Mobile Home Park with Waste Water Treatment Plant

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Mobile Home Park with Waste Water Treatment Plant

Cory H.
Boise, ID · Member since 2015 · 26 posts · 21 votes

Hello!

I'm looking at a potential offer on a mobile home park that has its sewer serviced by a private (park owned) waste water treatment plant.  Has anyone dealt with this before?  I don't know what I don't know and am trying to get educated.  

This would be my 5th MHP purchase, but the first to not be on city sewer. It's a 50 unit park with 2019 gross income $276k and 2019 NOI of $170k.

The system is 8 years old, and there is a WWTP technician on the park's payroll at ~$26k per year.  The technician supposedly has 30 years experience working for the county WWTP.  

Questions:

  1. How long do these systems usually last? How much do they cost to replace?  
    • I want to make sure I budget appropriate capex for eventual replacement.
  2. How much expertise does the technician require?  How hard is it to find someone to service this? Is this like a septic system where there are many companies who can service it, or is this a very specialized skill?
    • If the current guy ever decides to quit I'm worried about it being difficult to replace him
  3. Does anyone know of any good resources to learn about these systems? 
  4. What questions am I not asking that I should be?  What else should I be watching out for?

    Thanks for any advice!

    Cheers!

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      • Omar C.
        Chicago, IL · Member since 2014 · 91 posts · 32 votes
        6y

        1. It should last a very long time as long as it's properly maintained.  Not sure if the prices have changed and it's highly dependent on the size but you are looking at easily 6 figures to replace. 

        2. This is depending on the state and if the effluent goes into a public waterway.  Servicing is easy, just regular maintenance that most sewage companies can provide.  Actual running and fine-tuning I would recommend someone that is familiar with the system you have onsite.  That is not easy to find in my experience and is someone to run the plant, record the numbers, and ensure they are properly recorded with the state.  It could also be the area my park is in that I can't find someone qualified.  

        3. For me it was learning from the person onsite as much as possible, that's your best resource.  Though they never told me everything they were doing since it wasn't in their best interest to do so.

        4. Ask if the EPA is involved, what state requirements need to be met, renewal process, any federal or state violations.  Also if the effluent does flow into a public waterway what is the contingency plan if there is an issue.

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      • Jack Martin
        Specialist · Scottsdale, AZ · Member since 2014 · 626 posts · 700 votes
        6y

        @Cory H. another resource would be the county or state level body that governs the installation, use, and service of waste water treatment plants.  As mentioned above, start with the current owner, and the company that services the plant, but make sure to confirm everything with the county or state.  They will know the latest regulations, what is required, how often, etc.  

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      • Cory H.
        OP
        Boise, ID · Member since 2015 · 26 posts · 21 votes
        6y

        Thank you for the info!

        0Reply
      • Mark Brogan
        Investor · Roanoke, VA · Member since 2012 · 1k+ posts · 374 votes
        6y

        do NOT even consider this park, the gov agencies can put you out of business any time they want

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      • Tim Rainey
        Member since 2018 · 26 posts · 6 votes
        5y
        • I realize this thread is 9 months old, but I came across a similar MHP deal with a treatment plant and had concerns about the plant. I dont have income numbers yet, but wanted to see if the plant was a deal breaker at the start.

        -40 current spots on 10 acres with room for at least 100 spots

        -Water treatment plant in service 15 years.

        -Plant capacity is 20,000 gallons per day. Averaging 8000 gal per day use now according to owner

        -Current owner is certified to run plant and does so himself. Said he hired someone previously but they were incompetent

        My questions are:

        1. How long would a plant like this be expected to last?

        2. Should it be expected to be replaced? If so what is replacement cost?

        3. Assuming worst replacement scenario above, would you just consider replacement/repair a potential expense and subtract that amount from the asking price?

        Thanks

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      • Mark Brogan
        Investor · Roanoke, VA · Member since 2012 · 1k+ posts · 374 votes
        5y

        @Cory H.

        Before buying this park talk to the govt that regulates the WWTP In your area to make sure it is compliant, if not they can close your park down or at the very least cost tons of money to get unit into compliance

        Good luck

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      • Brent Tiano
        Member since 2022 · 3 posts · 0 votes
        4y

        Another option is to consider selling the WWTP to a private utility.  Let them take over the running of the plant, the risk of repairs (be it to the WWTP or the sewer pipes), and let them take over the billing.  YES, you lose the revenue and the cost of running it, as well as risk of running afoul w the EPA or local government, and the eventual repairs/ replacement costs of the facility.  There are a number of private utilities that are actively pursuing the purchase of private water & waste water utility assets :  Corix or South West Water Company are regional utilities in the US and Canada.

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