Taking over utility billing and trash was worth more than the rent increase

Where did the $95k come from? Your own cash, a reserve the lender required, or an equity slug from someone else? I'm trying to understand how private capital actually shows up on deals this size, and a 96-lot park at $3.4M feels like it's right at the boundary where you either write the check yourself or bring in two or three people and suddenly need documents.

The submetering install being done by your own crew is the part I keep rereading. $41k for 91 meters is about $450 a lot including labor. What would a contractor have charged? I ask because I'm looking at the service side of this and if there's a real gap there it's a business.

I'd push on the going-in cap. You reconciled seller NOI of $242k down to $198k and then paid a price that implied 5.8 on your own number. So you paid full retail for the improvements you hadn't made yet.

That can be the right call if the improvements are near-certain, and water submetering in a park buying 1.1 million gallons a month is about as near-certain as it gets. But you were also carrying a permitting risk on the billback and a construction risk on the install, and you funded both out of a working capital account that turned out to be short by 58 percent. If the meters had come in at $60k instead of $41k, what happens? Do you have a credit line behind that or were you genuinely five weeks from a problem?

@cobalt the trash fence is the highest return thing in your whole post and nobody's mentioned it. $6k spent, $14.9k a year recurring. That's a 250 percent annual return on the spend and it capitalizes into value at whatever cap you eventually exit at.

I did a smaller version on my 24-lot park and the same thing happened. Once the dumpsters weren't a public amenity for the surrounding neighborhood, the volume dropped by half.

Nine residents came to talk to you about a $30 increase. What did you actually say to them? I keep thinking about this asset class as income without a second job and then reading posts where the operator is having nine difficult conversations in a month.

@marlow that's the part I've been sitting with too. The chapter is direct that residents who own their homes face thousands in moving costs, so they stay. Which means the rent increase lands on people who mostly can't respond to it by leaving. @cobalt handled it with notice and a letter, and one person still left.

I don't have a conclusion. I just notice that the thing making the returns durable is also the thing making it uncomfortable.

On @sable's question, the boundary isn't the dollar amount, it's whether the money is yours. One check from you, a purchase agreement and a loan. Money from other people for a share of the profit, and you're in securities territory regardless of deal size, which means a securities attorney rather than a template. That's not a step you can eyeball.

@cobalt separate question. You said the letter explained the water submetering separately from the rent increase. Was the billback disclosure and the rent increase notice in the same mailing or two mailings? I'd guess one mailing reads as a $30 increase plus a new bill, which is what you were trying to avoid.

$2,850 a month for two yards of dumpster service was absurd and I'd want to know whether the seller was overpaying or the neighborhood volume was just that high. If it was contract terms, that's a thing to check on every park.

Thin margins are my whole life so the five weeks of choosing between the road and the meters is the sentence I recognize. I've been there on a much smaller scale and it's how people end up taking money at 14 percent.

The honest question is what the road patching bought you. $19k of deferred maintenance in month seven. Could that have waited to month eighteen? Because if it could, your cash crunch was self-inflicted and the meters would have gone in with room to spare.

@cobalt did you check the water billback rules before or after you priced the deal? I killed a deal over a permit I asked about in week six and the whole lesson was sequencing. If your $34k of water income depended on a state rule you confirmed after closing, you were carrying a lot of the price on an unverified assumption.

Long holds are my thing so I'll say the part that matters over ten years isn't in your list. You now own private roads on a 96-lot park and you patched $19k worth in year one. Patching isn't a solution, it's a schedule. At some point that's a full resurface and on a park that size you're looking at a six figure number.

Same for the water mains you didn't mention. You put meters at every lot, which means your crew was in the ground 91 times. What did the pipe look like?

@warrant that's the answer I needed, thank you. The line is other people's money, not the size of the deal.

@cobalt one more. You said DSCR moved from uncomfortable to fine. What was it at close? Because if a lender funded a 96-lot park where the borrower's own reconciled NOI was $198k, I want to understand what they underwrote to, and whether they were looking at the seller's $242k or yours.