Restraint of trade laws are intended to prevent parties from entering into contracts that tend to stifle or reduce free trade competition. Mobile home parks may be one of the last remaining strongholds where the accepted method of doing business absolutely impedes free competition. Not such a good deal if you’re the tenant but it’s great news if you happen to be the landlord.
Here’s what we’re talking about and is one of the great benefits of investing in mobile home parks.
Let’s say you have a tenant who owns his own mobile home but rents the land it sits on from you, the landlord. Though you may not express it in such terms, Mr. Tenant is, for all practical purposes, your economic hostage should you decide to raise the rent on him. Perfectly legal. You don’t even need a good reason. Maybe because you woke up that morning and decided you hate that damn flamingo pink color on his mobile home, so you double the rent.
Mr. Tenant may be extraordinarily outraged, but unless he has around $3,000 at his disposal, he’s going to eat the increase. Why $3,000? That’s how much it would cost to have his mobile home taken down, moved, and installed in a different location. And maybe he likes where’s he’s at; it sometimes is hard to find another agreeable spot.
Is the landlord playing dirty pool? Depends upon who you ask. At some point, he will endanger his occupancy rates but you might be surprised how much tenants will pay to avoid relocation. This idea of “hostage” tenants is one of the great benefits to investing in mobile home parks.
The MHPListings Team
Flickr / deltaMike