So I have a park under contract and the seller claims to have invested heavily in the septic and well over the past few years. I know the county will do the quick test to tell me that it is working correctly, what is the right type of service person to opine on the quality of the system? I have spoken to installers and inspectors, most have told me they do not inspect and to speak with the county. Is a plumber the correct person to use? Any advice is appreciated.Thanks,D
Well, you said “any advice”…Why would you want a park on septic and well? When I first got interested in having a park, my mentor made sure I understood to steer clear of such parks. My brother owned a motel in New Hampshire on well water. Just last year he spent a couple of thousand dollars to extend his well. And…nothing. And septic? Whew. Don’t want nothin’ to do with it.There are parks out there for sale which are on both city water and sewer. Why not let the city handle it?Just a thought…
So- in most states you must have the new system engineered. I would ask for a copy of the blueprints and the evaporation tables. You can also check to see the system was inspected. I would ask for the septic person that services the MHP. they will be the pumpers of the system. If I were buying the park, every tank would need to be pumped and inspected. You shold make sure you have some sort of ‘what if’ plan. If a field collapses, then what? Can you put a new one in, can you combine homes on one system? Will the city / county / state allow you to put one in at all? If the system fails, it is not all that easy to put one back in the same hole without some serious soil work.Also- there are several types of fields, and different ones for different soil conditions- that is another thing to check…
Who pays for ALL the tanks too be pumped and HOW do you check out lateral lines??? For being in the business for 35 years and having treatment plants (they use to much electricity and a management concern) and talking down septic systems I disagree. Concrete tanks are NEVER REPLACED AND out of 60 septic tanks in 16 years I have replaced I lateral line and pumped out NO TANKS. When a system is put in CORRECTLY either anaerobic or septic the system is very environmentally sound with a small carbon foot print and very efficient Even with DEQ regulations some systems have problems and some are trouble free! My cost total cost for 136 units on septic’s is less than $1500, yes less than $1500 total! Try having city sewer for 16 years and what would be the cost??? Also lets talk about wells–I was on city water for 13 years and at first it was $800 per month and three years ago was raised to over $5000 per month! For those on city water what will be your water bill in 10 years–yes you will not know. Wanting to have better water, yes my people did not drink the city water so we put in a DEQ approved system for $150,000 and my present cost per month including chemicals is $160 per month plus in ten years will be less than $250 depending on KW charge–yes now the people drink the water. As an owner operator our costs are low and in the process of selling the business the buyers are saying impossible until they see the numbers themselves! So to buyers looking at wells and septic systems they can give you an economical edge and to multi-park owners we can profit more with one park than some with three parks or more because of efficiency with our labor and attention to detail! I spent less than 30 minutes per week checking on the water system.
I see there are definitely two schools of thought here. I have been looking at a couple of parks here in Ohio that are on septic systems. Could someone summarize some of the key questions I should be asking the brokers in regards to the septic system that would help me to better understand the risks and rewards of such a system in a park? Thanks for any and all guidance.
So first- In my opinion most (99.99%) brokers are useless to ask such questions too. They look at computers, find properties, fill in the blanks on contracts and not much more. There are a few exceptions, but it is very few. Remember, they are not in the game for you to get the best property, they are in the game to get paid. I have had brokers representing sellers on owner financed deals point blank tell me to stop making payments after a year and make the seller change the term. I looked at a property with a listing agent and he had no idea the property had septic tanks- and that property had EVERY leach field fail… so they had opened the sewer to run on the ground. In some places, they removed the tanks lids and just let it overflow… he had NO idea… Also- most brokers have no idea how to price the property. that said- if you want to learn about private utilities I have 2 things to say…1) youtube- search for what your wanting to learn. You will be amazed at what is posted2) visit the property with someone that pumps and inspects the systems. Tell him you want to pay him for an extra hour of his time. If you want to remember what he says, bring a small video camera or audio recorder. If you did not catch it… agents are in the game to make a commission. That is OK- so long as everyone knows their role. If your asking the agent for advise on buying the property your doomed. Find an advocate that just is working on your behalf…
Jim, good points, you are exactly right.I have parks on septic/well and on city services. IF there are no problems, they are both great, IF. I view this as a risk/reward scenario. septic/wells are very low cost to operate but when they go out, or have problems and they eventually will, they can be very costly, tens of thousands of dollars easily. On the other hand city services are more expensive on a monthly basis. However if the park is run properly, much if not all of that cost should be passed on to the residents, and you have no worry about interruption of service.I am not in the camp to never buy a park on septic/well. But I do think it is very important to understand the future replacement cost of these systems because if you own the park long enough someday you will know the cost first hand. It is not fool proof but at the very least have a septic inspection and a well test.
Call Mike Renz at Renz and Associates at (614) 538-0451 and I’m sure he’ll have some ideas for you on how to determine the current condition, He is the best Phase I guy in the U.S. You’ll want to talk to the septic operators in that market (including the one that currently services the park) to see their opinion. But, as already discussed, nobody knows the real answer, because there’s no fool-proof test you can do.Septic systems run fine in many markets. But you have to know if you will be allowed legally to make repairs/replacements and what that will cost. And you have to be able to write a check to fix it immediately. If the cost would be $100,000 worst case, and you don’t have the ability to write a $100,000 check (or have a plan to be able to) then I would not buy a private utility. REO is peppered with people who took the gamble and lost.When running the number on a septic system, use the same cost expense % as a park on city sewer that the park pays. Why? Because you have to save enough to fix the system down the road. Don’t let a seller tell you that septic is free – it’s not. You have to internally save at about the same pace as paying for city sewer. The only one who gets away with murder is the seller who closes the day before the septic system fails. Unless you are that lucky, you better be allocating the money internally.
Frank, you are dead wrong! I have 40 years of experience with utilities and to generally lump All septic and well systems to have similar costs overall as to city utilities is false. After 16 years we are not replacing tanks, lateral lines or pumping them, our cost is $1000 total since a tree root changed the flow to a lateral line. There is a very efficient and reasonable way to check on lateral lines since pumping out a tank to see if it works is nonsense (90% of problems are laterals lines not concrete tanks). As per wells we were on city water at a cost of $5,500 per month with still needing to do water testing as to bacterial, lead and copper, by-products and numerous other tests. With the wells our monthly cost is $156 including chemicals, plus we have better quality water that people drink. To replace a pump is much less than one month cost of city water. Please do not use blanket statements–some of us have field experience that a textbook would never give! Presently at the above mentioned park we are at 136 sites and expanding.
Everyone is allowed their own opinion on the forum. We have owned over 200 parks, and there’s no way that your numbers work in the average park. The individual park you are describing may have had phenomenal luck, but if you have had only $1,000 in total costs in 16 years (that’s $60 per year on average!), there’s no way that the typical park can remotely resemble that performance. I wish it was true, as we own a bunch of parks on septic. One of those parks had spent over $150,000 in septic repair/replacement before we bought it (and we had to finish it). You have to allocate future capital costs into your monthly numbers – not just repair and maintenance. The water well that costs you $156 per month (which cannot include testing, chemicals and electricity, right? The electricity alone is more than that) will also have around a $50,000 capital call when it ultimately has to be re-built (my first water well in Springfield, Missouri only lasted about three months after I bought the park, and the estimate was $50,000+ to drill a new one and finish it off, so I converted to city water).Every park is different, but I don’t want people reading this forum to think that private utilities are anything less than a nightmare unless you have properly budgeted to replace the systems, allocate a reserve to do so, and do terrific due diligence on the front end to make sure you have a handle on them (which you can never truly have a handle). City water and sewer has been, and always will be, superior to private utilities. If you don’t believe me, just talk to any industry-specific lender like Security Mortgage Group at (585) 423-0230 – the largest mobile home park loan originator in the U.S. Banks and appraisers set the park values, and you always get a deduction for private utilities. We will still buy parks with water wells, packaging plants and septic, but only because we can afford to write big checks if they fail, and only if the parks have terrific economics that make the private utilities worth owning. But the industry preference has always been city water and sewer.I’m not trying to offend anyone, but the facts are the facts.
Frank, experience is hard to package and yes the numbers are TRUE sorry for the costly problems. My last commercial state approved well 2013 cost less than $6000 to drill and start operation. Sometimes the big boys are not efficient or their due diligence was lacking. Our local banks are very pleased to loan on parks in our area and have no need for the big box lenders. When buying property with septic’s I study soil types and perc rates and then check on the installers and their track records for success and then the last ten years as to any kind of problems and then ask many, many, more questions of the park owners and residents!!!
I am not out to knock any one persons investment choice buy lets keep in mind that if everyone wants to own a park and not have to pay a premium price to be on city services it’s reality time. The reality is that every park everywhere is owned by someone, most are making money, and the majority of those parks are not located inside city limits.
Septic and well are simply just another aspect of MHPs. Unfortunately we can not all afford the luxury of purchasing the ideal park on city services. For those lacking the ability to tackle the challenge of rural parks just dig a little deeper into your park purchase piggy bank. For the rest investing comes with risks and rewards that usually balance out if you know how to properly operate a business.
For those that can’t stand the heat I agree you should play it safe and stick to the more conservative investment of a city park. Let those of us prepared to take the higher risks reap the higher rewards of rural community investments.
I think the septic, sewer system is the riskiest part of the whole investment.I have one park on sewer and one on septic. Actually the park with the sewer has given me more problems to date.Many times I have had to jet the lines and in one case had to replace a stretch of old piping that was damaged.The septic system I have is in a sandy area and this is conducive to the system working well to date.The septic system is more complicated bc of all the variables but the day to day costs are much less. With cash on cash returns in the 20% or more range of course there is going to be risk.No free lunch!!All of us here are willing to accept those risks with the hope of excellent returns.In many areas of the US unfortunately there is not a sewer system but there are great deals.In any event the logic is take calculated risks and diversify.
Hey, I’m not knocking septic systems – we own some of them! I just want to put it into perspective for people who read the forum and may not know what a septic system is or what the costs and risks are. I certainly have no desire to offend anyone.
I thought i’d jump into the miss information of the Septic and Water Well discussions, I have had years of Water Treatment and water and the use of septic systems in RV and Mobile Home Parks, Commercial and New Home Construction, and I read about Carl’s Park with 60 septic tanks and a Approved Water Well and I have to agree with him, if proper Septic Tanks with the proper length of lateral lines are installed the overall Cost should be minimal over the years. You Park Buyers and Brokers don’t own these Parks long enough to really know the Facts. If you operated a Mobile Home Park for example as this guy Carl has you would know what he is telling you is Petty Close to the True. You Buyers of Mobile Parks Remember that these Brokers will tell you anything for a Commission. They lack in Research, and Knowledge because they have Never operated a Park for any length of time. All they do is listen to all the negative comments. Most Mobile Home Buyers want to purchase several Parks in a close area so they can hire ONE Manager to run them all and cut expenses down so they have a good Bottom Line. Don’t be Miss Lead, Listen to some of these Owners that have been operating these parks for a number of years.