Park Question

I looked at a property has a lagoon for sewer but city water. If it is close enough to get city water is it possible to get city sewer too? How expensive is that? Or should I just not consider a park like this since they use a lagoon?

The reason I ask is that all the other numbers seem to work out well. 20%+ cash on cash return before rent increases and rent hasn’t been increased since 2010. Plus a strong CAP rate.

Any insight would be helpful.

Thank you.

Justin Donald

I once did diligence on a park that had public water and a private packaging plant, and the city told me there was no way they could provide public sewer to the park. So, I think it’s entirely a case by case bases, and the only way to know for sure is to hit the phone and find the right person in the utilities department to talk to.

If you do have access to city sewer you then need to ask for the hookup costs (highly variable) and look up the cleanup costs for once the packaging plant starts failing and you have to shut it down.

You have correctly defined the big problem with this park – the lagoon. And you are asking all the right questions, such as the cost to connect to city sewer. You’ll need to get that exact number from the city, but first a rough idea of where the sewer lines even are would be of value. If the sewer line is near the park, then it might be possible. If it is miles away, then there’s probably no way it will be economically feasible. And, if the city sewer is not available if the lagoon goes bad – and you also can’t have a packaging plant – you would have to really want the park bad to make sense of it (we’d probably drop it). And when you factor in the cost of these alternatives, it will probably kill the deal anyway.