David Seger’s advice - Posted by Tony-VA
Posted by Tony-VA on March 20, 2002 at 08:12:30:
Scott has a realized an often untapped approach. Typically Lonnie dealers have always steered clear of collecting rents, preferring to just let the park managers handle this. Many times this was because the park insisted that they do not allow subleasing. Oddly enough, Scott mentioned privately that this very park also did not allow subleasing at first but quickly found value in the way Scott delivered the options.
David Segers kindly corrected me several times in the past when I suggested people steer clear of this. David reminded me that in business, success often comes from “controlling the deal”.
Here is how my own experience has proven David correct.
I did typical Lonnie deals and let the parks collect rent. The parks knew that I had a solid track record of evicting tenants who did not pay me, and would work with the park on lot rent owed.
Well the parks began to fall down on their job, hoping that my buyer had stop paying me when they had stopped paying the park rent. The park would wait until 3 months had passed before letting me know that my buyer was behind. (Lot rents were $335 per month).
To say the least I was not a happy camper when the park felt it reasonable to ask me for $1,000. We had sit down conversations to try and eliminate their propensity for procrastination. It did little good.
Even when I would stop by or call several times per week, the park would not bring up the topic, even when I asked how my people were doing.
The park got a wake up call when we finally layed down our hand. We had one home that they again let get behind $1,000. The Buyer was current with us when they were finally served with court papers by the park. The park asked us to fork over the cash the Buyer was behind. (I argue that VA law reads contrary to this but let’s remember, we do offer to guarantee lot rents and this has provided a large number of referrals and deals).
When the park asked, we advised that they we would not be responsible for their failure to take action against Their Tenant in a timely manner. We had our money and profit already so we advised that they could either play the game fair, or we would simply release our lien on the home. They quickly negotiated.
The point of this long post is this. Controlling the deal by collecting rents may be a bit more paperwork each month but it is a great value to you and your park. You can take quick action to get bad tenant/buyers out and keep the parks happy (more deals).
I have seen the light David.
As an aside, the eviction process in VA is much easier to do when evicting for failure to pay lot rent, than it is to seek a Warrant in Detinue, then trying to evict (this does seem to vary by county however).
Courts and Sheriff Depts. are familiar with landlord/tenant disputes and evictions. They are not so familiar with Lonnie deal repossessions and this lack of experience can cause red tape and time delays.
Tony-VA
Ps. One last suggestion. If you take the “We Guarantee lot rents” approach, do so in a professional manner. Create a form that the park and you sign stating that you will guarantee lot rents only if the park notifies you within 10 days of the lot rent not being paid and that your company will ensure that this missed month is paid for. This is not unreasonable and provides both you and the park a clear understanding right from the start.