I am looking at a park that has master meter gas and electric. Normally I wouldn’t even bother but the seller financing, and the metro are attractive (the rent stabilization, less so). Thankfully it’s relatively warm, and I would price a conversion to propane to be put in place on day 1 of takeover, but is there anyway to deal with Master Meter electric? Is it as a major concern as gas?Ari
They’re both a concern – a big concern. But if you really like everything else about the deal, and the numbers are compelling, here’s what you’d do:1) Get a price for propane conversion, and make sure the city would allow you to do it. Run the numbers with that extra cost and see where you end up. The problem is that you can’t test the existing during diligence because it will no doubt fail and you’ll leave the seller without gas. It’s a really tough problem to hedge against.2) Go to the power company and see if they would take over the electric system. They will probably say no (that’s the response 99% of the time). Then have a certified electrician do an inventory of everything wrong with the system, lot by lot, and see the impact of that cost on your return numbers. Then have them do a study of how many amps the system is built to handle vs. how many it is currently handling. If the current amps are less than what it was designed for, you might be OK.We own a few master-metered gas and electric systems. It’s all about the overall attractiveness of the deal, as well as the amount of risk you are inheriting, and what the hedge is to mitigate that risk.
The electrical system is a potential present and future money pit. If the city is WILLING to take complete control of the present system fine but I also doubt their willingness. It is very easy to spent over !500 per home for pedestals, meter loops wiring and contractors plus in the future be responsible for the system. For example our utility company provides ALL items except the wiring find the breaker box to the home, and thus our present and FUTURE costs are minimal Sub-metering for electrical consumption could involve you with future potential regulations that are not on our radar today and as owners we need to be very careful about our increase risk for labiality issues. Personally if the city will not assume responsibility for the electrical system I believe this could be a deal killer.