Looking at a park with well water and Lagoon septic system

Mobile Home Park Investing
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Looking at a park with well water and Lagoon septic system

Rodney Miller
Lender · Oklahoma City, OK · Member since 2017 · 138 posts · 130 votes

I would like to know the downsides of purchasing MHPs that aren't on city water and sewer.  I am in OKC and a lot of parks are on well and septic systems.   I saw that one MHP guru said he only buys parks that have city water and sewer.  Wonder what everyone's thoughts are on this topic. How do you do a proper inspection of those systems and what could get me into trouble?

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Andriy Boychuk
Rental Property Investor · Staten Island, NY · Member since 2013 · 480 posts · 197 votes
9y

Hi @Rodney Miller I highly recommend to read this post since it covers answers to your questions 

https://www.biggerpockets.com/forums/30/topics/459244-is-a-mobile-home-park-with-septic-that-bad

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  • Andriy Boychuk
    Rental Property Investor · Staten Island, NY · Member since 2013 · 480 posts · 197 votes
    9y

    Hi @Rodney Miller I highly recommend to read this post since it covers answers to your questions 

    https://www.biggerpockets.com/forums/30/topics/459244-is-a-mobile-home-park-with-septic-that-bad

    1Reply
  • Paul Stout
    Mobile Home Park Investor / Licensed Indiana Real Estate Broker · Chicago Area, IL · Member since 2015 · 262 posts · 135 votes
    9y

    @Rodney Miller It is no secret that public utilities are far superior to private utilities for numerous reasons.  However, each deal must be evaluated individually.  Although it may be wise to adopt the policy of only buying parks with municipal utilities, you must be careful not to limit yourself unnecesarily.   If you find a great park in a great area for a great price that has private utilities, should you buy it?  Whether or not the numbers make sense is a relative equation.  What makes a good or bad deal boils down to numbers.  A great price for a public utility park may be a bad price for a similar private utility park.  You have to run the numbers and be able to project expenses accurately to know the answer.   Regarding inspections, this is not a part of the due diligence that you want to be cheap on.  Depending on the type and size of the system you could be looking at hundreds of thousands of dollars to repair/replace it.  You want to have a true subject matter expert perform the inspection and you must be willing to pay for this expertise.   All other aspects being equal, you should be buying private utility parks at a higher cap rate.  You should also be using a higher expense ratio in your calculations.  Be certain that your maintenance, repair, and capex projections make sense for the subject property.  One last thing I would suggest is that if you plan to own one small park, you are probably best sticking with public utilities.  If you plan to buy private utilities you may want to keep that as a small part of your overall portfolio.   This way you mitigate damage to your portfolio by volume.  If you are new to MHP investing you also may want to start out with public and work your way into private as you grow.

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  • Account Closed
    Johnson City, TN · Member since 2014 · 586 posts · 705 votes
    9y

    Let me ask you this one question. What would you do if your well went bad and the groundwater became contaminated?

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  • Rodney Miller
    OP
    Lender · Oklahoma City, OK · Member since 2017 · 138 posts · 130 votes
    9y
    Originally posted by @Account Closed:

    Let me ask you this one question. What would you do if your well went bad and the groundwater became contaminated?

     A buddy of mine had that happen and he drilled another well.  In our area, you have to have your well water tested every month.

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  • Account Closed
    Johnson City, TN · Member since 2014 · 586 posts · 705 votes
    9y

    @Rodney Milleri asked what happens if your water becomes contaminated? As in ALL the water sources under ground are contaminated.

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  • Rodney Miller
    OP
    Lender · Oklahoma City, OK · Member since 2017 · 138 posts · 130 votes
    9y

    I don't know. That's why I'm asking questions.  Do have some experience with such an event? 

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  • Rodney Miller
    OP
    Lender · Oklahoma City, OK · Member since 2017 · 138 posts · 130 votes
    9y

    @Account Closed

    I don't know. That's why I'm asking questions. Do have some experience with such an event?

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  • Account Closed
    Johnson City, TN · Member since 2014 · 586 posts · 705 votes
    9y

    I have never personally had that experience but I have known people that have had their water contaminated and their only option was to use bottled water

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  • Rodney Miller
    OP
    Lender · Oklahoma City, OK · Member since 2017 · 138 posts · 130 votes
    9y

    @Account Closed  Guess I'd have to start selling bottled water LOL

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  • Rhett TullisBusiness Member
    Property Manager · Oklahoma City, OK · Member since 2013 · 1k+ posts · 617 votes
    9y

    you might check with @Paul Choate he has a bit of experience with this i think as far as the testing goes.  he might be able to answer you on the potential issues should the water fail.  

    [email protected]405-283-6522
    Integrity Oklahoma
    WebsiteView Page
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  • Paul Choate
    Attorney · Shawnee, OK · Member since 2013 · 350 posts · 230 votes
    9y

    I have a lot to say on this subject! I have two parks on private well and septic. One is shut down because of it. (I bought it that way.) feel free to contact me if you have specific questions. You really need to become well versed in the requirements and laws surrounding them. 

    Biggest downside is they are very expensive to fix if something goes wrong and you don't have a lot of time to fix them before the state gets involved. Upside is they are fairly common so they do work and people use them so you don't have to be afraid of them. Just need to know what you are buying and make sure you have a plan to deal with it.

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  • Rodney Miller
    OP
    Lender · Oklahoma City, OK · Member since 2017 · 138 posts · 130 votes
    9y

    Great. I'm gonna give you a call. 

    Thanks!

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