Hello,
I’m looking for insights into the methodology, do’s and don’ts on getting tenant-owned homes up to standard.
Common issue…A couple communities I took over have a large amount of residents who just won’t get their homes into compliance. Annual inspections in past were weakly enforced and when it comes to repairs, many are non-responsive, flat-out refuse, or endless promises or excuses.
They all pay their rent, but one of our park’s has 50% occupancy. Across the road I have a park one lot short of 100% occupancy. It’s a nice area, just a few exits outside the major urban area, good schools, etc…The demand is there - We’ve added 30-40 residents a year to our other nearby parks for the past few years…but the half empty park has a lot of homes that with a small amount of work (generally painted roofs, steps, some skirting repairs) could look pretty nice. Not A+, but no longer contributing to a run-down look, which we get feedback that this is why people look to our other parks first.
I’ve read on here that owners sometimes complete the repairs to home exteriors and bill back the residents in installments. I do this for yard work, such as pulling out overgrown bushes, but haven’t approached homes this way since they are tenant owned.
I’m in no hurry to send to threaten 60+ residents with eviction…but with 120 sites to fill, I want these ones fixed up soon so my new residents keep a high standard from the start.
My initial thought after reading some things on here, was, if legal, to give out notice that due to incomplete repairs and/or lack of communication of a plan to complete, the park management will be completing repairs at their expense and if they wanted to avoid the bill they needed to get right on the repairs.
So - thanks for tolerating the long read…
Do I need them to give authorization to do exterior work, or do you just give them notice? I assume authorization is needed.
Do you ever make giving authorization a condition to avoid eviction process?
Any opportunity to have a fine/fee structure for homes out of compliance added to rent?
This is my template:
-Fix up all community items as best I can to set a good example and change the expectations of the community
-Send a friendly letter to all residents that need to fix up their home giving them a timeline and offering contracting and financial assistance if needed
-Send follow up letters with fines to all homes in non compliance, with an offer to waive the fine if a plan is implemented in the next 7 days.
-With the remaining holdouts, send more fines, and then eventually a lease cancellation.
Most people probably aren’t fixing their home because they feel like its a waste in a community with no pride of ownership. The remaining residents just don’t care and never will, and need to go.
Thanks Noel. That’s similar to my thoughts. I had discussed the concept of fines for non-compliance with a representative at the MHI, who didn’t seem to think you could fine people. It’s something I was going to research further with legal counsel.
Hello again Noel, @Noel_S
What dollar amount of fines have you found to be sufficient to motivate most of your residents? My goal isn’t really to generate revenue but to change culture. I know under prior management, simple things like lawnmowing was such a small charge that a lot of residents just let their grass grow because it was too easy to wait a month for the community to come by and charge them 20 bucks than it was to mow weekly or hire someone themselves.
I’ve addressed the property issues such as lawns already (have my staff do it, charge enough to make it painful), but my initial thought for the actual homes, is something like $100/month for home issues such as skirting, broken windows, etc…knowing I can always escalate to eviction later.
Dealing with exactly this issue. I have to fix some things like non existing skirting, block level tie, and paint or steps. Expensive for many homes. I’ve been unsuccessful billing back tenants, as they do not absorb the cost well. Maybe it’s because this park is top of market. The solution doesn’t work for all cases. As Noel explains some tenants will never do it and never change. Some will. I’ve had that happen as well.
I fixed all community areas first, now working on the homes. What I’m doing instead is doing the repairs free of charge for residents and I will then raise the rents 30-50 for the community as a whole. This will be an immediate upside for a refinance and I don’t have to wait for my money back from residents who can default. The bank always pays.
If you Bill back tenants it becomes more difficult to justify a large rent increase.
Another option I’ve considered - My rents were about 85 dollars under the market average, but I had a lot of spots to fill - so rather than jack up rates for longstanding residents during the pandemic, I raised rates for all new/incoming residents and planned to do a more modest catchup schedule for current residents over the next 3-5 years. Maybe I was too compassionate.
I’m considering that I basically say - "you’re rent is discounted from what I’m currently charging. Fix these issues or you’ll lose your discounted rate. Pretty certain I can refill with higher paying customers, but I at least wanted to give people a chance.
No, you don’t want to threaten tenants. You’ll end up on the news or local newspapers or get sued. Very bad idea.
I see the approach of raising to current market to new tenants as smart, but you should have also raised rent on other tenants as well. Mistake there.
What you need to do now is make good improvements and make a larger increase to current residents. 50 or so. More than 50 and you may scare them off, but again, if a tenant walks away from the home or gets evicted and you fill it with a new tenant at market, you may still come out ahead in a refinance. It really depends on condition of the home. If old, maybe not worth. If newer, maybe yes.
Bottom line increasing rents is the best and easiest way to cash out in this business. Don’t mess it up!