If you will be renting or selling an investment mobile home via monthly payments then having a random vacancy will be an inevitable part of your mobile home investing business. Although this vacancy process is typically thought of as an unpleasant experience, with just a few attitude and business adjustments you can continue business as usual the next time you have a mobile home turn-over.
In the first 4 years of my investing career I experienced an “unusually high” turnover rate from my mobile home investments of exactly 100%. This means that although I sold each mobile home to a buyer that agreed to pay for the home monthly for up to 30 years of payments, many tenant-buyers were only staying less than 2 years on average. I say “unusually high” turnover rate but in reality investors starting a new career of mobile home investing with no prior business or management experience are seldom trained the proper screening requirements and evaluating potential tenants.
Unfortunately high turn-over rates are common with inexperienced investors and burnt-out landlords.
Imagine if you awoke in a 10-ton construction-style bulldozer and were told to successfully maneuver it around the construction site. Could you do it? Without proper insight and education you will likely run amuck over the yard. This bulldozer analogy is similar to the feelings a new investor may have when it comes to screening and managing tenants –no one wants a struggle. We're always taught to be nice to others; but what about when others are not being nice to us?
Renting to high-risk, eviction prone, disrespectful, professional tenants is inevitable unless you properly screen every tenant and/or tenant-buyer who wishes to live inside your prize mobile home. Use the 4 tips below to help keep your mobile home vacancies down to a minimum.
1.) Approval process: Create a step-by-step process that all potential tenants must complete in full before you will agree to sell or rent anything. The process I use can be found in a prior post named, Making Your Next Mobile Home Tenants Earn Your Love. The goal of this process is to make each candidate go to great efforts to live in your investment mobile homes.
2.) Approval Criteria: Next time you have a free hour make a written list of all the necessary requirements a tenant must have OR not have in order for you to “trust” and feel comfortable with them living inside your investment mobile home. These requirements are qualities such as; a specific minimum credit beacon score, a zero eviction history, income verification requirement, etc. Keep this list posted in your office to remind you of your business obligation when you feel yourself considering to amend a particular requirement because your heart is telling you to “give these tenants a chance.”
3.) When You Break #2 Above: At some point your heart will win out over your logical brain and you will find yourself with a tenant that is unqualified to live in your property based on the above requirements. At times like this you may require that the higher-risk tenant fork over a higher deposit or non-refundable move-in fee to obtain a key to your property they so desire.
4.) I.C.O. Fund: From every tenant collect their first 3-6 payments and put them aside for future vacancy, late or non-payments, and even eviction proceedings. This side fund I refer to as an “In case of fund”.
Professional tenants who take advantage and don't pay landlord are smart at finding ways to legally not pay. Do not rent to unqualified renters or sell to unqualified tenant-buyers. Thoroughly screen all adults, keep your qualifications tight, and keep your emotions out of the process.