I’m about to close on a park here in Minnesota. One part of my business plan is to bill back for water, sewer, and trash. This will give me some headroom to make some much needed investment into the park and allow me to run a sustainable business for the long haul. I need to give 60 days notice to the residents of any increases including a utility bill back just trying to time out when this communication will occur.
When have operators typically communicated the news of the billbacks (or lot rent increases) post close?
I am debating sharing the news on utility billbacks in my ‘new ownership’ letter but maybe that is considered too soon. Thoughts?
I usually steer away from any sort of increase in the initial communication. Better to take a few months and build trust. I’d wait a month, get collections streamlined, then put out another communication outlining when/why/how you’ll be installing meters and billing. Build in a month or two where you give folks their consumption and offer to help the heavy users: you don’t want to hit the 90 year old in lot 5 with a $500 bill if they’ve got a running toilet.
I had a company that was bought out by a large corporation. The first thing they did was notify all their new employees by letter of all the changes they would make. The changes included bringing in their people, replacing current staff. New policies and procedure’s. Changes in pay structure, etc. No one knew the new owners and it caused a lot of stress in the company. We lost several good employees before they actually took over. Due to loosing these key personnel and they replacement of others the company floundered and 3 years later it shut down. I understand we may be talking about apples and oranges here if there are similarities. Your residents will be expecting you to raise rates. They aren’t stupid. But, I would suggest you let them know you first. Don’t make drastic changes for a few months. Myself, I would have a “meet and greet”. I would even have a free cook-out for the tenants. Hot dogs are still pretty cheap. Gives you a friendly atmosphere where you can explain your vision for the new property. A friendly face goes a long way. Just take a pen and paper with you. They will tell you everything that is wrong in the property. Just a thought.
@MinnesotaGuy timely post!
We too are closing on an MHP in the next 45 days and will be looking at doing the same thing. Present owner is “giving away the castle” in our opinion, as their LR includes everything! Landlord pays trash, water, sewer, and even cuts grass on ea lot - crazy! This model was prevalent maybe in the 1980s and 90s, but certainly not today. We are totally good with providing value to the tenant, but it is not business savvy whatsoever to provide an “all-inclusive” experience. After all, LR rates are just about at market (its not like they’re charging market-plus rent rates)
To answer your question: maybe in your “new ownership letter” state that global changes are coming. You could even hint at utilities responsibility will see some changes (use the term “responsibility” as opposed to “bill, cost, payment, or expense”). Just my thoughts.
Our plan is to wait at least 1 month before changing anything. Then, we will begin with both water bill-back and landscaping. The water bill-back will take some time to get to full completion (probably 6-9 months at most). We have metering, but maybe to soften the blow, we’ll offer a “straight rate” (which will be less than any minimum water bill) for the first 2 months. Any thoughts on this straight bill approach, with it not being the actual bill on the meter?
The water and landscaping bill-backs alone should return a minimum to us of $55 per lot. This will supercharge our cashflow on the 3-month pro-forma.
The straight rate could be fine as long as each resident is informed what their actual usage and bill would be. We sent out a one-month bill first to get everyone calibrated and now we bill quarterly. Many people fixed leaks, some of which were quite significant. Along the way, we discovered a leak in the main and after that, we put a meter on the main coming into the park.
I am interested in understanding the legal ramifications associated with the transition of utility payment responsibilities between landlords and tenants, particularly as stipulated in the Revised Code of Washington (RCW). Specifically, there is a provision within the RCW addressing situations wherein tenants assume accountability for payments previously covered by landlords, such as water, sewage, and garbage. As I contemplate the prospect of shifting these obligations to residents, it is imperative to meticulously examine the implications within the framework of pertinent legislation. While adjusting rent upwards subsequently might be feasible, I am particularly concerned about the initial transition process. Therefore, I seek guidance on the procedural intricacies of effecting this transition while ensuring compliance with statutory mandates and fostering equitable arrangements for all parties involved.