Manufactured Home Community Succession

When you are dealing with manufactured home community succession, there are a lot of factors at play. Things are complicated on both a financial and an emotional level. Keeping that in mind, here are some tips for manufactured home community succession.

Thinking About Worst Case Scenarios

When someone owns a manufactured home community, or anything of value really, they tend not to ask themselves the tough questions. Questions like “what will happen if they die or if their heath starts to decline in such a way that they are no longer able to care for their home?”.

When this type of planning is not in place, it can lead to issues that can cause families to suffer financially and emotionally with family members becoming enemies while fighting over who is entitled to what.

Of course, you can avoid this drama by putting a contingency plan in place. Here are some of the things that you should include in that plan:

  • Make sure you have access to capital in the form of cash reserves, a loan or something similar.
  • Designate someone trustworthy to take over management, even if it’s on a temporary basis.
  • Be sure to have proper estate documents in place.
  • Grant power of attorney to someone you trust.
  • Get a good lawyer, CPA and financial advisor. These are great investments overall.

Planning the Meeting

If the time comes to move on from your manufactured home community, and you want it to stay in the family, it’s a good idea to plan a family meeting. But before doing so, you should first think of what you want for yourself and your business before throwing around ideas and letting others decide. Here are some things to consider.

What Will Happen to You

What are you planning to do after selling? Are you moving to a new location? Taking on a new career?

Who Will Take Over

If you are considering transferring the business to a child or sibling, how will you handle that? Do you think they will want to cash out the business or continue running it? If you have more than one child, what will you do so that things are divided fairly?Manufactured Home Community Succession

You need to think of your children. Decide if they have the right kind of mentality for running the business successfully. If you think they may be better off doing other things, you can give them the option to sell it and invest the money in something they are passionate about.

If they decide to take over the business, make a clear plan for how things will run once they take over. Think about how involved you will be in the business after selling. Set them up in a good cash position. Make sure not to leave them in too much debt after the purchase. Be sure to account for estate taxes as well.

Selling Outside the Family

While selling your business to a family member can be complicated, there are also pitfalls involved when selling to another company. One common problem is that the company can start raising rents higher and faster than you might like.

This can especially be the case if you work with a ‘faceless corporation’ as opposed to a person that owns their own business. People will be more likely to work with a renter that is falling behind on rent. This is less likely to happen with a big corporation.

If a new owner raising rent is a concern, you can make an agreement when you sell that states that a buyer can only raise the rent by a certain amount after a certain period of time. This might lower the price you are able to sell your manufactured home community for, but it might be worth the peace of mind that comes with it.

Owning a business is complicated and selling it can be even more complicated. However, with careful planning, any situation can work to your advantage and result in a minimal amount of drama. Consider your options and create a strategy that will ensure that your manufactured home community ends up in the right hands. And that your family remains happy for years to come.

Don’t hesitate to contact us to discuss succession plans for your manufactured home community.