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1 <br />Sargent, Maryann <br />From: <br />Sent:Tuesday, March 05, 2019 9:25 AM <br />To:Cutter, Pauline <br />Cc:_Council; Liao, Thomas; Sargent, Maryann <br />Subject:Mobile Home Space Rent - 2% of $1Million is BIG number <br />Attachments:2% of $1Million is not a small return.xls <br />Dear Mayor Cutter - <br /> <br />I was taken aback by your belief that if an owner only raises the space rent at 2% a year their property isn't making <br />them a profit. In an attempt to show you the arithmetic to prove otherwise, I expanded my spreadsheet (which Mr. <br />Ballew got yesterday) to include what a rent increase translates to for annual rental income for a whole park. I did a <br />spreadsheet so I could let Excel do the arithmetic rather than a calculator, and so it was not that much harder to do the <br />numbers for ALL the San Leandro park sizes. <br /> <br />Since reading the spreadsheet , which has now gotten as big as the income, might not be fun, below is a verbal reading <br />of what the profit is for a 2% and a 4% increase in a park of 58 spaces. I think you can easily see from the spreadsheet <br />how big the numbers get as the size of the park grows in size. <br /> <br />Perhaps you could look at this before you meet with the owners. <br />Virginia Madsen <br /> <br /> <br />For a 58 space park: (Hesperian) <br /> with a 2% increase which doubles the individual space rent after 36 years <br /> the owner's annual rental income for 1 space in year 1 is $12,240 <br /> for all 58 spaces in year 1 it is $709,920 <br />After 5 years of 2% rent increases the owner's income for all 58 spaces is $768,440 which is $58,520 more than year 1 <br />which is an 8% increase in income <br /> <br />After 10 years of 2% rent increases the owner's income for all 58 spaces is $848,420 which is $138,500 more than year <br />1 which is a 19.5% increase in income <br /> <br />After 15 years of 2% rent increases the owner's income for all 58 spaces is $936,724 which is $226,804 more than year <br />1 which is a 32% increase in income <br /> <br />After 36 years of 2% rent increases, at which time the tenant is now paying double the rent as in year 1, the owner's <br />income for all 58 spaces is $1,419,762 which is $709,842 more than year 1 which is a 99.98% increase in income <br /> <br />In the 36 years, the owner has made $37 MILLION in rents and gotten over $600,000 from that one tenant with just a <br />2% rent annual increase <br />How is $1 Million a year in rental income not a fair return? <br /> <br /> <br />For a 58 space park: <br /> With a 4% increase which doubles the individual space rent after 18 years <br /> The owner's annual rental income for 1 space in year 1 is $12,480 <br /> for all 58 spaces in year 1 it is $723,840 <br />After 5 years of 4% rent increases the owner's income for all 58 spaces is $846,790 which is $122,950 more than year <br />1 which is an 17% increase in income