Increase the value of your mobile home park
Before you decide to sell your manufactured home community/mobile home park, there are several ways to increase the value of your investment and, in doing so, increase the value of the park and make it more salable. Here is a list of 10 potential ways to increase the value of your mobile home park.
1. Increase rents: A rent increase of $10 per month at an appraisal using a 10% capitalization rate can increase the value per lot by $1,200.
2. Water, Sewer and Garbage Submeter – By installing water meters at each mobile home and billing residents for water, sewer and garbage, you are actually increasing your bottom line. I often think this is one of the most equitable ways to pass costs on to residents, as they only pay for what they use. In my experience, when meters have been installed, your main water and sewer bill is reduced by 30-40% as your residents become more aware of the amount of water going through their faucets. Leaky faucets are fixed, toilets no longer run continuously, cars are not washed every day, etc.
3. Enforce Rules and Leasing Agreements – By enforcing reasonable rules and regulations, your mobile home community will be considered a safe and comfortable environment. Get rid of problematic tenants. If you’re worried about losing the rent to one or two problematic residents, consider that you may lose even more good residents and potential residents if you stick with the ones who are causing trouble and don’t obey the rules.
4. Reduce your property tax expenses: Contact a company that specializes in going for you with your county tax assessor to reduce your assessment and taxes. Many states and counties base the assessed value on the purchase price. However, most mobilehome parks must have a business value component that is not taxable as property tax. These companies often work for a reduced tax % and you only pay them if they are successful.
5. Reduce other ongoing expenses: Get multiple mobile home park insurance quotes, assess phone costs and extras, negotiate with plumbers and electricians for a lower hourly rate, etc.
6. Fill in vacant mobile home lots: How much is a vacant lot worth? In many cases, a vacant lot is actually costing you money to keep the grass cut, the lot clean, etc. If your lot rent is $200 per month and is based on a simple formula that a mobile home lot is worth 60 times the monthly rent, then an occupied lot is worth $12,000. Would it make financial sense to spend $2,000 to cover moving costs for a prospective resident? I think so. Other incentives I’ve used include free or reduced rent for the first year or two, free installation of new baseboards, free steps and decking, and the list goes on. Get creative and stay ahead of your competitors. It is much more effective to come up with 50 ways to market to one customer rather than one way to market to 50 customers.
7. Buy manufactured homes for Resale or Rental. Buying used homes and placing them in your manufactured home community for resale or rental is another way to dramatically increase the value of your community. As mentioned above, each time you fill a vacant space, the value of your park increases. As a community owner, you have an advantage over most mobile home retailers in that you don’t need to make a profit on the sale of new and used homes. If you make a profit of $12,000 per space in equity every time you add a new home, you can sell the homes at breakeven and be well ahead.
8. Increase Curb Appeal – Encourage residents to clean up their yards and properties. Hold monthly cleaning days. Install attractive new signage at entrances. Repair roads and maintain adequate public lighting. Have monthly rent discount incentives for residents for things such as: Property of the Month, Most Improved Property, etc. Plus, offering your residents financing for things like new baseboards, paint, wainscoting, and other exterior improvements can also make your manufactured homes look better.
9. Add Additional Sources of Income – If you have vacant land, consider adding some mini-storage units or fencing it off and offering storage for additional RVs, boats, and cars. If you have highway frontage, consider putting up billboards or selling easements to billboard companies. Consider getting park-wide cable TV or Wi-Fi and by doing so your residents will get a discount on these costs and you should be able to benefit too.
10. Dedicate streets and public services to the city. Although not too common for established communities, if you can convince your city to make it happen, it will simply reduce your exposure to street repairs, utility repairs, and metering.