Raise lot rent or back bill utilities?

[Brandon Tarby]

Buying a MHP where lot rents are a decent amount under market value, around $100-200 under. The owner also pays water/sewer. I don’t want to go in spike the tenants monthly payments right away but something needs to be done. Should I raise rents and still pay utilities? Or back bill utilities and keep rents the same for now?

[Andrew Keel]

Quote from @Brandon Tarby:

Buying a MHP where lot rents are a decent amount under market value, around $100-200 under. The owner also pays water/sewer. I don’t want to go in spike the tenants monthly payments right away but something needs to be done. Should I raise rents and still pay utilities? Or back bill utilities and keep rents the same for now?

Hi Brandon,

I recommend adding Metron-Farnier submeters asap and billing back utilities as quickly as possible. This should drop the total consumption by around 30% right away because now it’s being tracked. Make sure to hire a plumber to insulate and heat tape the submeters really well if this park is up north where it gets cold.

I recommend waiting then to increase rents until around month 3 after you've invested some CapEx dollars into the park through road improvements, tree trimming, new signage/fencing etc. This does wonders for morale and residents in our communities have been more willing to pay the increase after seeing our improvements.

Best of luck to you and congrats on the value add park - it sounds like a good one with rents so low. Feel free to reach out if you have any questions.

Good luck,
Andrew Keel