I had this deal under contract, but decided to pull the plug…30 lot park, South Carolina, 100% occupied, 4 POHs, city water and sewer. Lot rent $160. Cost $375 000.Lot rent has not been increased since 2009.Craiglist add received about 10 calls per day.All utilities billed directly to the tenants.So everything looked good, until I spoke to the plumber who has been doing the park’s plumbing for several years…- the sewer lines are PVC, but they are +/- 40 years old. And 40 years ago, the PVC pipes were thinner than they are today. The plumber has scoped (camera) several of the lines and they are oval (they should be round). This indicates a high risk of collapse. - the main sewer line is only 4 inches in diameter, and that it should be 8 inches. - the pipes are old and brittle, and they probably cannot be patched should there be a collapse or leak.He says that one can go on nursing the plumbing, but it is only a matter of time until it will require major overhaul. He recommended a complete upgrade, and gave me a guestimate of at least $100 000. The pipes will need to be dug up, and some of the roads will be destroyed which would add even more to the cost.Do you guys agree that killing this deal was the best option? The seller did not want to reduce the price. Has anyone had a similar experience? This would have been my first park had the deal gone through.Thanks.
Can you bring the deal back to life? The old “you need to replace the sewer line” gag is the oldest in the book. Every plumber says that about every park. And why not? They can’t be blamed for trying to fleece every customer they run into – a certain percent take the bait.We have NEVER replaced the entire sewer lines in OVER 200 PARKS NOW. What’s that mean? It means the guy was totally lying to you.I’m not saying that I would still buy the park, because there’s a whole lot more to the diligence and I’ve never seen the park. But would I drop it over the sewer lines based on what you just wrote? NO.
thanks Frank, maybe I can bring it back to life. I am going to call the broker now. I will keep you posted.
GJS, my Husband and I own two Mobile Home Parks in South Carolina. Our MHPs are:- MHP #1: City Water (Billed Directly To Tenants From City) & Septic Systems (One Per Mobile Home)- MHP #2: City Water & City Sewer (Billed Directly To MHP - Master Metered)You indicated that your MHP (under Contract) was:- City Water & City Sewer (Billed Directly To Tenants)Does the Utility Company bill the Tenants directly for their City Water & City Sewer?If no, does the MHP bill the Tenants directly for their City Water & City Sewer?If the Utility Company directly bills the Tenants for their City Water & City Sewer, the MHP would only be responsible for:- Water Lines: From the Individual Water Meters to the Mobile Home- Sewer Lines: From the Mobile Home to the Sewer Lines in the groundIf the Utility Company directly bills the Tenants for their City Water & City Sewer, the Utility Company would be responsible for all the Water Lines and Sewer Lines that need replacing.
@Kristin, all utilities are billed directly to the tenants by the utility company (not the park). The park is on city water and city sewer.As I understand it, the park is responsible for all sewage lines from the homes until where they hook up with the city/utility line.
The deal is back on, I am going to get a second opinion. Thanks for you advice Frank!
Get three opinions and average them together (and don’t use that guy – as he’s already tainted).
will do, thanks. I will keep you posted.
GJS,Please do continue to post updates - to get Frank’s guidance of course, but also because this is a textbook example for others interested in parks. As a beginner it’s very easy to get overwhelmed by a seemingly horrid plumbers report, even though reality is not remotely close to what they described and their recommended action is way excessive.Also, keep in mind an “iffy” plumbers report can definitely be outweighed by significant positives elsewhere in the deal - a super strong metro, simple upside in lot rents, etc. Assuming you have some kind of upside and you’re in a solid metro, this could be an excellent starter-deal given the high occupancy and direct-billed utilities. Don’t let concern over something like needing to patch parts of the sewer line at some unknown point in the future scare you off.
I would get a second opinion and a scoping with a cd or jump drive with the film on it first as part of your DD; you want to see for yourself what the pipes look like and what they are made of so that you can make an informed decision, not a coerced decision. PVC pipe comes in several grades and specs, even 40 years ago. If they used less than schedule 40 PVC they may have cheated, depending on local codes, and if the pipes are oval shaped they may not have been bedded, or installed, correctly.A word on plumbers in general, present company excepted of course. The plumbing industry suffers from several problems. The materials sometimes are less than what’s really needed and the working conditions are often difficult. The insurance industry says that if materials were better and designs were better the loss rate due to plumbing issues would be way less. Plus, with sanitary sewer systems, aka SSS, there is the ‘yuck’ factor at work. The average person doesn’t like fooling with sewage so they are happy to pay through the nose for someone else to do it. The size of the pipe probably doesn’t matter that much as long as it is not ‘surcharged’ during peak flow times. Surcharged means that the pipe, from a cross-sectional view, is full. Also, I would point out that pipe ‘flow’ is a second order function. That is, if you double the pipe diameter from 4 to 8 inches you quadruple the flow rate, all other things being equal. Lastly on the pipe, there is a pipe specification called C factor which relates to the resistance to flow that a given pipe material offers. PVC has just about the lowest resistance, as I recall, to flow of any pipe. Dinner is on the table, got to go, more later.Jim Allen
Frank, Jim, Kristin, kg2, thanks for your feedback.I got another plumber to inspect the plumbing. He said to me that if I were to go ahead with the deal, I would have to proceed with “caution”. He expects that the plumbing will require ongoing maintenance, but he could not guesstimate how much per year.Please follow the link below to review his report.https://www.dropbox.com/s/0x5qbjrjc9kiztu/SCN_0003.pdf?dl=0I don’t know if I should go ahead with this deal. I still have 28 days of due diligence left, but the plumbing has me spooked.