Mobile Home Park Collection Tips

Article

One of the most difficult and time consuming tasks of a mobile home park manager is in the collection of rents.  It has been my experience that about 50 percent of your residents will never have a problem paying on time.  Then about 25 percent may be late on occasion and are also not a major problem.  It is the other 25 percent that will take most of your time and efforts.

It is this last 25 percent that will often make or break the deal.  This is usually the money that is left over after you make your loan payment and cover the other operating expenses.  So what is a manager/owner to do to make sure that these slow paying residents get motivated to pay?

Here are a few strategies I have used.  Of course, make sure that any of these programs are legal in your state.  If you have any other thoughts I will post a followup in the next newsletter.

  1. Rent Discounts.  Using a rent discount program, I set the rent a little higher than I typically would and then reward those that pay on time.  For example, I might set the rent at $220.00 per month and for all of those residents that have paid by the 1st of the month, they will receive a discount of $20.00 for a total of $200.00 per month.  Taking this program further, I have had a rent schedule that goes something like this:  Rent of $200.00 by the 1st, $220.00 by the 5th, and $240.00 by the 10th and so on.
  2. Late Fees:  Whether used in conjunction with the discount program or as a stand alone program, this program will charge late payers a penalty for not paying the rent on time.  In most of my parks, this will be a late charge of $20.00 to $25.00 if the rent is not paid by the 5th of the month.
  3. Taking Credit or Debit Cards:  In the world of plastic, many people do not carry cash or checks anymore and by adding this convenient payment method you may be able to increase collections.  Many times in the past I have had someone fall behind and in order to avoid an pending eviction, one of their relatives will call with a credit card to catch up the balance.  I have even taken this to the point that a few of my residents have their credit or debit card on file and we automatically charge them on the first of each month.
  4. Send out Invoices:  Even if the rent is exactly the same every month and there is no utility billing, sending out an invoice is a good way to get your rent bill on the pile, so to speak.  People are more apt to pay the bills with an invoice first.  Using self-addressed stamped envelopes are also an option.  In the world of high tech, you might even be able to accomplish sending out the invoices via email.  By using a mail merge on excel and word this can be done within minutes.  There are also software specific programs out there that will do most of the work.
  5. Sending out Late Notices:  It is important to send these out on time every month so your residents know that you haven't forgot about them.  You should be persistent and follow-up with phone calls and in person visits.  This way they know you mean business.
  6. The 3,5, 7, or 10 day notice:  If they have not paid then send them the legal notice to pay or vacate.  This should spur some action and after a few times of having to pay court costs, the residents will get the picture that they have to pay.  The rent bill should go to the top of the list.  The longer you let the resident go without paying the less likely they will be to get caught up.  If they don't have the rent money in May, then they probably won't have the May and June rent in June and so on.

Collecting on delinquencies is probably the least enjoyable part of managing a mobile home park but ranks up there with the most important parts.  When you find the strategy that works best you should follow it every month like clockwork.  You want the residents to pay their rent before they pay on their cell phone bill and other un-necessities.