Well water utility in MF

[Dave Rav]

I am considering purchasing a small MF deal in SC. 5 units on well water. I have zero expe as source of water supply. I have zero experience with well water. Thoughts here?

[Frank Rolfe]

5 units is really small to be on a well water system. It costs the same to fix the water well whether it's 5 units or 50 units. But the problem is that you don't have many units to divide by and absorb that cost. It it costs $10,000 to fix the well, that's $2,000 per unit on a 5 space park yet only $200 per unit on a 50 -- it's a huge part of the overall value of the park. While we own parks with water wells, they are all 100+ units in size. Sounds like a lot of risk for a small park. That being said, if you are buying it for a really low price, or if the location is outstanding, there may be something about the park that offsets the water well risk. But if it's just an average park in both location and economics, then I'm not sure you want to go forward with that.