I’m looking at a park under contract with crazy high water usage. The park is averaging 8300 gallons per month per occupied unit. Daily this is over 275 gallons per day. This is a mixture of mobile homes RVs and a few 1 bedroom apartments thrown in.
My apartment complex runs 3500 - 5500 gallons per month per unit
My duplexes run @ 3500 gallons per unit per month
I have to assume there is some major leaks to run double the water usage per occupied unit in the same region. Especially if 40% of the park is RVs.
The existing owner says he checked and does not know of any leaks. There are no wet areas or particularly green areas.
Is this something I can fix in due diligence or do I need to wait to close before I identify or fix the water problem? I am buying based on current water bill and fixing it will be to my own personal gain.
I know I can enter park owned homes and apartments in due diligence, but I am guessing I can’t check in tenant owned homes or RVs.
try to get 12-24 months of water/sewer bills (either direct from the water company or from the Seller) and analyze if it has always been this high. if it hasn’t always been that high, then use that as leverage with the Seller to get a plumber out there to see where the leak is at.
I don’t think you will be able to find the root cause during due diligence. The most that you’ll be able to find is that there is a problem. Correcting these problems takes time, including the time necessary to install meters, and you would not be devoting these efforts to a property until you own it.
You would probably have to make your best assumption as to how much water you can save through your mitigation efforts but then, after you own this property, you will find out the true results.
That is high but probably a couple running toilets. I average 50- 185 gallons per unit in my parks. I had one TOH going through 1800 +/- gallons per day with a running toilet. We contacted him on day 2 and kept trying to reach him. He did not get fixed for 30 days so we billed him. Metron meters are great. Can spot these things in less than a day.
I have Metron meters on 10 of my parks. My very first meter install was a 101 space park that we reduced the water usage by just over 4,000,000 gallons of water in the first year. The water/sewer bill (city master meter) dropped by $6,000 per month.
I could tell that similar story about all of my submetered parks. Those meters are worth every penny to me.
Going through same thing. Very same issue on a park we’re under contract on. The water bill (paid by landlord) is exorbitant and alone represents 11-15% of the expense ratio! Seller definitely had a few leaks in the past, and we’re not convinced all has been fixed. One recent bill came in at nearly 40% of the monthly expenses!
What’s even more suspect is they have Metron meters at each home, but dont use them. Landlord continues to pay water bill and deal with this mess. Its insane.
The first thing I would do is hire a leak detection company. They can find all your leaks for about $2k.
Then, I would install water meters.
I do not recommend Metron meters; they gave me a complete runaround. Their meters are illegal in CA, but they sold them to me anyway. I almost had to hire an attorney to get my money back, but seven months later, I finally got my $4500 back. I found out that they respond a lot better to Nasty as apposed to Nice.
What is illegal about them in CA.? Ive had Metron for 6 yrs. Theyre not perfect but ok. Get some irregular readings sometimes off the master piggyback reader.
We took them to weights and measures, and they were denied. I do not think the State of California ever approved them.
The feedback from the local weights and measures was that they are not approved in CA. One issue is the ability for two-way communication. When we ordered them from Metron, we ordered them with Cuft, and Metron shipped them out as Gallons. We let Metron know they sent us the wrong meters, and they said it was not a problem. They updated the meters over the air, and unfortunately, the changes were initiated at the exact time weights and measures were working on testing the meters. This set off all the alarm bells.
We were told that Metron meters are not approved for use in California by the Local Weights and Measures. The local county also said they conferred with state regulators to confirm this.
Metron has been a total pain in the rear end to work with.
Here is their NTEP certification. Please note the options section. I looked at other NTEP certs, and the options section is where I found other approvals, such as Radio addons. 20-086.pdf (700.2 KB)
I have noticed that mobile home tenants tend to use a lot of water when they don’t pay for it. More than I’ve seen with apartments or single family. In some parks I’ve seen usage that high but you likely have too many RVs for that to be the only cause.
It’s been covered but the first thing you should do is submeter the entire park. I’d even put them on the RV lots even if you don’t plan to bill them. We have some RVers in some of our parks and we read their meters just to ensure they aren’t abusing the water. Sub-metering is the only sure way to begin isolating the problem though.
You probably have both a leak and tenant abuse. I had a leak in a park I own in Iowa that was happening under someone’s home. Outside of the signs that were directly under the trailer, there were no other indications of a leak. It also went on for quite some time because we are direct billed in that park. The city sent me a letter to fix it and if not for that, we’d never have known about it.
Maybe in DD you can check under each home to see if there are any signs of leaks. At the end of the day, some leaks don’t show above ground and the only way to track them down is through doing leak detection. I wouldn’t close without doing leak detection and I would recommend you are on-site when they come out and do it. I’ve had too many leak detection companies screw me around when they realize i don’t own the property yet.
Problematic water/sewer lines are becoming more and more common due to the age of these parks and they can cripple your investment. It’s something that can really turn a deal sour fast.
I have the same questions as Jay-E. @SDGuy how are they illegal in CA? I mean your state does some odd stuff, but how can they outlaw a water meter product? Seems like a major judicial overreach…
Every MHP owner has had to deal with this - you are not alone.
What are the water mains made of? PVC or metal? If PVC, leak detection will have a difficult time finding the leaks. If metal, they will find those leaks and they will be shockingly accurate. Simply connecting water meters will reduce that number but you just won’t know how much until you have some data. Keep in mind that there is not one single manufactured community in the United States that does not have some sort of leak at this very time. Not one.
If it were me, I would do the following:
Your valuation should be based off of the current expenses (Of course) so fixing the high water bill is going to be very profitable to you as the savings go right to your bottom line.
If you don’t already know, determine what material your water lines are made of. Then call American Leak Detection to discuss your situation. We have used them numerous times and they have never failed us.
If a leak is detected, get a quote from a plumber on fixing it and then negotiate that price with the seller.
Once you take ownership; fix the leaks that were detected, install meters at each site and begin billing back. You’ll be amazed how much the usage drops when tenants have to pay for it.
Residents and most people for that matter don’t understand how much water is lost from a pin hole leak at 60 PSI - it’s a crazy number. We’ve seen leaking toilet flappers cause 13,000 gallons of usage in a month. The residents never believe us until they fix the flapper (which costs $20 and takes 15 minutes to install) and see their usage drop back down to 2,500 gpm.
In closing; yes, you have at least one leak in the park. But, you must identify a baseline first and the only way to do that is by individual metering. We once had a resident who had leaking toilets and was using up to 15,000 gallons per month. Rather than fix the toilets, ,she just paid $200 a month for her usage. Insane.
From what I was told by my local weights and measures, the State does not allow 2-way communication.
Metron can “adjust” the meters remotely. While I do not think they are bad actors, our state is very pro-consumer, and since it would be technically possible to adjust the meters remotely, they do not allow it.
Isaac here - this could be an influx of issues. Do you know the reading system of the meters? Are they manual reads?
If there is a reading system - look at the system and look into the data. If it is a leak then you will see a steady increase over time in those high usage units/meters. Another issue to look for is what multiplier is set in the system as it could’ve be tampered with.
If not - it could still be a leak. Usually around the toilet bowl is the best chance. Put some food coloring in the top of the toilet and see if it gets into the bowl.
It could also be a meter issue - while rare it happens.
I would be happy to troubleshoot this with you - no charge. Feel free yo reach out
@SDGuy ah, ok. So the state looks at it from a “potential for fraud and abuse” standpoint. I guess that makes sense. However, rather than just “outlaw” them, wouldn’t it be just as suitable to require transparency and disclose measurements to the tenant. Heck, even require a 3rd party to do so, by law. So many different ways to manage that without the cancel culture approach.
@jo13nathan you mention some excellent points. Our sample size is small, but what we’re seeing is many sellers KNOW about some kind of leak issue, but NEVER want to deal with it at sale. It baffles us, especially when they’ve owned it for years and have crazy equity built up (in other words, take yourself a HELOC or other equity draw and fix it!). Not only do they not deal with it, but they dont give it proper credit for $$ off the sales price.
But you are correct, once the problem is fixed, then those water bill savings directly impact your cashflow positively. It’s just a significant risk getting to that point, with many potential pitfalls. Your 4-step plan explains it nicely. However, it is never straightforward and quick. Everything from contractors not showing up, to contractors not performing the work properly, to having to shut off water to potentially large segments of the Park -can all be daunting.
So communicating with voting machines{Dominion] is ok with CA but Metron meters [to my knowledge with my Metrons do NOT] is not OK? Sounds about right.
