What is a private MHP well system worth to a willing buyer?

I own 3 mobile home parks that have water provided by private wells on the property. I pay an operator to regularly test that water, treat it, and file the state paperwork required and charge a monthly fee to tenants to cover this cost. There is a local utilities company that has approached me about buying the well systems so they can take over and bill the tenants. The tenants would almost certainly end up paying more, but the new owner/operator would also be better equipped to handle emergency situations that occasionally arise.

They want to know how much I would like to sell the systems for. I would almost be willing to give them away simply to get rid of the liability, but on the other hand if they are willing to pay for it, why not try to get a market rate valuation. The trouble is, I’m not sure what a market rate valuation actually is!

Any suggestions on how to determine a price?

Its pretty much like a park use the income approach. The big down side to the utility business is if there is rate regulations. This limits the ability to increase rates with out getting approval. How many connections are in each park? Economies of scale dont really really kick until your over 200 connections.
Small systems usually trade at 0 to 3 times Net.

The bigger issue is do you want someone else controlling the fate of your park? Their goals and yours may not be the same. If they cut corners on cap ex for the system for the next 10 years to maximize profit they will run it into the ground and sink your whole park or hand you a massive cap ex bill.

Im in the water business and there is no way I would hand over ownership of my water and sewer infrastructure to someone else when your park lives or dies by its infrastructure. You have to much to lose.


Thanks for the response. There are 3 parks total ranging from 20 to 34 connections, so there’s not much net income after all costs. I’m more interested in risk management, trying to transfer the responsibility of water service to a company who does it as a business. I understand your point about the dangers, and it wouldn’t make sense to turn over the infrastructure to a smaller, less reputable company. In my case, the company that is interested is fairly large in the area and has the resources to do a good job. Using your metric of 0-3 times net income, I probably need to be willing to almost “give” the system away to have them take over operations.