Formula for park with WWTP

This park is currently mismanaged and most numbers look terrible but with proper management and collections I think things could turn around.

Assuming the WWTP won’t need to be replaced, because I will factor that in final price, does the ( rent x lots x 12 x .6 x10) work or does a WWTP require a higher expense ratio?

Approx 90 lots. Half full and bad collections.
Looks like they average 36 regular collections per month
Thanks folks.

Turnaround Parks you can expect to evict a large number of tenants if they have bad collections. It may be 50% full today but will be 30% full after you’ve cleaned house.

As far as expense ratio for a WWTP needs to reflect the information from the other post. If it’s a brand new WWTP and permitting looks good and a long life span then you can plan accordingly, but if it’s at the end of life then it’s a ticking time bomb and you cannot really include this as part of your pro forma very well.

For a 90 pad Park that’s full the expense ratio is typically 30-40%, but something in your situation I would say 40-50%, or more depending on the severity of collections and what the real occupancy will be…you cannot absorb this very well with such a small number of paying tenants.

That formula only works for a 10 cap. For say a 9 cap it won’t work. The true formula is rent X lots X 12 X expense ratio / cap rate as a decimal, not percentage. So a 9 cap would be /.09. A 10 cap would be /.10.

Not trying to be difficult, just save some confusion to new people to the forum.

Thanks. I noticed you can change the cap rate in the equation but just wanted to make sure the expense ratio was close.

Same answer as other post :wink: what kind of treatment plant is it? Will it require a professional to operate it?

Ranking of cost to operate (lowest to highest)

Standard spetic tanks and drain fields
Modified septic tank (blower…) and drain field
Septic tank and Mound infiltration

Below systems usually require professional oversite. Varies greatly by state.

Septic tanks and sand filter.

Septic tanks and recirculating sand filter

Septic tanks and attached media (oreco or other)

Activate sludge

Big driver of costs are lift stations and aeration.

Professional operator could be 50 to 60% of operating costs depending on system complexity.

You noticed I left out a straight lagoon for treatment and disposal of waste water. :wink: Im sure there are a few types of systems I have left out but you get the idea.