While most mobile home park owners prefer the “parking lot” model in which all of the homes are strictly owned by the residents, in some cases even well-managed properties may engage in rentals for various reasons. And if you’re going to rent mobile homes, it’s essential that you have a system of rental inspections. In this Mobile Home Park Mastery podcast we’re going to explore the necessity of inspections and how to perform them properly.
Episode 386: All About Rental Inspections Transcript
After all these years, I think it's pretty evident that we do not like rental mobile homes. We've long been advocates that the way to run a mobile home park is just like a parking lot where the residents own their own homes, you own the land, and you charge a monthly fee to park the tenant's mobile home on your property. But the world is not perfect, and sometimes park owners do end up with rental homes. They may inherit them when they buy a mobile home park. Possibly they're renting homes that already exist in the mobile home park until titles can be received in hand. But for whatever reason, if you're going to rent mobile homes in a mobile home park, it's essential that you do rental inspections. This is Frank Rolfe, the Mobile Home Park Mastery Podcast. We're going to talk all about rental inspections, how you can give some oversight to rental mobile homes on your property.
Now, I won't go into all the many reasons that we hate rental homes. I think I've beaten that to death over the past couple of decades. But here are some reasons that if you have rental homes in your community, why you need to do periodic inspections. Number one, it saves you a ton of money on home damage. Because you would be shocked at how many of those who rent mobile homes do not report things that you yourself would probably report: Leaks, ceiling leaks, hot water leaks; leaks under the sink, in the kitchen and in bathrooms. All of these things you would think people would immediately report, but often they forget to. And as a result, if you do not do your rental inspections, there's a good likelihood that when that renter moves out, you'll find that the home has got significant damage due to water. And that's a huge problem as the owner. Because you could save the home and fix those things so inexpensively if only someone would tell you about it. And since often they neglect to do so, that inspection is your one chance to watch for these kinds of things, which will mushroom into gigantic issues, yet you could fix on the front end so inexpensively.
Also, rental inspections give you the additional ability to monitor safety in the home, and that's in the form of smoke detectors. Also, checking on stairs, railings, doors, all those components on a rental home that could cause you liability later. But once again, often the residents will not report to you for whatever reason. If you go in the home, for example, and someone has raided the batteries out of the smoke detectors, which residents do on a regular basis, TV remote batteries are broken, it's late at night, they don't want to put their clothes on and go back out to the store. What do they do? They pull down the smoke detector and take the batteries out and put them in the remote. I'm sure everyone is aware that that occurs. So, at least when you have these periodic inspections, you can make sure, for example, that the smoke alarms have their batteries in and are functioning, and making sure that the handrail on the stairs is in good solid condition. So, it gives you a lot of additional overview and oversight on the safety issues, and that's great.
Another benefit of these rental inspections is, it often gets the resident to question, "Why am I renting? Why don't I own?" Because it's a constant reminder that both options are on the table in most mobile home parks. You really want to sell your homes off. No one really wants to rent mobile homes, or at least very few people do. So, if you go to the resident say, "Hey, I want to do my regular periodic inspection of the home," that often serves as a trigger for them to think, "You know what? Why don't I just buy this home? Why do I have to do rental inspections? Why am I renting anyway?" Most Americans like to own property. They like to own their own homes. That's what we call the classic American dream: Is home ownership. Often they don't buy it on the front end if you have rental homes, because they're not really sure that it's a way they want to live. Many have not lived in a mobile home park before, and they're kind of testing the water. And when you do your regular rental inspections, often that's a catalyst, the grain of sand that makes the pearl, which gets them thinking, "You know what? I think maybe I will go ahead and buy this."
Now, if you're going to do rental inspections, here are some tips on how to do it properly. Number one, make sure that you have the legal right to do it. America is a strange place anymore. The states grow annually farther and farther apart. You've always had this dichotomy of red states and blue states, but it just keeps growing more vast. So, make sure that you know, by calling your state mobile home association and whatever other research is needed, that you do have the right to do regular rental inspections. And also make sure that your lease provides for that. If it's not legal in your state, if your lease does not have the language allowing for rental inspections, then don't even think about doing it until you've gotten that into the correct legal channel, which means you may have to wait until that rental agreement has expired. And then make sure, using the correct language for your state, that you repaper it this next time around, allowing for those inspections.
And if you do have the legal right to do them, here's a good way to set it up. I would do in year one, one inspection per quarter. In the second year, I would do one inspection every six months. And in years three and on, I would do one inspection per year. The point of the matter is, when someone first moves in, we want to make sure that we are monitoring much closer how things are going, as opposed to a resident who has proven their capability to report what's going on on a regular basis. And if someone has lived in that home and rented that home for three years and every inspection has just passed just fine, it's a good likelihood that that's going to set the precedent of how it's going to go going forward.
When you go in the home, make sure you're looking for the right things. Number one, any possible sign of water intrusion: A spot on a ceiling, a soft spot in the floor. These should all be duly noted, because we want to make sure that water, which is the arch-nemesis of the mobile home, is not entering into that home. Also make sure that all the appliances are functioning. That's always a good idea to do. Clearly check that all smoke detectors are functioning. Also watch for any other fire hazard you may see, such as space heaters, which are notorious for starting mobile home fires. Make sure that the resident does not have any space heaters beyond what's allowed under your lease and rules. And even if they have them, that they've got ones that cannot tip over, or ones that are not located near draperies or other things which might combust.
Also watch for any signs of tenant abuse. Sometimes the greatest risk to the home and the home's condition is in fact the tenant. So, if you see someone who's punched holes in the wall or sprayed graffiti on the wall, these are all things that you need to immediately say, "Whoa, wait a minute, we can't have this going on in this home. You're going to wreck this home." And if the resident fails in the inspection, they have to either pay to fix whatever damage they have done, if it's things that they did. Obviously if it's not, if it's things that the home has done, well, then you are responsible for that. And if they simply cannot on a continual basis prove to be an acceptable renter based under their lease and rules, then you would have the right to non-renew the lease in conjunction with whatever the state law may be.
Now, again, it's also a great time, when meeting with a resident on their inspection, to further reinforce the idea of simply buying the home. Because some residents need a little encouragement, and they need a little time to digest the concept of owning as opposed to renting. Now, if you can offer the resident $100 a month less in total rent between lot, rent, and mortgage as opposed to what they're paying in rent, most people will in fact go forward and buy the home. But in some parks that's impossible. And the total all-in cost between lot, rent, and mortgage is the same or even in some cases higher than what mom and pop are charging in rent.
But with time, people come to realize, they enjoy the attributes of detached housing. They like the fact there's no neighbors knocking on walls and ceilings. They like having a yard. They like knowing the names of their neighbors, because mobile home park residents typically hang around for an average of 14 years. They enjoy parking by their front door. In most parks they enjoy having a polycart for trash, just like a single-family subdivision does. And many, when they reflect back on this, if you give them that continual reminder on every rental inspection that, "Hey, we would love to have you buy this home," over time, they'll agree with you. Then they'll say, "You know, I think that is in fact a good idea for my household." And remember, every time you convert someone from an owner from a renter, it means you don't have to do rental inspections anymore.
This is Frank Rolfe with the Mobile Home Park Mastery Podcast. Hope you enjoyed this. Talk to you again soon.