Cap reserve private utilities

What are reasonable figures to use as capital reserves on a park with Well and septic?

I am in the diligence phase of my first park purchase and just found out that the park is not on sewer as I had previously thought. It is still attractive to me since it is close to my house and has good numbers and upside otherwise

Is 15% a fair figure for cap reserves, maintenance and repair on the whole property? It is 30 spaces (22 occupied) with two wells and 3 interconnected septic tanks. I do have a decent reserve personally, so I am not concerned about losing it should catastrophe strike, but I still don’t want to wind up with negative cash flow.

Make an inventory of infrastructure.
Water system questions: How deep are the wells? Whats size pumps do you have in them? What kind of storage/pressure tanks do you have? Booster pumps? When was the park built? What type of water mainline do you have? Once you have that info call some local well and pump guys and get quotes. Wells usually are good for 30 plus years. Pumps 10 to 20 depending on size and use. Tanks should be 30 plus depending on water quality.

Waste water questions: is the system tanks and leach field (sounds like it). What are the tanks made of? What type of material are the sewer collections lines made of? Age of tanks and collections lines?
Get some quotes to replace.

Once you find out where are in the life cycle and replacement costs you can decide on cap reserves. Big question is has any maintenance been done or has it been deffered? If it is deffered you you may already be at end of life cycle of some components.

Hope that helps
Phillip Merrill

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Your parks is a little small for the private utility gamble. Here are two things you’ll want to do:

Well

  • Is the second well a back-up well?, if so, what is the condition?
  • If both wells are being used, does each have the ability to carry the park (fully occupied) by itself?
  • If both wells are being used, is it an attempt to get around testing? (did diligence last year on a park that operated four wells (9 tenants each) so it didn’t have to test)
  • When you have it inspected, have the inspector make recommendations on preventative maintenance, life-expectancy and costs of the components.

Septic

  • Your set-up is a little concerning. We like 1 septic per home with a large enough lot to replace if needed.
  • Is it in a flood plain? Has there been (or could there be) any new construction near it that could potentially change the flow of water runoff?
  • When you have it inspected, have the inspector make recommendations on preventative maintenance, life-expectancy and costs of the components.

Once you have all of these answers (and a lot more), then you can build a realistic capital budget. On the front end, I would likely use $5,000 per year just to have a number in my initial evaluation.

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@NateB , I agree with @CharlesD:
“Septic
Your set-up is a little concerning. We like 1 septic per home with a large enough lot to replace if needed.”

Personally, I would not purchase a MHP unless it had 1 Septic System per Mobile Home.

The Septic Systems in our area have Drain Lines. The Drain Lines are the expensive portion to replace. The Drain Lines should be based on the number of bedrooms that are in the Mobile Home.

I also would not purchase a MHP that has both Wells for Water and Septic Systems for Sewer. If your Water becomes tainted by the Septic Systems, the government will shutdown your MHP in a heart beat.

We wish you the very best.

Thank you for the responses, it is so nice to have a wealth of knowledge so easily accessible.

As it turns out, the hand drawn map in city hall must not have been updated to reflect the change to city sewer.

I will be checking to make sure that the water can also be hooked up should the wells fail in the future.