Understand now you will sometimes have to operate with renters, instead of buyers, because it pays high returns. To say you might rent without maintaining shows me you haven’t read your local laws on how tenants will have certain rights and there are some things if you rent you must maintain, by law. So look at that first. And don’t be afraid of rentals, really they make your park worth more in the numbers, and the units can hang around for fifty years that are built post HUD, 1976. Again, there are two sides to every story. Many park operators are buying their tenants units and renting them back to the tenants now. There is no one way to decide now how to do it, you will do what you have to do to amortize the debt when you get your park. Get a park and you will get your own education soon!!! Good luck.
Challenge: Renters to Owner Occupants - Posted by Stephen in TX
Posted by Stephen in TX on February 28, 2008 at 15:53:24:
We’re looking at a nice clean 40 lot park. 28 of the units are rentals. There are 7 vacant MH that can be rehabed and sold on a note. We have experience doing Lonnie deals and we’re looking to get our own park. My concern is the change in culture from renters to owners. Ray Alcorn says it’s note realistic to think you can change a community from renters to owners.
Is it realistic to think we can turn these renters into owner occupants? And what are the challenges/obstacles? And how can they be overcome?
Stephen, I have 1 9+ year renter and 15 renters that have been here 5+ years, I would finance (most wouldn’t need financing) their sale any day they want to. They don’t want to, they are old and have all owned their homes before, they place a high value on my providing home maintenance. I wouldn’t haved purposed to do this, but it has worked out pretty well.In other situations, I would imagine renters would love to buy. Every situation deserves some investigation to determine the best plan. From what I picture in my mind about your Park, I would talk to each person and offer to sell them their residence, and when a tennant moved out offer it for sale. I would be cautious so as not to make the renters feel like they need to find a new place to move. Keep your cashflow.
Re: Challenge: Renters to Owner Occupants - Posted by Ed in Idaho
Posted by Ed in Idaho on February 29, 2008 at 09:50:15:
Not a pro, but have seen this attempted a couple of times in some towns I’ve lived in. First, some people will ALWAYS be renters. They could never get their act together to be an owner. Aside from that, companies have just offered to convert leases to notes for ownership to anyone who wanted to ‘BUY’ there home. Their payments would stay the same, they would be responsible for the homes maintenance now, could do pretty much what they wanted, and their payment would not be lost to rent.
Many believe that they would not ‘qualify’ to be able to buy, and you may not want to do that with everyone anyway, but if you could offer ownership to those people who you wanted to, without them jumping thru any more hoops, you might make it happen. At least for many of them.
Maybe someone could talk more about a lease to own, where they pay for so long, then own the home for $5 or whatever at the end of the term. I know it creates an actual sale in the eyes of the IRS and that more money may be paid at by you in the front, but this may be a great way for you to protect your interest in the places because if they failed to honor the agreement at any moment, you could simply revoke the offer and revert back to a rental situation.
Re: Challenge: Renters to Owner Occupants - Posted by Todd(AZ)
Posted by Todd(AZ) on February 28, 2008 at 18:36:00:
I have the same questions Stephen so I hope someone chimes in here. I, too, am looking to get my first park with plans to Lonnie the mobiles to current renters. Always wondered how difficult this will be to do because I will not keep them as rentals (unless with understanding I’m doing zero maintenance). I have some good ideas on how I would present this to current owners but it would be nice to hear from anyone who has actually done this while the renters are living in the mobile home prior to park changing ownership. Todd(AZ)