How To Raise Rents In Mobile Home Parks And Not Lose One Customer

Many landlords are terrified to even think about raising rents on their single-family home, apartment complex, retail center, and self-storage investments. In an economy like this, how can anyone even think about raising rents? Won't everyone just move out?

Well, there is one type of property that allows you to raise your rents annually like clockwork in recessions and depressions. And that type of property is the old-fashioned mobile home park.

So why can mobile home park owners keep raising rents when nobody else can?

The tenants can't move out without paying a $3,000 fee.

That's what it costs to move a mobile home - about $3,000. And how many mobile home owners do you suppose that can afford to spend $3,000 cash - or would even consider using their money for that purpose? You're right, the answer is zero.

Mobile home parks are the only form of real estate that has their customers trapped - they have to go along with whatever you do or pay a huge penalty.

The industry norm is raising rents annually - so they can't find another park cheaper.

There's no incentive to complain or move if there is not another park that is cheaper to move to. And that's how it is in the park industry. Most owners are also constantly raising their rents, so there is no place to move, even if they wanted to spend the $3,000.

Some park owners actually send out competitive information on the other parks in their market when they raise the rent, just to hammer the point home.

The tenants can easily afford it.

A $20 per month rent increase is hardly creating a hardship for most tenants. Since mobile home parks are all about affordable housing, we're not talking $100+ monthly increases like expensive apartment complexes and condominiums - or even some single-family homes. Most park owners raise their rents 5% to 10% per year which, based on an average lot rent of $200, is $10 to $20 per month.

Most anybody can spare $20.

Most leases are month-to-month.

Almost all mobile home park leases in the U.S. are month-to-month. As a result, you can raise the rent anytime you like. While most owners hold it down to once per year, the important factor is that you are not locked into long-term leases. This gives the park owner much greater freedom to set the rents whenever he wants to.

Conclusion

Things may be bleak in all other forms of commercial real estate - but not mobile home parks. Mobile home park rents just keep going up, as does their net income, despite the current U.S. depression.

With returns of 10% to 20% the norm in most mobile home park investments, and that yield going up every year, shouldn't you look into mobile home park ownership?