maintenance (our investor pays for the work scheduled), etc. It is a turnkey investment for our investors; we manage everything as if were still our house, and just send them the checks, and occasional bills.
And we are looking for more investors! ; ) We could put to use $400,000 over the next 8 months.