Investing in a mobile home park can be a lucrative opportunity, but before making a purchase, it’s important to understand the difference between private utilities and public utilities. In this article we will look at the advantages and disadvantages of each option.
Utilities are a critical component of mobile home park living, providing residents with the basic amenities necessary for modern living. When referring to utilities we are typically referring to water, sewer, electricity, and gas service. Park management is responsible for ensuring that these utilities are maintained and available to residents, and residents are responsible for paying their bills on time to avoid disruptions in service.
Private Utilities In A Mobile Home Park
Private utilities refer to the infrastructure and services that are owned and operated by the mobile home park owner or in some rare cases a private third party. We are typically referring to water and sewer services here, but you may still run into some parks that have master mastered electric or gas systems. I would avoid mastered metered electric or gas situations unless you have advanced knowledge of them. The repairs and upgrades can be extremely costly.
Private water and sewer systems in a mobile home park often have a single meter at the output of the water well system, which allows the owner to monitor consumption and check for leaks. The owner of the park typically incorporates a flat rate for utilities included in the resident’s lot rent.
Private utility systems you might run into include water wells, septic systems, sewage treatment plants, and lagoons.
- Wells: In the case of wells, the park will have its own water supply that is sourced from underground aquifers. This can be a cost-effective option for park owners as they are not reliant on municipal water supplies, which can be expensive and subject to rate increases. However, owning a well requires careful maintenance and monitoring to ensure the water supply is safe and up to code.
- Septic Systems: Septic systems are another common option in mobile home parks. These systems are used to treat and dispose of sewage from individual homes. They can be a good option if connecting to a municipal sewer system is not possible. Septic systems are generally low maintenance, but they can pose health and environmental risks if not properly maintained. Make sure to clean your strainers regularly and don’t be surprised to see a few barbie dolls in there.
- Sewage Treatment Plants: A sewage treatment plant on site is another option for mobile home parks. These plants treat sewage from the park and return it to the environment as a clean effluent. While this can be a more expensive option, it offers greater control over the quality of the water leaving the park.
- Lagoons: Finally, lagoons are an alternative to traditional sewage options. Lagoons are shallow pools designed to treat wastewater through natural processes, such as aerobic and anaerobic bacteria. While this can be a low-cost option, it also requires regular maintenance and monitoring to ensure proper functioning. Be very careful and research all your options when buying a park with a lagoon system.
When considering purchasing a mobile home park with private utilities, you should understand the costs associated with owning and maintaining these systems. The cost of maintenance and repairs can vary depending on the size of the park, the number of residents, and the condition of the utilities. Private utility repairs are more expensive than the repairs associated with the public utility infrastructure, simply due to there being more equipment on site. You should have a thorough inspection and assessment of these systems before purchasing the park to avoid unexpected expenses down the road.
Advantages of Private Utilities in Mobile Home Parks
- One of the main advantages of private utilities is that mobile home park management can be more responsive to the needs of the park and its residents in the case of equipment failure or other events that cause temporary loss of the utility.
- Park owners don’t have to pay for water usage, as they are getting their water from their own well.
- Private utilities can provide greater control over the quality and reliability of the product.
- Management can tailor services to meet the specific needs of the mobile home park and its residents, rather than relying on standardized services provided by public utilities.
- Mobile home park owners may be able to invest in infrastructure upgrades and improvements more quickly than public utilities, as they have greater control over their budget and decision-making processes.
Disadvantages of Private Utilities in Mobile Home Parks
- Maintaining wells and septic systems can be expensive and time-consuming. Park owners are responsible for ensuring that their systems are functioning correctly and complying with regulations.
- Regulations regarding private utility systems vary from state to state and can be stringent. Non-compliance with these regulations can result in significant fines, legal action, and environmental hazards.
- Private utility systems have a limited capacity, meaning that they can only handle a certain amount of waste and water before they need to be emptied or serviced. This could be an issue if looking to expand a mobile home park.
- If not maintained correctly, private utility systems can pose health risks to residents and the environment. Contamination of water sources, for example, can lead to illnesses such as E. Coli infections.
Public Utilities in a Mobile Home Park
Many mobile home parks rely on public utilities to provide essential services such as water, sewer, electricity, and gas to residents. Public utilities are those that are owned and operated by a government entity, such as a city or county. Residents typically have more protection and oversight, as there are regulations in place to ensure fair pricing and quality service. Public utilities also often have more resources and expertise to handle large-scale infrastructure projects and emergencies.
As a mobile home park owner, one of your biggest public utility expenses is water. In some mobile home parks, there may be only one water meter at the entrance to the park, and the park owner is responsible for paying the water bill for the entire park. In other parks, there are individual water meters at each home, and residents are billed individually for their water usage.
Submetering is the process of installing individual water meters at each home in a mobile home park that does not already have them. This allows for residents to be billed based on their individual water usage, rather than the park owner being responsible for the entire water bill for the park.
There are several potential benefits to submetering the water in a mobile home park:
- Fairness: Submetering ensures that residents are paying for the water they use, rather than being charged a flat rate regardless of usage. This promotes fairness among residents and can reduce disputes over water bills.
- Conservation: When residents are aware of how much water they are using and are charged accordingly, they are more likely to conserve water and reduce wasteful habits.
- Cost Savings: Submetering can also help park owners reduce costs by identifying leaks or other issues early on, before they become major problems that require expensive repairs.
- Increased Park Value: Submetering can increase the overall value of the mobile home park, as it promotes water conservation, decreasing expenses, and therefore increasing the net income.
Advantages of Public Utilities in Mobile Home Parks
- From the perspective of a park owner, public utility infrastructure is typically cheaper and easier to manage then private utilities. There are less moving parts to spend money and time on fixing.
- Public utilities are typically subject to government oversight and regulation, which can help ensure that they provide high-quality, reliable services to residents.
- Public utilities often have greater resources and expertise, which can make them better equipped to handle complex infrastructure issues or emergencies.
- Public utilities can provide a level of transparency that may be lacking in private utilities, as they are often subject to public scrutiny and are required to make certain information available to the public.
- Public utilities can provide consistent, standardized services to all residents, regardless of their individual needs or circumstances, which can promote fairness and equality in the community.
Disadvantages of Public Utilities in Mobile Home Parks
While there are certainly advantages to public utilities in mobile home parks, there are also some potential disadvantages to consider.
- One concern is that public utilities can sometimes be less responsive to the specific needs of mobile home parks. Public utilities are often subject to bureaucratic processes and regulations, which can make it difficult to adapt to the unique circumstances of a mobile home park.
- Public utilities may be less flexible in their pricing.
- Public utilities may have less of an incentive to invest in infrastructure upgrades or improvements, as they may have less financial flexibility.
In reality there are not many downsides of public utility service in mobile home parks. If I am trying to decide whether to purchase the same park on public or private utilities, I am always going to go with the public utilities.
Gas and Electricity
In a mobile home park, the way that gas and electricity bills are billed and paid can vary depending on the specific arrangements between the park owner, the electric and gas companies, and the residents.
The most common arrangement is for the gas and electric companies to bill each resident individually for their usage. In this case, the park owner is not directly involved in the billing process, and each resident is responsible for paying their own bill directly to the gas and electric companies. This arrangement is advantageous for both the park owner and the residents.
In some rare cases the park owner may be responsible for paying the gas or electricity bill for the entire park. In this case, the park owner must manage the billing process and collect payment from the residents to cover the cost of the gas or electricity usage. Usually the gas or electricity is incorporated into the resident’s lot rent in master metered parks.
Final Thoughts: Private vs Public Utilities In A Mobile Home Park
Investing in a mobile home park can be a lucrative opportunity for investors, but you should try to become an expert on private and public utilities before you pull the trigger. As a review, private utilities refer to infrastructure and services owned and operated by the mobile home park owner or a private third party, while public utilities are owned and operated by a government entity such as a city or county.
Private utilities can provide greater control and flexibility over services, but they can be expensive to repair and pose health and environmental risks if not properly maintained. Public utilities offer more protection and oversight to residents, and they often have more resources and expertise to handle large-scale infrastructure projects and emergencies. As a mobile home park investor, you should assess the costs and benefits of both options before making a purchase. Good luck!