Converting POH to TOH - who is responsible for maintenance?

10 Replies

I'm aware of the advantages of having a park 100% or at least mostly tenant-owned homes.


However, during the process of converting park-owned homes over to tenant-owned homes (using some form of Rent Credit format), who is responsible for maintenance on the homes? I realize this might not be an absolute, but can anyone speak to what's most common?

Also, please feel free to chime in with any other advice/recommendations on the POH->TOH conversion process.

Thanks!

@Matt Williams If the residents own the home, they'll be responsible for the upkeep of the home itself (inside and outside). Though as the landowner, you'll be responsible for any infrastructure issues with the land like getting water to the home, sewage problems, electrical, etc. Hope that helps! 

@Matt Williams We sell ours via installment sale. Tenant owners pay a set price per month for a specified number of months (ex: $350/mo for 60 months, plus lot rent which is a separate contract). After that last payment we sign over the home to them. 

The tenant owner is responsible for all maintenance right from the beginning. 

@Matt Williams This stuff is kind of like the wild west. Anything goes as long as all parties agree. Obviously check the local laws etc to make sure you comply but otherwise be as creative as you want.

I have recently purchased a park which has 15 tenant owned homes and 10 park owned homes. Current rent for pad sites is $250 to $265.  Current rent for trailers is $700 per month.  We are going to increase that to $280 to $300 for pad sites. Can I get some advice/recommendation on this rent to own process? 

Be prepared to address the scenario when something big breaks that the resident cannot afford to repair.  Then what?

Under rent credit we will fix the issue and then capitalize the value of the home to (somewhat) recover it upon credit redemption.  I suspect there's an equivalent mechanism under installment sales.

Your mileage may vary.  Good luck.

Originally posted by @Jeffrey H. :

Be prepared to address the scenario when something big breaks that the resident cannot afford to repair.  Then what?

Under rent credit we will fix the issue and then capitalize the value of the home to (somewhat) recover it upon credit redemption.  I suspect there's an equivalent mechanism under installment sales.

Your mileage may vary.  Good luck.

 Can you expound on how an installment sale is different from rent credit?

In the context of this thread an installment sale is the owner financing of a mobile home in exchange for payments using the installment method.  They key difference between an installment sale and rent credit is that rent credit was designed to work around Dodd Frank, SAFE Act legislation.  With installment sales this is considered a mortgage on a dwelling, and so compliance with those is deemed necessary (see many other threads on the topic).  Rent credit is like renter's earning Southwest Airline miles that are redeemed as a means to purchase any available home in a MHP for a given number of credits (more or less equivalent to the home's value).

Has anyone explored giving away POH’s to residents for a small sum or even $0 as an alternative to rent credit or lease-to-own?  I appreciate that we would leave money on the table with this option but our goal is to have owners in our community.  We don’t want to be in the POH business.  Has anyone pursued this option?  Is the uptake strong?  Have you seen behavioral changes upon conversion to owners?  

@John Jacobus , over time we've offered to convert homes to RTO for about 15-20 residents. Despite the fact that it'd result in no increase in the monthly rate, less than half took the offer. I know it's market specific but I've heard that the acceptance rate is closer to 50% than 100%.