Industry experts on the panel noted that retaining people who are effective with coworkers and the public is an ongoing process. Periodic employment reviews and training programs are generally well received. Most people want to know how well they are doing and what needs to improve. Coaching by regional managers and outside consultants is critical to recognizing employment and operational issues and correcting them before they cause other problems.
Second “tip” is also simple and can be summarized in one word: Documentation. It is critical that your community have well prepared written rental agreements whether for a long-term or month-to-month tenancy. There are, of course, pros and cons to both forms of tenancy. Certainly, in a rent control jurisdiction, long-term leases are preferred. However, it is well understood that obtaining an economically viable long-term lease can be difficult in rent controlled communities because of the legislative constraints on tenant negotiations. To the extent a local jurisdiction has vacancy control it is critical to pay attention to those opportunities to offer suitable long-term lease agreements so that future rent increases are known by both the resident and the park.
Another form of documentation to consider is arbitration agreements. There are intense debates among lawyers, and even within the industry, about whether or not arbitration is a desirable means of conflict resolution. If arbitration is going to be pursued, however, it is critical that the arbitration agreements reference and be drafted in accordance with the Federal Arbitration Act. While the State of California has an arbitration statute, it is effectively useless in compelling arbitration in most circumstances in a mobilehome park context. Numerous appellate State court decisions, when deciding whether or not arbitration can be compelled under the state arbitration law, are uniform in declining to enforce landlord/tenant arbitration agreements.
Documentation also means due consideration of park rules. Park rules are the functional equivalent of covenants, conditions and restrictions created for residential developments such as condominiums and planned unit developments. California law requires that park/community rules be reasonable and that, of course, is key to any judicial enforcement. Park owners differ as to whether they prefer general rules or more detailed rules. Again, there are pros and cons to each. However, when it comes to enforcement, it is this writer’s experience that more particular detailed rules are typically easier to enforce than a more vaguely worded general rule where “reasonable” discretion by the park’s resident manager might be seen by a judge as being less objective or personal. The courts in California tend to err on the side of tenants and thus making sure documentation (Rules) are objectively reasonable can greatly aid in their enforcement.
Tip three is getting to know your customer/market. Understanding who wants to live in your park and why it is important to properly serve that segment of the public and the larger “neighborhood community”.
Consistent with knowing your market and customer, is knowing your competition. A park’s competition might be other manufactured housing communities or, possibly, nearby apartment complexes, duplexes and triplexes in the area. Knowing who is renting and at what price is critical to knowing if your park is offering all that it can at a competitive price.
A fourth issue noted by regional park managers is the need to conduct a thorough park assessment. Many of the larger owners in the industry have an annual reassessment of each community including what potential capital expenses and improvements might be required. An annual or semiannual assessment can be done in conjunction with a documented risk assessment and analysis. Reviewing a community’s streets, curbs, gutters and any recreational amenities can help a community be prepared for accidents; weather cause events and the ever present potential for litigation. A proactive system of having maintenance logs and keeping records of what has been repaired, when, and by whom is critical in the event of a simple slip and fall accident or, more significantly, if a “failure to maintain” lawsuit is threatened. In California failure to maintain allegations are routinely made against many communities that, from all objective criteria, are well-maintained and are highly desirable places to live.
Capital improvement and risk analysis assessments also lead to insight as to how a community is evolving. Is there a plan for replacing or improving the current housing stock? To the extent the park has the ability to help renovate or replace older functionally obsolete housing is a plan being considered. In some areas of California, the options of potential closure or conversion to a resident owned community are worthy of discussion. In rent controlled communities it might be prudent to have park owned homes so as realize appropriate revenue from the park.
One final tip: manage your revenue properly. Successful park operations need to follow and have a well-defined timeframe and process for rent collections. How rents are collected, managed and deposited is critical to cash flow. An annual review of the community to understand whether reserved parking or storage facilities should be provided, for a fee, should be considered. A number of communities have added solar panels to parking areas that generate revenue and help offset electricity costs in the park. Whether or not the park accepts electronic payments and how it processes resident checks can be critical to cash management. Knowing when and where funds are spent is ultimately the reason that the investment is either successful or not.
Thanks to Mindy Parish from Hometown America and Tom Pacelli from J&H Management for their participation and insight as to how operations for community owners can be managed proactively and efficiently.
Bill Dahlin is a partner with the Southern California law firm of Hart King and a leader in the firm’s Manufactured Housing Industry Practice Group. He can be reached at 714-432-8700, 714-619-7084 (direct dial) or firstname.lastname@example.org.