You can be nice in ways that don’t take $$$ out of your pocket & lower the value of your MHP (which is based on income). Tenants expect changes w/new ownership. Tell them you’ll be installing sub-meters, but to ease the transition you are giving the 1st so-many gallons FREE. Do other nice-guy smart things like planting trees, cleaning up, attending to repairs, safety inspections (including new smoke alarms & fire extinguishers for all).
While you’re making changes, if there are dumpsters, you are going to want to change the tenants over to individual trash p/up.
If you have several changes, I’d fully inform tenants of your plan immediately, while they are expecting changes, but then phase them in. I paid the 1st 3 months of trash service for the tenants as an incentive for them to sign up w/GDS. You could also inform tenants that because of their increased expenses, you are either going to: (1) not increase rent for X months, or (2) not increase rent as much as you had planned. Be sure to institute your new Rules on Day #1.
No matter what you do or don’t do, tenants w/ gripe among themselves & to you. That’s their job. However, as soon as you spot the troublemakers (& there w/be some, though not all w/be easily identifiable), make an example of them & get them O-U-T immediately. This is Ryan’s New-Sheriff-in-Town approach, & I like it.
I’ve been investing in SFR for about 8 years. I’m looking into my first MHP deal. Not really sure if this deal pencils out, but here are the numbers.
79 space park. Asking price is $1M. Lot rent is currently $290/pad. It’s located in a fairly urban area. Plenty of employment base in the area. I’ve normalized the expense statement to about $106,000/year. Currently, there are 29 empty spaces with the opportunity to move MH’s in and sell Lonnie style on these lots. So, there seems to be upside there. Also, the owner currently pays the water bill. I thought about lowering the lot rent to $270/pad and installing individual meters. This should increase cash-flow by about $20/pad/month.
Overall, the park is not as nice as a neighboring park down the street, but I wouldn’t consider a fixer-upper either.
Without knowing more details the numbers don’t look to bad to me, just make sure your due diligence is done correctly!
As for changing things, we just removed the dumpster from one of our parks and everyone is happy as can be that it’s gone… Why?
We explained that the cost of keeping the dumpster was going to have to be passed on to the tenants now that the rehabs are finished and it just didn’t make sense as we were going to have to raise rents by $25-35 to cover the cost (and our markup) and they could get regular residential service for $12 or haul it off themselves for free. Only one person really said anything derogatory and when I asked if he would rather me have to raise his and his mothers rent by $35 each or pay $12 for one trash can they could share he was happy as a clam.
It’s all about how you explain things… With the water I agree that rents shouldn’t go down and I’d explain it as the higher than anticipated water usage is going to force us to raise everyone’s rents by X or we could install meters so that everyone pays only their fair share. You will likely have a couple of the larger families get upset about it but I think a gift like new universal toilet flappers and a couple low flow shower heads will calm most folks. These two items cost us around $20 per unit and took the average water bill one of our 8 unit parks from 250ish to 125 per month adding $125 to our bottom line each month. Figure that at a 10 CAP and the equity gain from the reduction in expense added roughly 15k to the parks value, not bad for a $160 investment IMHO. Wonder what it could do with 79 pads…
Just to ease the pain of the tenants incurring the water bill. Maybe that would be too nice of me. I figure as long as it’s a net gain to me, I don’t really mind too much.