you will probably not be able to do any more business in that park. I’m not going to loose a good chance to do business with a good park manager for a few hundred bucks.
In addition, I ALWAYS guarantee site rent to the park if I carry the paper. If you have to repo the home, the park manager is going to expect you to pay the past due rent anyway… call it park manager mentality.
It’s just my way of doing business. When I personally guarantee the site rent and REQUIRE the tenant to pay it to me, I’m in total control of the entire deal. This also lets the manager know that I am worthy of his/her trust. I make the site rental a part of the contract and if they don’t pay, the tenant is in violation of one of the contract provisions… perhaps facing eviction.
Mobile Home park where I have one deal in wants me to start collecting the lot rent and paying it to them. It seems other Investors in this park are doing Lease Options, and others have failed to make the lot rent current when people moved out. I’ve told them that I do not Own the home and and am only the Lienholder and will show them a copy of the complete transaction. They don’t understand. This wouldn’t bother me except I have enough problems with these people thinking they are really renters, which I think this would compound it. I’m on very good terms with the Park Manager, she says this was handed down from the Owner, because of problems with other Investors. Anyway, my choices are as I see them…
Move the home…Not a chance!!!
Buy the park…have been asking if they will sell…No Response.
Deal with it…seems like my only option.
Start a seperate Corp as a finance company.
My questions?
Would they truly make a finance company do this, could they, legally?
Looks like you?ve already gotten good advice from all the others, so not much I can add. I?ve had several cases where I collected the lot rent and paid the park. Just a little more book-keeping, but not a problem. In fact, it could be more advantageous for you in some cases where your tenant is a slow payer.
I?ve known of some cases where the park manager was lenient and/or lazy and let the tenant fall several months behind. Then they expect the lien holder to pay the back rent when the tenant skips or the MH is repo?ed. Since the park manager has the leverage, you need to work close with them to avoid letting this happen. Maybe this is a good time to figure out how to profit from this.
Consider this idea…Tell the park you will prepay the next 12 months lot rent if they will give you a 10-15% discount. Suppose the rent is $200 ($2,400 year). If you could prepay 12 months at 15% discount ($360), you would pay $2,040 for the next 12 months rent and you?ve made 31% yield on a $$2,040 investment. If they give you a 10% discount, you make close to 20% yield. If your tenant is late, you collect late charges for an additional profit. So, like the saying goes…if you wind up with lemons, make lemonade.
Sorry for taking so long to get to your question, we?ve been out of town.
Re: Lonnie, Dirk, Dan, Doug and all doing MH deals… - Posted by Dan in Dallas
Posted by Dan in Dallas on April 13, 1999 at 20:15:49:
David,
I have been there. I asked a park manager if they would
expect the same thing from Greentree that they expect from me. It didn’t have a positive result in the outcome. Remember that the manager can be totally arbitrary in their dealings with you (if you want to continue dealing in the park).
In retrospect, I feel the same as David. I’m (you’re)
going to guarantee the rent anyway, so I would collect it myself next time.
As an aside David, it can get a lot better…I spent the day today riding my mower at my little MH park. I
know most people would just hire it done, but I found it rather serene.
Not really sure how I’m gonna play it yet. Will probably bone up on the state statutes. I may go for trying to get a discount, on the space rent with the right to sublease. I think that I will try talking directly to the Owner though and also drop another line about buying the park. The payor has been adding to this Mh and has built a bar into the kitchen wall, new tile floors, countertops, it’s incredible. If he ever moved I’d laugh on my way to the bank, was even considering trying to get him to go down and refinance until I saw how well my security was looking.
actually, I like collecting the site rent from the tenant; gives me more control over the deal.
It’s happened to me… a call from the park manager telling me that the home that Mr Smith “abandoned” last month has a past due balance of 4 months site rent and $1 per day late fee. This manager knows that I am the finance source and is looking for answers to yet another one of his/her problems.
When the tenant is getting their “ducks” in a row to leave you holding the bag, they somehow seem to forget to pay the site rent for the last few months. You are going to pay it anyway, so don’t be intemidated in the least when they ask you to pay directly.
In addition, why not make a few bucks in rent “spread” while you’re at it. $20 sounds fair to me. If you lease several sites, perhaps you can negotiate a 10-15% discount and make a few more bucks.
Hi Dave, I think the lease with right to sub lease sounds like the way to go. If the title is still in your name it is more like a rent to own situation than just being a lein holder. That being the situation it is not unreasonable for the park to expect payment from you. You certainly don’t want to blow a good thing. If you challenge them on this matter you will probably be the loser in the long run. They are holding all the cards.
Posted by Dirk Roach on April 12, 1999 at 21:53:21:
You know David, knowing you like I do, I know that have better things to do than be a park manager. I.E. Doing her job. But here is how I’m reading, and maybe I’m off base. But it seems to me that these folks want their space rent guaranteed. Which of course it is because we all know that you are the lien holder. However just because on paper it says you have to pay the rent, to them probably means that if YOU don’t then they’re going to have to take you to court and get a judge to say that you have to, and then wait for you pay (if you even do) because you don’t have wages or anything which they can go after. Big perceived mess.
If it were me I would use this situation as a negotiating tool. Sure why not have your buyers include the rent to you with their payment. Then you just cut a check to the park. At least you’ll know if they get behind. I don’t know the legalities of this though. David Seagers would probably have more insight.
But for taking time out of your schedule I would want certain concessions. Free space rent on future deals in that park, till you sell. Etc.
If you’re like me though, I set up every note due on the 15th, as opposed to the first. I don’t like my buyers getting hit all in one paycheck. Bad for moral. Then you would be out of pocket the space rent for 15 days, which I wouldn’t be thrilled about.
Anyhow bottom line, you sometimes gotta do what you gotta do. Me, I would at least make it a pleasurable experience to do that.
Dirk
Re: Lonnie, Dirk, Dan, Doug and all doing MH deals… - Posted by DougO(NM)
Posted by DougO(NM) on April 12, 1999 at 20:57:59:
First of all, I really like what Dan had to say. If it is important enough for you to keep good relations with this community and manager, then if they expect you as lienholder to collect the rent and pay them, then by all means you should be leasing that space with the right to sublet ! Offer to lease several !
I would also suggest that if you don’t already have one, get yourself a copy of the State Statutes as they pertain to Manufactured Home Communities. If you are going to be in the business you better know them cold. I’ve never heard of any lender being asked to do this. The only time a lender pays lot rent is when the home is repo’ed and they have to, if the market is soft most parks won’t charge the lender to keep it there ! If other so-called investors aren’t paying the park, then that’s their poor management ! I suspect that if they were to do their job properly, they would get paid no matter what. As long as you are professional and help that manager do their job both they and the owner should be happy to do business with you.
Doug
Re: Lonnie, Dirk, Dan, Doug and all doing MH deals… - Posted by Jerry Greer
Posted by Jerry Greer on April 12, 1999 at 20:11:59:
David, It is not likely that the Mh park can make the person financing the mh collect the lot rent. This you should check with your attorney. They certainly can’t do it here. However, Positive relations with this manager is obviously very important. I think if it were me I would try to get out of doing this by playing the card you are currently playing. ie, I am the lienholder. What you might do is ask the manager to check with her legal council and see if they can make you collect the lot rent.
As far as the owners you have in there, You and I know that if they are allready acting as if they are renters, nothing will change that. Hopefully, they will just move and you can start over. And of course make more money… Gotta love that.
I hope this helps.
Jerry Greer
You already know the importance of maintaining good relations with the manager. Why not ask them if you can lease the lot and sublease it to your buyer (at a higher price of course). Are your buyers going to move out if you raise the lot rent $25? I doubt it, but if they do, yippee! After all, you should get paid for doing the park manager’s job. Good luck.
