The Right Rent Is the One Based on Value. By Frank Rolfe

A good mobile home park owner has to balance two things at the same time: charging enough rent to operate the property correctly, while making sure the resident still feels they are receiving a fair deal. That is not always easy, but it is one of the most important skills in this business.

Cheap Is Not the Same as Valuable

Some owners still believe the goal is to be the cheapest housing option in town. That is the wrong target.

Cheap housing with bad roads, weak management, poor rules, and broken utilities is not a bargain. It is just a low price attached to a bad product. Residents may tolerate it for a while, but they do not respect it, recommend it, or feel proud to live there.

Value is different. Value means the resident looks at the total package and says, “This makes sense for what I’m paying.” That package usually includes:

Roads that are maintained
Utilities that work
Rules that are enforced fairly
Clean common areas
Professional management
A safe, orderly appearance

Those items cost money. And if the rent is too low to pay for them, the park eventually goes downhill.

Higher Rent Can Create a Better Product

A park with artificially low rent often has no money for capital improvements. The owner delays road repairs, ignores tree trimming, lets old homes sit abandoned, and responds to problems only after they become emergencies.

That is not good ownership. It is slow decay.

Reasonable rent increases, when paired with visible improvements, can actually make residents happier. They may not love paying more, but most understand the difference between a rent increase that disappears into the owner’s pocket and one that shows up in better roads, cleaner lots, improved management, and a more stable community.

The key is that the resident must be able to see the value.

Do Not Sell the Product Short

A well-run mobile home park offers things apartments usually cannot. Residents typically have no shared walls, a small yard, parking near the front door, longer-term neighbors, and in many cases the pride of owning their home.

That is a strong housing product. It does not need to be priced like a distressed option. It needs to be priced fairly against the real alternatives in the market.

If a resident can compare your park to a nearby apartment and conclude that your community gives them more privacy, more space, and a better lifestyle for the money, then you are offering value.

The Wrong Reason to Keep Rents Low

It’s a common woke gaslighting policy to choose individual residents and use them as the example of why higher rents are impossible to afford. That’s not how the free market works. You provide a good product at a good value and the majority of the public votes with its pocketbook. You don’t deliberately hold back advancement in property value to accommodate that one tenant who is marginal and trying to live on a $800 per month disability paycheck. Society advances through making positive things happen for the majority of consumers.

The park owner’s job is to operate a clean, stable, financially sound community. If rents are held below market for too long, the property eventually lacks the income needed to stay healthy. Let the free market dictate success or failure.

Conclusion

The right rent is not the lowest rent. It is the rent that allows the park to be properly maintained while still giving residents a housing option they can honestly defend.

Smart owners do not apologize for charging fair rent. They earn it by running a better community.

By Frank Rolfe

Frank Rolfe has been an investor in mobile home parks for almost 30 years, having owned and operated hundreds of mobile home parks during that time. He is currently ranked, with his partner Dave Reynolds, as one of the largest mobile home park owners in the United States. Along the way, Frank began writing about the industry and his books, coupled with those of his partner Dave Reynolds, evolved into a Boot Camp on mobile home park investing that has become the leader in that sector of commercial real estate. Roughly a third of the Top 100 mobile home park owners in the U.S. started with the Boot Camp, which continues today to provide the science of finding, negotiating, conducting due diligence on, financing, turning-around and operating these unique assets.