There are various expenses, including mobile home park management fees to consider as you invest in a park. Today we’re going to discuss the difference between mobile home park management fees and your monthly expenses.
We’ll uncover the differences between the two and what goes into each category.
As you work through the details of mobile home park investing, it’s smart to know what expenses might be like. This will help you calculate what to expect for a return on your investment.
Mobile home park investing requires a good understanding of the ins and outs of the trade, including fees.
Mobile home park management fees vs monthly expenses
Now let’s consider the mobile home park management fees and the monthly expenses. What makes them different and what are they like?
Mobile home park management fees
So, mobile home park management fees are the fees incurred by having someone else deal with the management of your park.
If you have got your hands on a real fixer-upper and you’re new to the trade, some folks like to hire someone else to deal with the management tasks. Having someone else take on repairs, secure tenants and collect pay can free you up.
It can be temporary or long-term. Your choice.
In many cases, a mobile home investor will only temporarily outsource mobile home park management. Later, the investor will take over those tasks completely. In other scenarios, it’s a long-term arrangement.
How the fees are calculated
Generally speaking, park management fees are a percentage of monthly rental income. In most cases, it’s 7 to 10% of the collected rent.
The expense is for the cost of:
- processing payments
- collecting rent payments
- dealing with late rent payments
- answering regular and emergency maintenance calls.
Mobile home park management is on call at all hours in the case of an emergency.
Additional management fees that may be incurred
Talk to your property manager and consult with them for a full picture of their services. Some will have additional fees incurred for different situations.
For example, if your property isn’t bringing income, they may charge a vacancy fee.
There may be a setup fee to get started with the business relationship so they can set up your account.
In some property management arrangements, the entirety of late fees paid by tenants could go into the management’s account. Other property managers will only take part and give you the rest. It varies from property manager to property manager.
The nuances of the agreement should be typed out by management and read by you prior to coming to a business agreement.
You don’t want any surprises!
Mobile home park monthly expenses
Now let’s discuss your mobile home park monthly expenses. These are different from management fees. By calculating your monthly expenses, you’ll know what you should charge for lot rent fees. If you are using a management company, then take into consideration the percentage that goes to the management company. That percentage along with these monthly expenses will help you determine how much you’re making from your park.
Here are some common monthly expenses:
- overhead costs (staff and/or management company)
- amenities such as cable TV, internet, phone, and utilities
- taxes (even if these are paid annually, it helps to divide the cost out monthly)
It’s important that you collect all the ballpark estimates on these expenses so that you can adequately crunch numbers. Also, take a look through old receipts to see if there are other expenses you pay monthly. You need to calculate whether a mobile home park investment will work for you rather than against you.
Another great tip
Mobile home park management fees can vary from property manager to property manager. Before you strike up a deal with the first manager who comes your way, weigh all your options. And be sure that your decision isn’t solely based on the price point. Ask about referrals so you can hear about their work ethic from others they’ve worked with.
Think for the present and future
At the end of the day, you need a mobile home park manager who will look out for your park and help it grow — not leech off of it. This is important for the livelihood of your park and all parties involved will win as a result. If you can’t find a company you like, consider building your own management team.
Going into a mobile home park investment is a huge undertaking and not to be taken lightly. There are some big risks to consider, but there are also some ways to think smart.