Hello everyone,
I am always on the look out for new parks to buy. Personally, if a park is on a well and there is not public water available to tie into, I move onto the next park. Am I making too big a deal about well water?
I say “There are no bad parks, there are only bad prices to pay for parks.” Frank says “Jefferson is nuts, don’t ever buy a park on well water.”
(:P)
We own one park on well water. We had the well checked out (health/quality of the water with the local Department of Environmental Quality, the depth of the well, and water level in it). All checked out well (pun intended). This was a park with lot rents 40% below market. I felt that sort of ‘easy upside’ more than compensated for the ‘risk’ of buying a park on a well. Certainly well water parks are, all things being equal, of less value than a park on city water. But I do not view well water as a deal-killer, provided the well is healthy.
I might reduce the price of a park by 20% (+2 cap-rate points) to compensate for a well (especially if city water does not run right infront of the property and can not be easily connected to).
Your mileage may vary,
-jl-
I agree with Jefferson. We purchased a park last year on a well. Everything checked out really good with the DEQ and the certified operator gave us a lot of insight into the history of the well - no problems. Like Jefferson’s deal, we bought the park at a very good price with much upside, so that made up for the well water vs city water.