Investment firms can be a big resource for a park. Some dilapidated parks have been completely turned around after being acquired. The downside is that it can result in a higher rent increase. However, the result is more than worth it. You get a nicer, and better functioning park.
“Often, a lot of these parks have been mom and pop owned for decades or longer,” says Glenn. “They’re tired of the deal fatigue.” This has resulted in a decline in their upkeep. Or, it could be a lack of cash flow, which can impact bill payment scheduling. This is usually a result of losing tenets.
Rent Increases
For the past decade, the MHP industry has endured the tumultuous economic climate. Glenn says there’s been endless opportunity for investment firms to step in and churn out a successful park. “Once the park is renewed, and all the deferred maintenance is gone, you end up with a beautiful park.” This can cause a spike in rents, but ensures a stable, functional park. This increase allows for grounds upgrades, as well as an all around safer environment. It will also support increases in “tax revenues”.
On the other hand, the alternative is a less desirable, or possibly defunct park. While this generally generates negative attention for firms, Glenn contends against this notion. While firms and brokers may get a bad rap, oftentimes they help to save and repurpose parks headed for collapse. “At the end of the day, it’s best across the board to allow rents to come up to improve parks. This leads to more expansions, creating a softer supply demand curve with more supply.
Owning A Mobile Home Park
There are several different scenarios that can occur when acquiring a park. In some cases, new park owners may not address structural needs immediately. Couple this with a lack of effort towards getting their vacancies filled. Then when things fall apart, they spring rent increases on existing tenants to break even.
A more forward thinking owner would have “gotten some kind of expansion for their park. They would receive it before having to jam increases down the tenant’s throats. They’d fill up their vacant lots with homes. They buy a value add park, and prioritize adding value first.” If you plan properly, a calculated yearly investment can maximize your park’s returns.
Signs Of A Park In Need
There are a number of ways to identify a park that needs a lot of upkeep. The roads are a quick indication of this. If it’s unkempt and unstable, that’s an obvious sign of things to come. This can be a gateway into problems well beyond the ground. Failing to meet infrastructural needs can result in some big problems for a park.
The Mobile Home Park Expert
Contrary to some poor narratives, a partner in this industry can help you a great deal. Looking for a guiding hand in the mobile home park space? Contact us today! We’re happy to help you reach your MHP goals.
