Investor · New Orleans, LA · Member since 2013 · 107 posts · 30 votes
I have a park under contract with fairly low lot rent for the area. Problem is the park does not make sense unless I raise the rents on the 26MH pads from $150 to $300. Not sure if anyone ever raised rents that much but just curious what others have done when it comes to day one owning the park.
Chicago, IL · Member since 2014 · 91 posts · 32 votes
5y
It depends on what the current market rate is for local lot rents and when was the last time it was raised. Many parks do x% every year, some do large increases only every 5 to 10 years. The residents typically know how their current lot rent compares to nearby parks and if you adjust to market-rate I doubt it would be a surprise. Also, keep in mind that if you are raising that to match nearby lot rent the community should be on par or better than the nearby communities.
San Antonio, TX · Member since 2009 · 3k+ posts · 1k+ votes
5y
@Shane Jeanfreau You'd have to figure out what the going rate for lot rent is with other parks in the area. Also, if you do raise lot rent you'll have to justify the cost to the residents living in the park.
In general, many residents are OK with lot rent being raised as long as the costs are justified and they can physically see where the money is going with the types of upgrades and improvements made to the park. Though, if they don't see anything being done and improvements are not made yet the lot rent gets raised with no sound justification then that's when they start having issues with the cost of lot rent going up.
Investor · Roanoke, VA · Member since 2012 · 1k+ posts · 374 votes
5y
if you are overpaying for the park then do not buy it if you have to raise lot rent that much, i see lots of buyers are way over paying for the parks in hopes they can raise the lot rents to much at one time, i would see what other apartments are renting for then compare amenities like pools, clubhouses, parks and things like that, from what i see just having a place to park your home should not justify charging the same as an apartment with lots of things to do and you will get tons of push back from the tenants good luck
Rental Property Investor · Pensacola, FL · Member since 2009 · 85 posts · 38 votes
5y
You have to know your local market and your state regulations (if any exist on rent changes). A few phone calls and trips to see the other MHPs in your area will tell you quickly what the market lot rent should be. If your park is way under the market rent of comparable MHPs, then let the tenants know in advance about the lot rent increase (60-90 days is fair I think) and then make the increase. I believe in the band aid approach over small increases that take a long time. Hopefully you'll be making some improvements to the park for the residents to feel better about the increase, but IMO it's not fair to you to take all the risk and expense of owning the asset AND keep your lot rents lower than market.