Tenants who sign leases are happy.
Laws authorize long term leasing security. And we have leases that are useful, beneficial and advantageous to both parties.
Unofficially, in my 40 years of practice, leasing success seems to track upward mobility and economic standing. This is usually indicative of a correlation to education, intelligence and hence cognitive ability to reason. In essence, smarter people are more likely to lease. And to keep an open mind, understand and take advantage of financing, security and future planning rolled into leasing.
BUT what if you have never offered leases before? What if all the residents are residing under short term agreements?
No one talks about the process of concept, to product, to offering to success: from
"A" --> "B."
And what if all the residents in the park hear is the groundless fear-mongering about leasing from recruiting operatives for ... anyone can draft a lease. But no one talks about a comprehensive plan and the steps to market and implement your plan ...tenant groups? No one to curb the abuse? Wrong. We can...!
HOW do we go about introducing leases to the community? Do we start by offering the leases park wide? Just on sale? Just to the tenants who are seeking to sell? Do we offer to pay a listing commission? Free rent? Utilities? What can we do?
It's NOT exactly a taboo. But no one talks about how to educate the residents to show them they have been systematically mislead and deceived about leasing, all to create an atmosphere of fear and loathing, to dismiss leasing as a ploy. If that were so, GSMOL would not have a leasing handbook for residents to use in formulating leasing.
It is a remarkable disservice to residents that their leaders have abused their position to keep residents in the dark about the benefits of leasing. Look at the 5 plus star communities and see they are all leased. The BEST communities are leased.
Leases are obviously a benefit for all: the best kept secret we have a duty to reveal and publicize. Getting out the truth is the first step to leasing. A plan for introducing leasing and follow- through to a park-wide success is the object of the next edition of PARKWATCHTM.
■ WE TALK PLENTY ABOUT THE MUTUAL BENEFITS OF LEASING. WE NEVER TALK ABOUT THE PROCESS OF A SUCCESSFUL LEASING CAMPAIGN. IT'S TIME.
A marketing plan for your long term lease offer - raising awareness of the advantages, security and financing benefits of long term leasing- this is the first step.
☆ When preparing to offer leases, design a marketing plan to achieve the intended goals.
Consider more than one lease, varying terms, and meeting the needs of your various tenant groups. Who are they? A tailored lease for different groups may encompass flexibility. And anyone can draft a lease. But no one talks about a comprehensive plan and the steps to market and implement your plan.
☆ Leases bestow valuable benefits on residents.
☆ For example, leases to help maximize home sale prices. Leases which pay the listing commission. Leases which freeze rents. Leases can reduce rents. Leases which excuse defaults for the aged, frail and disabled. Leases can provide for assignment without charge, with nothing due on sale.
☆ The world of leasing advantages lies at your feet. Especially in threatened areas like Los Angeles County, the time has come to closely study the benefits of leasing.
☆ This marketing plan will likely involve building leasing awareness and demand in the park, taking your residents' needs into consideration.
☆ Build awareness with plans for exposure through the media, meetings, contests, websites, and circulars.
☆ Build resident education and demand (because a good product sells itself) with ideas such as email and referral campaigns.
The wisdom of implementing long term leases to benefit residents is unquestioned. Mutually agreeable long term leasing is a concept as old as the Mobilehome Residency Law itself. It has always been with us. See Civil Code §798.18. The use of leases with the added alternative of leasing with express rent control exemptions has existed since January 1, 1986.
The lease is a benefit to both sides, a fair solution to rent issues, and a real tangible benefit for residents who seek good financing rates, security and assurances. We see it time and again, that long term assignable leases is a huge entitlement for residents which secures their investment, and give a vote of confidence to the management to continue park improvements and good maintenance--an assurance which keeps rents down for the management.
The management would like to succeed in 100% leasing of the park. Forget it. At least on first offer. Some choose wisely; some do not. But in higher quality parks, near unanimity is common. Unofficially, in my 40 years of practice, leasing success seems to track upward mobility and economic standing. This is usually indicative of a correlation to education, intelligence and hence cognitive ability to reason. In essence, smarter people are more likely to keep an open mind, understand and take advantage of financing, security and future planning rolled into leasing. Deciding a time frame calls for advance planning. The plan needs enough time to build excitement and anticipation. Why? Because a good product sells itself. Educating the residents respecting the benefits of the lease agreement will, of itself, constitute the sole impetus for a lease agreement.
We need to first educate your staff assistants, management hosts and the residents to leasing. Part of that education is dispelling false claims and criticisms with facts about leasing benefits. So much of the scare tactics are urban myth. The slander is from various sources. But not the GSMOL. That organization publishes a leasing handbook promoting leasing. Consumer Guide evaluation of mobilehome park rental agreements says the tenant has "no rights" without a lease. The condemnation of leasing may try to seize on an elderly residents' fears to rally new members into tenant organizations. The vulnerable seniors are sensitive to financial elder abuse-which freezes them into inaction, when rejecting leasing is the worst of resident choices.
ESTABLISH A TIME-LINE:
Once you have established a time-line for your pre-offer educational effort to fairly inform what leasing benefits mean to the long term and elderly especially, you will have a picture of the outcome you intend to achieve. Leasing is really, the only rational choice for the 'thinking' resident. The fact that some tenant lawyers have told me that their resident clients must be the most stupid of the stupid for wanting a month-to-month agreement tells me this. Meeting these goals means building awareness and demand in the community, sometimes with the support of local government, the marketplace, comparisons to comparable but less attractive housing alternatives, and finally good will, which will lead to the realization that leases are great for residents planning to stay in place and build value.
MARKETING STRATEGY NEEDS TO BE PLANNED AND ORGANIZED:
At the time that you set the goals for the presentations of leasing education, offers, and success, you need to decide on a marketing strategy, which will take your resident's characteristics, need and goals into consideration. The plan responds to all these crucial, definitional factors.
Building awareness before and during a lease campaign is a necessary precursor to creating a demand-a desire to lease based on plan facts.
We need to disseminate those facts. By building awareness, you improve the chances that your residents will be interested in leasing vs. using a short term agreement that, for example, allows for rent increase at any time on 90 days notice. No one does that, but the fear-mongerers will claim it as undeniable fact.
Leasing can empower tenants with a voice in approving new park improvements. No short term agreement does that.
Leasing can assure free assignment (no pre-pays, due on sale, or increases) for residents of advanced age or infirmity. No short term agreement does that. It is just a question of developing your pre-offer plan, and offering a lease that is fair and a benefit to all parties...and sells itself based on merit--and the lenders will love it.
WHAT IS THE LEASE PLAN? YOU HAVE TO UNDERSTAND WHAT YOU INTEND TO PROPOSE.
Develop your lease concept. Where is the fair current rental rate and market? What is your target market rent? How long is required to achieve that? What incentives can be offered? What about signing bonuses? How long to recover the incentive outlay, and at what pace. How long is the lease; shall you have options? Is it freely assignable? Should you freeze rent adjustments for resident hardships? Should you offer signing bonuses to reduce the costs to assist new home buyers? Should you pay listing commissions to assist outgoing residents. "Gifts of value" to incentivize lease acceptance can take all forms except reduction of the rental rate during the first 12 months. What other advantages can be offered for long term residents, disabled residents, the aged and infirm, for long term tenants? Financial incentives talk loudest in my experience.
In the end the deal must not be fair-it must be fair and be seen to the resident as being fair. If your velocity of attrition is slow, attaining your goals will flow from annual adjustments. If you experience high velocity, objectives can be derived predominantly on turnover. This means potential pluses including attenuation of need to maintain pace with real COLA (cost-of-living-adjustments) based on CPI or better indices (such as the Federal Reserve's M2). This can be a real benefit to older long-tenured residents who are no longer employable.
When the leasing plan is decided, timing is next. When will all this happen. If the plan is not wholly successful, you can cut off the offer and change terms and offer a new iteration. Will there be such a second tier?
Plan to announce the future plan to offer leasing. Announce possible fringe benefits (which you are already considering and will be likely prepared to offer). You may also reference the reasons for leasing alternatives, including the ease of mobilehome financing, better terms with leasing, and successes in other local communities (assuming it's a truthful assertion- probably is. What were the things that mattered there? See if you can benefit from the experience of others who lease).
ASSUME THAT YOUR RESIDENTS ARE DECEIVED AND EXPLOITED-BY THEIR OWN FAILING ORGANIZATIONS
What no one mentions is that the existence of major tenant associations is tentative and fluid. And these organizations will do anything to get more money, from new residents. Truth is, HR1158 blew a gaping hole through recruitment efforts as many parks converted to all age parks, which caused a elder flight from what once were 55+ parks. The continuing fallout of this unintended benefit for park owners, is that resident groups have been crippled economically. All age residents cannot be scared and intimidated as the case with frail elders. Seniors have been exploited for decades with false or exaggerated claims about all park owners. Truth is, there is no need for the resident organizations. Look at the MRL. It needs no new laws. Legislators are over-protective right now. Residents do not need to pay for help-it exists in abundance.
Create an article in a park news letter or bulletin. Separate bulletin, or door hangar? Maybe. What works in your community? It does no good to see all your work tossed out into the street. Do you have a website. Announce it there. If feasible, you might use your announcements as a survey to sample interest in the park. How receptive is the audience?
Do not be discouraged if the result is disappointing. It may take some time. Assume no one wants a lease because the false smears from the fear-mongerers has exploited the frailties of your residents. You can fix that, so long as people will still listen. The truth, delivered consistently and repeatedly, can change the message accepted by your residents.
But for now, residents may be fed the "kool-aid" and unwittingly take it, and believe it. We need to change that false reality with the truth. We can play up the truthful benefits and fight the filth of selfish rumor-mongering and smears of owners' business practices.
GET A WEBSITE AND GET THE "GOOD WORD" OUT.
Companies are near you that can organize websites specifically for park owners. A park can benefit from a website. Or, update your existing website to announce the oncoming long term lease offer.
We can begin to provide the benefits of leasing in installments over time. Repetition. These comments can be featured on the website. Write about the new benefits, advantages, limited time it will be available, and why it benefits residents. Anyone who regularly views your website will soon learn of the new upgrade.
For "all age" (family) communities, where the residents are more likely to view the internet and social media, if your park has a twitter account, then tweet about the upcoming lease, post items about other leasing efforts and successes. Look at the local parks, usually 5 star and more, who rely on leases. See how happy the residents are in these communities. Include links to all the many articles and news about rent control failures, debacles, and closures of parks and reduction of housing. See if you can succeed in having followers retweet these announcements, which can help to create viral awareness of your news.
Building relationships with third-party groups such as local government, influential residents or others can help. Such support can buttress and corroborate-validate-the wisdom of leasing.
You can pursue the following activities to help generate awareness and demand for your leases and create a sense of urgency for your residents.
CREATE EMAIL CAMPAIGNS
Email campaigns designed for existing residents can help accelerate their awakening to the truth of lease benefits and advantages; this can encourage their participation and remind them of oncoming deadlines. Follow-up these mails with a phone call to maximize effectiveness. Think about the bonuses to staff for procuring resident participation on a lease-by-lease basis.
CREATE REFERRAL CAMPAIGNS
Your existing residents can be rewarded with bonuses for the successful referral of other residents in a leasing campaign. Offer an incentive to your existing tenant to refer a friend (for example, free rent for a month, cash, a gift). Because these new tenants have had the leases endorsed by a friend, the chance for success is much higher.
Hold a contest to give away a "gift of value" attached to the offer of a long term lease. The gift of value can be a rent freeze after the first 12 months, a cash gift, cash in installments, a cruise to Alaska, part of tuition, or books for a year. Set up contests prudently; make sure that the lease "gift of value" is a real advantage. The lease can be given away at various intervals. Charge to participate. Check with your attorney for legal impediments.
CONSIDER VARIATIONS ON A THEME FOR RESIDENTS TRYING TO SELL.
For residents trying to sell, you can devise a lease which precipitously drops rent right now. This makes the home easier to sell, more valuable. You can offer to pay the listing commission too. Bridging the gap between tenancies is an ideal opportunity to provide huge resident leasing benefits. In sum, this is a matter for you and your lawyer to discuss.
Leasing is protection. It is good for residents. Some lenders actually require it, we are told. And the security, breaking free of surprises, and ease in assignment and ability to plan-much less the safeguards against new seller moving in-makes leasing a common sense proposition for both sides. Which is why the law authorizing long term leases is now "on the books" for 30+ years encouraging it.
If you are not leasing, you should take a look. If you are a fiduciary and operating property for others, you should take a hard look.
We do live in California, and the equation for being fair to property owners long ago dissipated into the mist. Leasing secures and vests rights, so that rent adjustments are not a matter of guesswork, but tied to actual experience.