Hooking into city sewer
I'm looking at a purchase of a small seasonal park in an area that's going through a big growth phase. As part of the growth, the city is extending sewer to all properties in the city limits and requiring sewer hookup. Obviously this is desirable anyway to get off septic, but the numbers hurt in the short-run. As far as the city is concerned, the actual hookup into the new sewer will be paid by the city, but I will need to run sewer lines this fall from about 30 homes to the sewer. NOI on the park is about $40K and the seller says running the sewer lines will cost between $30K and $40K. The numbers on lot rents check out and I can get the park for a decent cap, but it's hard not to look at an immediate $40K capital expense as raising the park price by that much. Plus, I don't really have the reserves in place currently to cover that large of an expense. There's some room to raise rents, which I'd plan on doing regardless, but I'm wondering if any of you have ideas on the best way to pass this expense on to the tenants. Also, I haven't done any due diligence yet on the actual hookup process itself and if the seller is quoting me accurate numbers, so I'd appreciate it if any of you have any idea of the expense (and esecially hidden costs) I would need to plan for with a sewer hookup. I just figure if you guys scare me off from a purchase like this, I won't waste my time calling around and figuring the actual cost.