Hi, my partner and I have owned several MHP’s for about a dozen years now, all with city utilities. We are considering the purchase of a community in OH that has well water and a private sewer plant. This community sits within a mile of a community and I’m told city services should be available to hook up to in future, but no time frame given. The park is approximately 65 lots. This is a 15 CAP deal, partial seller financing, with no park owned homes and the capability of adding income thru 10 empty lot fills (and is close to a large metro region). These are the reasons we are considering it despite the utility situation. With no experience in private utility operation and the regulations that could become an issue, I am hoping folks can share their thoughts/suggestions for due diligence on the existing utility structure and cost ranges/estimates for ‘worst case scenario’s’ should private upgrades be required before city services can be accessed. Any info you are willing to share is appreciated as we prep for due diligence and the decision on how/if to proceed with the deal. Thanks in advance.
As a park owners with all our properties on private utilities I am not buying any more except with city utilities. The changing EPA guidelines are giving us paper work beyond belief plus our testing is more than the cost of operation which has all happened in the last 6 years. If you are an owner-operator maybe but if not hands on–WALK. Most managers have not a clue to the licenses and testing and regulations now nor have the ability to handle the items coming on EPA agenda. In OHIO nitrates are a BIG issue (FARMERS and residents) and the removal of same is EXPENSIVE.
Ohio specifically is problematic. I’ve talked to a ton of park owners there, and finally extracted the truth out of a few of them. The Ohio and Fed EPA are putting the screws on people to upgrade to the newest packaging plants and systems. You’re looking at a 100-200k in expenses depending on the park. If there is city water/sewer near by, I know of several cities that have offered different loan packages to help connect.
How would one go about finding the current and coming EPA requirements “guidelines” for Well & Septic use in MHP?Starting DD on park (75 lots, rural farming area but within good metro), should be able to connect to City service but I want to be able to cite specific current & future burdens of EPA and why I can’t be on private service thus need to discount for cost of connecting to City. Thanks in advance!
Check with the local authority having jurisdiction, or AHJ, in your area. That may be the county building or permit office or the county agent’s office.
If the city is offering financing for you to hook up to their system I would explore that fully. It would be paid for on your annual property tax bill. You may want to ask about a variance to buy the time necessary until the hook up can be completed. That way you don’t have to pay for a bunch of improvements to a package plant only to have them ripped out in 3 to 5 years.
For the existing package plant, contact the OEM and see if they will send out their inspector to look at it as part of your DD. You should be able to find that company easily online.
EPA is a Pandora box for wells and septic tanks systems. You CAN NOT plan on their next moves any more than our government regulating out coal-fired power plants and most people in the past 3 years have seen their electrical rates increase 25% and in the next five years 30% more. Our government by regulations is determined to deal with only large entities like Wal-Mart and large cities and smaller entities will be forced to unite with similar entities to spread the costs of testing, regulation, and TRYING to stay in compliance. Small time operations will strangled and our government does not care. For instance when a Lowe’s comes to town the city father’s give a 20 year tax abatement and all sorts of concessions to have them whereas a small True Value store receives Nothing.
Generally, the EPA will leave the implementation of regulations to the locals. Yes, nitrates are an issue because of the blue-baby syndrome. A city will not commit to running sewer lines or whatever until they have the funding in hand. This keeps them from having to handle lots of complaints.As for the coal fired plants, they need shutdowns and major overhauls periodically. That is the time to convert them to natural gas but to do so they need to get commitments from gas suppliers and have pipeline(s) run to them. Many of the existing distribution pipelines are maxed out, we saw this play out in the winter of 2013-14. But I digress.Enough on the EPA. Do your homework so that you have a complete handle on everything. My own opinion is that this MHP be a real good purchase if it’s done right. That is, bought at a favorable price and cap rate in the path of progress of a jurisdiction in which you will be able to connect to public utilities in the near future.Jim Allen
The reality is that we can not fight government nor can park owners ignore the safety issues related to providing safe drinking water and taking the necessary steps to insure septic is properly treated.These are simply the costs of doing business and accept the fact that the cost must be passed on to the tenants. We charge a separate monthly fee to cover all costs associated with maintaining water and septic. By having a separate fee all parties, tenants, owners and government, recognise the fact that the end user is ultimately responsible for the costs. This is simply the cost for residents choosing to live in a community. We as home owners living in a subdivision also pay a monthly municipal fee for water and sewer. There is no difference.
Packaging plants do not cost $100,000 to $200,000, but more like $500,000 to $750,000 in most cases (we have bid out a ton of them over time). Packaging plants work fine, but the worry about what happens if they break is what causes the problems (as well as paying for it). In a typical scenario, if you take the cost of city sewer, and subtract the much lower cost of operating the packaging plant, the difference is the amount you need to save every month to ultimately pay for the replacement of the packaging plant. However, that’s the amount you need to save from the day you build the packaging plant. Instead, most people buy parks where the plant is 20 years old and they are therefore 20 years behind on their savings. If they then sell the park 10 years later – without the plant failing and being replaced – the new owner is 30 years behind on their savings when it ultimately goes bad. It’s this game of “musical chairs” that causes the final owner to get destroyed. You should never buy a packaging plant unless you have a game plan to handle its demise and, if you can’t afford that worst case scenario, stay clear of them.