Im looking at a fully occupied 70 space park with rents below market.
On top of that the current water/sewer costs run around $100 per person.
If I were to guess I would say 60% of that is from tenants using to much water and 40% ($33,000) is from underground leaks. Total costs for water/sewer is 84k
The avg cost for water and sewer once billed back is around $45 a month per home according to other parks nearby.
The game plan would be to bill back the water/sewer and fix the underground leaks.
The park has no lawn and no reason to use any water so if am able to do this I would be netting an extra $100 per lot.
The park owner owns multiple parks and seems to be pretty knowledgeable. The lots are already sub metered. The owner claims he used to bill back and then got tired of checking the meters. I asked about a leak and he said there could be some leakage he isn’t sure and if so it can be fixed.
I have seen a lot of posts online about pipe bursting, nuflow techonolgy, trenchless sewer lining etc. I have also heard that american leak detection can pinpoint exactly where the leaks are coming from. I also have seen that Frank says he has only had to replace sewer lines on one park out of 200.
So hopefully this is an easy fix.
My questions and concerns are.
Should I be worried about the leaks? Seems like they have lots of cheap solutions these days. Would it be safe to say that under most circumstances I would be able to fix all the leaks for under 50k? How often is it so bad that everything needs to be replaced?
Im also wondering what the catch is and why the current owner has stopped sub metering, and or hasn’t fixed the leaks himself. Seems like a no brainer.
$100 per household is way too much water/sewer. So here’s how you fix that:
Have a plumber go to the park at 10 AM on a weekday and take off all clean outs and find any leaking water. Have him go to the tenant’s homes when they get back, and have him fix the leaks (normally toilet flappers). Then read the meter, do a second reading in 24 hours and see what the impact was vs. the bill.
Have American leak detection do a study of your water lines (costs around $750). Fix the leaks and read the meter again and see the impact.
If you are still at $100 per month, then start reading the meters for a one month test and calculate the bills. See who’s wasting all the water. Anyone who uses more than $40 is a cuprit.
On those using more then $100 per month, non-renew their leases. You are paying them to live there. I have seen lots using $300+ before. Those folks ruin life for everyone else.
If the general population is all wasting water, go back to reading and billing meters. First make sure that they are all working and that you have notified the tenants and have all the correct licenses to do so.
One thing I will also add to this is to check with the service provider on their billing. We went through this on a park we performed diligence on and Jefferson is currently going through this on one of his own. Some municipalities try to charge a flat service fee per home even if the park is master metered. Obviously, this is probably illegal, but in the end you would have to be the one to fight them on it. The easy way to see if this is happening is to:
Have the provider print out the billing w/ gallons used
Divide the gallons used by the number of residents
If the usage seems relatively normal, you may have a billing issue type park.
When we first took on this type of park in diligence, we assumed the same things you are assuming. Massive leaks. Once we tied it up and started digging into the usage, we found that it was actually a result of the city changing the billing to the park. Caused the bill to double instantly from 2008 to 2009 with the same usage. For us, the park wasn’t big enough and the seller wouldn’t finance so we just dropped it. Had it been as big as yours, we may have taken it to court… or had the owner take it to court.
Thank you Frank and Charles. I am looking into it. Ill know a lot more when I run some tests and start trouble shooting. Im also going to check with the city.
Cities can and do charge sometimes a flat user fee plus water usage when added together can be significant When we were on city water we were charged $42.50 per unit plus water usage which basically was costing us $50 per unit. We put in a state approved water system and the present cost for electricity and chemicals is $1.60 per unit. thus installing meters makes no sense. One toilet with water going over the overflow tube and or the flapper can waste over 4,000 gallons of water per day. Our residents were basically responsible but we have done individual house inspections and found a so-called plumber had three individual leaks wasting over 3,500 gallons of water a day. Need to check the billing carefully and if you have multiply leaks $2,000 plus for leak detector service would be more normal plus you still must fix the leak.
Water sub-metering costs approximately $200 for each home and payback is less than 9 months
. The resident/tenant pays for their own water usage. When the resident/tenant is responsible for their own water, they become very involved with leak detection. Savings of 25 to 35% in water usage is typical with sub-metering.