Lot rent collection rates look strong on the T12 but the underlying payment behavior tells a different story

This is a sharp observation, and it points to something that due diligence checklists often miss.

The T12, meaning the trailing twelve months of income and expense data a seller provides, shows you what was collected. It does not show you how it was collected. A park where the manager spent forty hours a month making calls, accepting partial payments, and posting eviction notices to shake loose the rent might show identical revenue to one that ran on autopay with no friction. The labor cost and operational risk in those two situations are completely different, and only one of them shows up in the financials.

The autopay rate is the number I would pull first in any large portfolio review. A high autopay percentage, say 70 percent or above, tells you residents have stable enough banking relationships to set up automatic payments, which correlates with payment reliability and low collection labor. A low rate, or a rate that has dropped since the current owner started pushing lot-rent increases, is worth investigating carefully. Residents sometimes cancel autopay when they feel financially squeezed, which is an early signal of future collection stress.

I'm not sure there is a published industry benchmark for autopay penetration across large portfolios, so I would confirm what experienced operators consider a healthy rate with someone active in the space, a portfolio manager or an operator running a hundred-plus lots.

The thing worth adding: resident payment behavior also affects eviction risk, and eviction law in manufactured housing varies significantly by state. That is a conversation for a real estate attorney before you close, not after.

What does the current autopay rate look like on the park you are reviewing, and do you have month-by-month collection data rather than just the annual total?

Before buying on a T12, a careful operator pulls the rent roll and codes every resident by payment method, then counts how many required a late notice, a partial payment arrangement, or a direct call in the last twelve months, even if they eventually paid in full. The number that matters is not the collection rate, it is the intervention rate, because every intervention is a labor cost and a leading indicator of a resident who will not survive the next rent increase. You also want to ask the seller for their eviction filing count over the same period, since a park that files frequently and then gets paid before judgment will show clean collections but is actually running on legal pressure as its operating system. The gap between gross potential rent and effective rent collected before any intervention is the number that tells you what this asset actually costs to run.

What does your current late notice workflow look like, and do you track whether the same names appear on that list month after month?