Let’s imagine a park worth $400k, with park-provided water. If the water were submetered, the income would go up by, say, $3k, and the park value would go up by $30K.
Does that potential extra income change the value of the park at all? Is it worth more than $400k because the income could be brought up by $3k? Or does it just make the park more attractive, though still only worth $400K?
dave
Most of us only pay for performance. If the park is not performing at that improved level, just speaking for myself, I’m not going to pay for it.
But you can go ahead and spend the time and money yourself to sub-meter, and collect the higher ‘rents’ from the tenants for 6 - 12 months to prove they are able to absorb the additional ‘rent’ you are charging, and then if all works out, I’d pay you for your value-add.
My 2 cents worth,
-jl-
Dave,
It’s going to take at minimum 90 days for any additional revenue to show on your financials if you were to begin the submetering process say today so if you’re in a hurry to sell I wouldn’t do it. You’re talking 2-3 weeks for the installation, 30 day notice to tenants in change of lease terms, 30 days of meter reading, then 30 day payment terms for the readings for the tenants. But once that is all done and those numbers are showing you will for sure be able to get more for the park.
John
So a few things. First- sub-metering removes an expense and moves it to a pass through, BUT it also creates some additional work for people. the meters must be read, bills must be produced, laws must be complied with- and stuff breaks.
Power goes out in the MHP, several tenants do not drip the water, and it is cold out. 5 freeze plates bust (best case) and your shutting off peoples water and fixing freeze plates. Meters, from time to time stop working… a tenant calls because they have a $300 water bill…
ok- I will share one story- though we all know the best stories- and most tragic come from Frank… he attracts challenged tenants like road kill attracts flies and vultures…
we had a sewer stop up, main line and we needed to snake the line. So- we did. To check the line we asked the closest tenant if we could flush her toilet a few times to see the water flow. So- the next month with her payment she requests a ‘water’ credit for the 10 flushes the plumber used… 2.2 gallons per flush… so- we figured out 22 gallons of water and gave her the credit…
all that said- you park is worth more, but you might have some offset in labor and administrative time…
Every park has different parameters that need focus as to be how to be more efficient in water usage. Is it more efficient to have your own water system or can you by buying water and sub-metering KNOW ten years in the future the water rates will still be moderate. Park owners need to control all the variables that tend to be wild-cards so they can project future returns on investment sanely. For example when we bought a park 15 years ago the water cost was $800 per month and 3 years ago it was at $4500 per month and no matter how efficient I was the city was counting my units and them multiplying that by $45. My usage was about 7,000 gallons per day for 136 units (retirement and second home village) there was no way to lower my water bill with the city. Solution: put in a DEQ approved system for $150.000 and now my cost is $150 per month including chemicals–will the buyers pay me more–well buyers cannot believe the numbers and discount it as not normal since going by the book my water cost should be MUCH HIGHER. Some parks are very efficient on utilities and when buyers see the numbers there is skepticism. Park owners that operate one or two parks are a dying breed but generally try to do an excellent job for their tenants and watch the BOTTOM LINE CAREFULLY since that is their livelihood…