Raising Rents Best Practice
I’m making an offer on a park that has under market rents currently. What are some best practices for increasing rents after taking ownership?
Make improvements to the community before you raise so they see you are making it a better place to live which is what they are paying for.
I agree with Mario. Making some improvements (especially those that are readily visible) really softens the blow of a rent increase. Also, the magnitude of the increase matters a lot. if you are talking about a less than $50 a month increase, you probably don't have anything to worry about - just move ahead. Additionally, check the rent roll closely to see if you have any investors that own units in the Park you are buying. If you do and they own more than one unit, expect to get some grief and possibly some major pushback. If an investor owns numerous units, you need to have a detailed conversation with them - don't just send them a rent increase notice. The only time I have ever had a problem with price increases is with investors that own the MH's and rent them out. I hope this helps.
I agree with the previous sentiment, with the exception of the commentary on investors. In one of my Parks, I've had the opposite experience- investors are actually more resilient to LR increases than the regular tenants.
In my opinion, it's the "lifer" tenants you inherit who typically complain the most about LR increases (and many other things!). Upon purchase several years ago, a decade-long tenant actually complained about us installing neighboring lighting - a community improvement. I guess sometimes you just can't please everyone!
Thanks everyone! Great info