Don’t know how to compensate your property managers after selling a mobile home in your park? In truth, it depends. It’s not mandatory, though it does happen. If it’s a smaller deal, you may give them anywhere between a few hundred to a thousand dollars. In some cases, the sum equates to half a month’s rent. You can also give it as a bonus to their salary.
I’ve had my own experiences in this area. If my property manager handled the sale from tip to tail, I’d usually give him 2 weeks of the total rent. This varies based on how much he sold the homes for. If he sold it for cash and for market value, I typically paid him 10% of the sale. If he sold it for a discount or on a rent-to-own contract, he would usually get a half month’s rent.
Also, it’s important that you must exercise caution when structuring these. Always ensure that you’re operating in accordance with real estate laws. Often that means you will need to get a dealers license for that state, otherwise you could face stiff penalties.
Incentivizing your property managers when selling
Let’s say there’s a new home that you’re selling for $55,000. You’ll want to write your profit margin into the sale. So if you bought it for $45,000, plus an additional $8,000 for set up costs, there’s a $2,000 profit margin. From here, you can scale your manager’s percentage to wherever sales land on the profit margin. The higher the profit margin, the higher their bonus. This is a great way to incentivize their efforts at selling at the listed price. Either way, they’ll at least make base commission on the deal.
You can also sell your homes through realtors. Newer, nicer homes are the best bet for this option. Local realtors often have a vast network of people interested in cheap homes, even if it’s in a park. You just pay them their standard commissions, usually somewhere between 3-6%. If you’re renting the home, this comes with a different set of considerations.
Watching the signs when paying
Typically, the manager will get a two-week commission on a one year rental. If the rent is $1,000 a month on a year lease, your manager should see around $500. A pro tip is to wait about three months until after the tenant moves in to start doing this. This way, you don’t incentivize your manager to turn over renters. This would, of course, line their pockets while emptying yours.
You don’t want your unit rotating two to three times a year. This means you’re losing money, and that your manager is likely taking advantage of you. It starts out innocent enough. Someone passes the background check, gets in a home, and in 3 months they’re gone. But once managers see how quickly they can make $500, things may get tricky. Either way, the result is low quality tenants. This is counterintuitive to the interests of any park owner.
The Mobile Home Park Expert
Any hard working team deserves their roses while they can smell them. But you also want to ensure that you get your roses, too. With the steps provided, you should be able to form a plan to compensate your property manager. Contact us today to learn more!