I have a chance to upgrade out park by connecting to city sewer and water. It will be expensive so is it worth it? Right now i know many buyers will not even consider our park cause we have owner sewer and owner wells. Probably we are considered a 1 Star park idk. Upgrading to city sewer and water will add about $6000 per year in NOI.
If we upgrade to city water and city sewer how much more value will it add to the Park? Will we move up in class?
What is the total cost? You mentioned $6,000 per year in additional operating cost, but what about the capital cost to actually connect?
If you convert to city water and sewer, you would certainly want to sub-meter the water so that the residents are responsible for their own usage. That would negate the annual cost.
Parks that are on city water and sewer definitely sell at a premium to those on private utilities. So even if the capital cost was equivalent to 1 point of cap rate valuation, you’d probably still be money ahead to do the conversion.
Don’t forget to also take into account the future cost of repairing or replacing the private utilities in the future – that alone may be more than the conversion costs in some cases.
Hello Frank
The capital cost could be as high as $120,000 to install that water line. Please explain “So even if the capital cost was equivalent to 1 point of cap rate valuation, you’d probably still be money ahead to do the conversion.”
We have two wells, two pumps to replace every 5 years, two pump savers, cisterns that are obsolete, electric cost, two large $10,000 filters, etc.
@brandon The name “pump saver”, I believe he meant a special device that protects the pump motor. probably similar like that one SymCom 234P PumpSaver Plus Description:
SymCom PumpSaver® Model 234-P protects singlephase pumps from dry-well, dead-head, rapid-cycle, jammed-impeller, and over/undervoltage conditions. Typical applications include residential waterwells, commercial waterwells, irrigation wells, and golf course and other sprinkler systems.
Giant blizzard knocked out the electric to the wells causing us to have no water. Another reason to hook up with city water.
Filters need to be changed about every ten years and pumps with installation cost about $5000. We figure cost to run the wells at about $2000 per month and cost for city to provide water at about $1500. Residents can pay the $1500 as we have installed water meters on each home.
value with private utilities say $2,000,000 at 10 cap
value with city water and sewer $2,222,222 with 9 cap
Frank is that what you mean? raises value by about $220,000?
with cost of $120,000 or less.
Many cities and counties getting tough on regulations for Wells and septic and you have liability if people get ill from your water lawsuits
Yes, what I meant was that the lower cap rate of a city water/city sewer appraisal might cover the cost differential long-term. That does not also count the value of your peace-of-mind in having municipal water rather than you being responsible.
I have a small Park 41 spaces, City water is VERY expensive in N. Ca. Small town.
Before I went on City water, I bought a trencher and ran separate water lines to each yard, so that ALL outside watering is on our wells. The City water only goes to the inside of the trailers. I tried water meters and had too much trouble with them freezing and breaking, I divide the monthly water bill amount the tenants; $10 per space plus the remainder of the bill divided by the number of people living in the trailers. We remain on our own septic systems, which have actually improved through the years after LOTS of tweaking, our main tank is now pumped every 3 years (used to be every 6 months). I removed all the filters on my wells and all tenants have been educated not to drink out of the yard faucets. WE have no local Sewer Co., yet. But sewer is often billed as a % of the amount of water used. So, if and when the local sewer system reaches us, there will be considerable savings by still using our wells for outside watering.
Using well water for watering is very sensible, if people have been trained not to drink it.
City Water and Sewer Cost;
If you are just adding one main municipal meter, often the utility provider will allow you to pay the expense over a number of years. If each lot is separately metered through the city the capitalized expense (new water and sewer infrastructure) might be charged to each lot’s bill.
Passing through the water/sewer usage through sub-metering is an option, unfortunately, the capital expense is most likely not billable to the sub-metered residents.
"We’re here to answer your sub-metering questions"