Tenant owned home attrition

[Craig Salzer]

I know this is a difficult question with no concrete answer... from the experienced park operators - when evaluating a property what type of attrition would you expect (should factor in) from tenant owned homes? 

[Frank Rolfe]

You should have little or no attrition of tenant owned homes -- but it's all based on your specific property and what you plan to do with it. Any smart owner enacts two laws following purchase: 1) no pay/no stay collections and 2) no play/no stay regarding the park rules. This will naturally cause some existing residents to leave based on how much difficulty they have in living within the guidelines of these two simply theories.

The next issue is what happens when you raise the rent to market levels. If you buy a park with $150 rents in a $400 market, you will displace some marginal residents as rents increase.

Finally, you will lose residents periodically because of death or some other major life event.

What's important is that you be in a position to re-fill these homes or lots as they go vacant. To do this you will need four things: 1) a strong test ad in due diligence to prove that the demand is there 2) a dealer's license and an agreement to participate in the 21st Morgage's CASH program 3) the capital to make the necessary renovations to sell the home and 4) the knowledge and the ability to advertise, show and sell homes.

There's no reason to fear the occasional loss of existing residents as long as you are prepared to replace them. It's just a part of life.