Do any of you charge additional space rent for homes that are being subrented. Writing new leases on park we just acquired and finding several homes being rented out for considerably more than space rent. As we raise space rents for everyone in the park we don’t want to be punitive to those who actually live in the park but think we should be getting more for homes being used as rental income for the home owners.
No. I would not allow subletting. You dont want to allow people who you have not approved live at your park. If you condone subletting, you are asking for problems.
I also do not allow subletting. The quality of sublet tenant is usually very low and upkeep on the lot non existant.
As for charging a higher rent why would you do that. There is no relationship between the amount a individual pays to rent a home and how much to charge for lot rent. Charging a higher amount would be discrimination.
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The park doesn’t allow subrenting but as we took the park over we are finding some complicated situations. Untangling these is going to be a bit of a challenge based on the situation. Basically we have $400 spaces being subrented by trailer owners for $1000. Been going on for quite a while and as we took on the park we are starting to find these entanglements. High demand rental area. Sublet tenants are great and take care of the properties.
Have not had this issue in any of our other parks but this is a unique situation. Partner and I wondering how best to address with the pros and cons. There is no removing these homes or forcing the owners back in. One idea we bounced about was just placing a subrent surcharge on those who are profiting off the park. It was just something we kicked around over coffee… was curious if anyone had heard of before.
We are going to start gradually raising rents in the park overall to keep up with demand.
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I would propose that you have a problem but do not view it from my perspective as a great challange. As a new owner you have tenants in violation of the community rules. No subletting means no subletting.
In reality there is nothing complicated about inforcing park rules the complication arises more from a community owners unwillingnes to inforce rules.
If you view the situation strictly from a business perspective making decissions is extreamly simple.
Your first step is to determine the direction you want your community to take long term. Change your community rules allowing subletting or immediatly give notice you are inforcing the rules. If you inforce the rules those owners subletting will resist but ultimatly be forced to sell. I see no downside in that.
None of that has anything to do with lot rents.
Regarding lot rent I see your situation as a desire for you to profit from someone elses gains. Seemes on the surface as greed since owner occupied or sublet the operating costs to you are the same.
It would be similar to charging lot rent based on the value of a tenants home.
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I would raise the rents equally for everyone. You don’t want to get into an entanglement for unfair business practices. I am not a lawyer, but I could see someone taking issue with your proposed idea.
It sounds like your space rent is way too low. Great Job buying this park!!!
We have a park in a similar situation. We changed the park rules to disallow subletting, but a few spots were already doing so. We have been treating them like “grandfathered-in” spaces. I am unsure if that’s the best practice, but being in CA, things get sticky pretty quickly. There are only three spaces out of 68 doing it. One person is being evicted. Next year (2024), we will only have two to deal with.
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Thank you. Good insights.
Well said. We picked up two parks and a duplex both woefully under rent. Woefully. To the point on the duplex we are in a real pickle with making cosmetic repairs and new appliances vs. raising the rents to pay for them. Tenants want the lower rent but doesn’t do us any good on the LT value of the home.
There are also rumblings of additional rate oversight by our Washington legislature in 2024. We need to make some decisions quickly. Thank you SDGuy and Greg… you two have been around a long time and I always listen carefully to what you advise.
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Greg… we weren’t trying to be greedy we were just banging around ideas to figure out a plan. The thought was if they were surcharged maybe they would sell the trailer to the tenant. It is a very complicated situation with ESL throughout the entire park, old but well maintained homes, difficulty with communication, etc. We have a plan… will roll with what you and SD Guy advise.
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If they’re keeping things up, I wouldn’t non renew or charge extra. Just call them grandfathered and make it clear to the owners that the next time the home turns over it must be sold to an owner occupant.
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Sorry I did not mean to imply you were greedy simply that it may be viewed as such.
Keep in mind there is no one right solution and you will need to adjust to your particular situation, As SDGuy suggested in his case he is introducing new rules and can grandfather where as in your situation you have tenants in violation of existing rules and therefor are not in a position to do the same.
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Being in California, this wouldn’t work. California Civil Code states, A homeowner may not charge a renter or sublessee more than an amount necessary to cover the cost of space rent,
utilities, and scheduled loan payments on the mobilehome, if any.
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I’ve allowed a subletter in. Reason 1, I am faced with tenants who sell the the first person with money in their hand and this young guy is a licensed real estate agent trying to get into the real estate rental business and is a go getter and hard worker and so far his tenants have been good and the lot cleaned and mowed.
I sold him another fixer upper after the guys I hired bled me with mistakes and slow production and they were the best I could find. My subletter got more done in 2 weeks than these guys did in 2 months. It is a hard decision with an older home. The cost of demolition added to the fact I need a frost proof slab for a new home versus I can’t find any decent workers that want to rehap manufactured homes and to do it myself isn’t going to work.
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Hello! So glad you posted this. I must admit I fall into the unpopular category of allowing subletting of TOHs.
This is primarily geared toward the investor. Basically, they are looked at as professional operators looking to make a profit. As such, between that and the fact that this sublet arrangement increases our burden of management, we upcharge. Yes we do. It is not discrimination. We are providing a service and opportunity that frankly, most other residential management companies or landlords would not allow. With this, there is value and an associated cost.
Allowing subletting does not mean we lose control of our park. Nor does it mean we dont know who is in our park. We still require the investor to provide us all info on the occupant, and then they must go through our screening process and be approved. We charge for several aspects of this service, as there is work being done (which can be justified). Some examples of our fees are one-time processing fee, annual management fee, and other fees for non-compliance of our subletting rules.
It has been our experience that the investor 1) pays all fees fast. 2) Tends to problems faster than regular tenants (or they know they’ll be fined) and 3) just act more professionally generally speaking. (they never fight or argue with us)
The investor fully understands that many larger corporate-owned parks dont allow investors to rent out units, and are very happy we allow them to come in, run a rental business and make a little money.
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The logic does not make sense to me. In reality, the people that are renting your lots are not renting out the lots for considerably higher. They are simply charging home rent and the lot rent and naturally this should be considerably higher. They should be entitled to recoup their expense which is lot rent and to recoup more for renting out the house.
Other than being punitive to those who are renting out their homes, you have no justification to charge them more. The real question is do you want to sublet or not? If you want to sublet, then, do not punish those who you are allowing to do so.
Original post was a question to the group asking for opinion and guidance, Would encourage you to review the entire post.
I find your approach to subletting quite intriguing. Charging extra for this service sets your company apart, and it’s impressive to see investors following the rules and handling issues professionally.
Your openness to investors differentiates your community from more restrictive options, benefiting both your community and those looking to make some money.
It’s disappointing when a few cause problems leading to increased government involvement, highlighting the challenges in balancing community autonomy with external oversight.
Thanks for sharing your insights; it sheds light on the complexities of managing subletting arrangements.