Mobile home park owners and residents need each other. There are strong bonds when a community owner does the right things, but the resident has to do their part, too. In this Mobile Home Park Mastery podcast we’re going to examine the relationship between park owners and customers and how to make it even better – even how to bring back from the brink the errant resident.
Episode 250: Retention And Redemption Transcript
Here's the issue, "Mobile home park owners need residents as much as residents need us." It is not a one-sided relationship. This is Frank Rolfe, the Mobile Home Park Mastery Podcast. We're gonna talk about resident retention and resident redemption, all the things the park owners can do to forge stronger bonds with our residents, and also how to pull them back from the brink of disaster when things don't work properly. So, how can we keep our bonds with residents strong and not lose any customers? And also, how can we be the agent of success to redeem people who are not doing what they're supposed to be doing and still we still don't lose them as customers? Well, let's start off with retention. Retention in mobile home parks, the retention of the customer in their mobile home is all about value. It's been my experience over the last 25 years, customers are not, contrary to what the media may tell you, obsessed with just the price point. What they're more concerned about is, What do they get for their money?
There's an example I use with our managers frequently, you're driving down the highway, it's late at night, you're coming up to an exit and it's the last exit for the next four or five hours. So you gotta stop for the night. And at that exit, there are three different lodging options. The first one is the Tiki Motor Court. It's only $19 a night. Next is the Holiday Inn Express, and it's $100 a night. At last are the Four Seasons Hotel, and it's $300 a night. Which one would you stay at?
Well, almost everyone says the Holiday Inn Express. Sometimes people say they might stay at the Four Seasons, but I've never had anyone select the Tiki Motor Lodge. Why wouldn't they? $19, that's a fraction of the others. So if we were all about price as Americans, we would always say, "Oh, I want that $19 option." But we don't choose that one. Why not? Well, because the Tiki Motor Lodge, for $19, you'd be concerned about safety, your health, all kinds of issues, bed bugs, you name it. However, at the Holiday Inn Express, even though it's more expensive, you know you'll be somewhere that's clean and safe and comfortable. And what it proves is that, none of us are really just focused on price. Instead, we are in fact focused on value, what we get for our money.
So, therefore, if you want to increase your resident retention, give them more for their money. So how can a mobile home park owner just do that? How can we expand our value? Well, number one, by adding in amenities. Now, what is an amenity? Amenity is something that a resident gets as part of their rent that all residents receive, so it's communally shared. And amenities can include such items as club houses and pools, but also there's simple things that residents really enjoy, picnic tables with outdoor grills, pavilions, just green spaces to walk around, maybe a soccer net. There's all kinds of things that park owners can do beyond the old traditional brick-and-mortar items that residents really appreciate.
In fact, we found, over the last few years, we've really been working to expand amenities that perhaps the most favorite amenity you can put in a mobile home park are picnic tables and outdoor cooking grills. The RV industry, which parallels the mobile home park industry, did a study a few years ago, and they found the absolute number one item that most people preferred when utilizing an RV park was something that allowed for outdoor cooking. By having the outdoor grills and the picnic tables, it allows people of all ages to enjoy being outdoors. You can sit at the picnic table and you can read a book, you can talk with your friends, you can hold a party. And you can cook something outdoors. And of course, there is nothing that taste better than something that you cook outdoors on a grill.
Another item is infrastructure improvements. Nobody likes living in a mobile home park with bad roads. They don't like to jostle every time they drive in or drive out, it really annoys them. So I can improve the value to the customer of fixing those pot holes, fixing those roads, fixing issues that cause problems. For example, if you have a water system which has leaks all the time, it must be shut down periodically to fix the leaks, injecting the capital in to fix those water lines, obviously, again, gives people a whole better value for their money.
Also, you can build a sense of community. Even TIME Magazine took note of this in an article a few years ago called The Home of the Future, in which they were very, very excited about the fact that mobile home parks offer what they described as, "Gated communities for the less affluent." So how do mobile home parks create the sense of community? They do so by helping to unite the residents together. There's little small things you can do to achieve this. For example, having a monthly newsletter, or one thing we do every year, is a spring clean-up event where we not only unite all the residents to clean up the property, but we also give them a communal meal. There's a thing called a "Blessing box," something you can put in your mobile home park and people can deposit in the Blessing box an over abundance of whatever it is. Sometimes you take on their own personality of having a blessing box filled with books for people to share, sometimes its food products for people who need more food.
It's these little touches though that help unite the residents together for a common purpose. Also, you can create as an amenity simply the aesthetics of the property, through doing a better job with your common areas, streetscaping, expanding pride-of-ownership among the residents. Who doesn't like living in a place that looks better? And then finally, enacting professional management. We found that all residents prefer having a professional manager who does not play favorites among the residents, who has their office open at the correct hour, who is helpful and who is professional and courteous. So these are all different ways that we can all as park owners help to improve that resident retention.
But you know, residents also have to do their part. It's not just a one-way street. So as much as park owners bend over backwards to create that sense of value with the residents, we do ask that the residents do a few items. Number one, they have to pay the rent every month. And the other is, they have to follow the community rules. It's not asking much. Those are the two basic codes of conduct that we require to maintain that healthy balance of power between the park owner and the park residents, simply have to pay their rent and they have to follow the rules. And when the resident fails in either category, typically it falls on the park owner to try and fix the situation.
Now, the payment of rent, most parks are set up or should be set up under a "No pay, No stay" arrangement. Where, if the customer does not pay their rent by the due date, then they ultimately will be evicted, because you can't have people living in your mobile home park and not pay the rent. Among other items, it's not fair to those who do pay rent. But what we found is that the park owner often is the one who bears the burden of trying to redeem the customer who doesn't pay the rent as required. And I found over all these many years, that really, often when someone doesn't pay, there's two very legitimate reasons why they don't. The first one is, prior ownership may have never pressed the fact that you had to pay your rent every month. We bought many mobile home parks and moms and pops who never ever adopted a no-pay no-stay stance. But instead it was "No pay and stay."
There are residents sometimes when you buy these older mobile home parks or bring them back to life that haven't paid rent in a year or two years. I've seen some as many as five years in arrears, yet they're still living in the community, laming with the neighbors, picking up the mail. So, when you buy a park where Mom and Pop never enforced the payment of rent, of course, you will have people that need to be re-trained on the fact that one of their life skills is they have to pay the rent every month. They have the money, they just don't wanna pay it because... Well, the old owner never made them.
The other reason is that sometimes things just happen in life. Now, perhaps most park owners are spoiled because we might have more disposable income, and we don't have a life-altering event by simply having a car breakdown. But many of your residents do. And it doesn't make them bad people, it simply means that they haven't been as fortunate in the money department in life, and as a result, things that normally you would not imagine could cause such a derailment, in their case do. These thing could include the car breaking down, a medical issue, loss of employment, many, many things, and they have almost no savings to buffer that. So what's important is, as a park owner, when someone can't pay the rent, try and figure out the source, the reason why, and then try to work around it. So, if the customer can't pay the rent, find out the story. If there's any way you can help through some kind of a plan where they will be the proactive person to make sure they get the plan done, then you might want to adopt that.
But most importantly, as you go down the process of eviction, if that's the course you must take, if at any time they can pay the rent, let them pay the rent. Don't be judgmental. Don't say, "Oh well, no, this person is a bad person, they didn't pay the rent." No, it's very possible, based on life's circumstances, you would have been the better. Now on the rules, you really don't ever want to lose a resident over a failure to follow the park rules. That's a very, very expensive undertaking. If you lose a resident, you will lose the lot rent. And then ultimately, something will have to happen with the home, either it'll ultimately have to be demolished, or you'll have to take it through abandonment and rehab it. But nevertheless, if you add it all together, the typical park owner's gonna lose on a customer who leaves maybe $5000 to $10,000. There are very few rules violations that happen to mobile home parks you can't solve for far less. But to do so, you have to sit in your manager and you to proactively solve it yourself. And if the issue is that the park looks terrible, or not the park, the home looks terrible needs to be repainted, your manager needs to go to the customer and negotiate how they get it repainted. If you provide the paint, will the customer paint it? And if not, is it okay for me to go in and paint it for the customer?
Something has to be done, I can't let this rules violation make the rest of the community suffer. But at the same time, I don't wanna suffer by losing the resident. So often, the only time you will lose a resident through a rules violation is when you've exhausted every possible option. I mean, every possible option. You may even elect yourself to go in and do such things as buy them as shed, to go in behind their home to store all those many items they have in the yard that can't be there under your rules, because you just don't wanna lose them. They can't part with the items, but you don't wanna part with the resident. The bottomline to it all is that park owners and residents have a very, very strong bond. That's what makes the mobile home park industry so unusual and so stable and so profitable. So do your best to maintain that bond and help your residents do the best to keep their part of the bargain up as well. This is Frank Rolfe, the Mobile Home Park Mastery Podcast. Hope you enjoyed this, talk to you again soon.