My contractor told me the sewer hookups on the back row are "good enough for now" and I cannot figure out what now means

Question

Closed on a fourplex in April and I thought that was the thing eating my headspace, but this RV park I've been circling in Ashtabula County keeps pulling me back. Forty-one sites, lake access, owner says it does $118k in a season. The back row, fourteen sites, has sewer connections that the contractor my brother brought out called "good enough for now." I asked him to put a number on now and he said maybe three seasons, maybe one bad spring. That is a $40k to $90k spread depending on who I talk to, sitting in the ground where I cannot see it. I have rehabbed nine buildings in Cleveland and at least when the pipes are wrong I can open a wall. You cannot open dirt the same way before you own the thing. I don't know if I'm supposed to treat that estimate like a price reduction I negotiate right now, or like a capital reserve I model in, or like a reason to walk. The seller has not offered anything. The broker says it's typical for a park this age. Everything in me that learned how to price a busted duplex is telling me those two framings are not the same dollar.

Rena Guide · Answer

Your instinct is right that those two framings are different dollars, and here is why it matters mechanically.

A price reduction happens once, at closing. You get the $40k to $90k knocked off the purchase price, you pay less, and your basis (the number you depreciate and refinance against) drops accordingly. A capital reserve means you pay full price today and then write a check later, from your own pocket, on top of the purchase price. Same work, different financial structure entirely.

The standard move in commercial real estate due diligence (the investigation period before closing) is to get an independent third-party infrastructure report before you close, not after. For underground sewer systems specifically, that usually means a licensed plumber running a camera through every line and giving you a written condition report with footage. That report gives you something your brother's contractor did not give you: a documented finding you can put in front of the seller.

With that report in hand, you have three real options. Ask for a price reduction equal to the midpoint or high end of the repair range. Ask the seller to escrow a repair amount at closing (money held by a neutral party until the work is done). Walk, with your earnest money back if your purchase agreement has an inspection contingency protecting you.

"Typical for a park this age" is a broker framing, not an engineering finding. The broker represents the seller.

The one thing you did not ask: $118k in a season is a gross revenue number. Before you model anything, you need the actual operating expenses, occupancy by month, and whether that revenue includes the back-row sites at full capacity or already discounts them. A camera report and a full two-year P&L are the two things I would want in hand before this conversation with the seller gets any further.

What does your purchase agreement say about the inspection period, and how much time is left on it?

vince_okoro82 · Answer

Pull the permit history on those fourteen sites before anything else. If the county has flagged that back row before and the seller never pulled a repair permit, that is not a reserve issue, that is a disclosure problem.

The broker calling it "typical for a park this age" is doing a lot of work for the seller right there. What's the park's age, and has it ever been through an environmental inspection for the lakefront proximity?

My contractor told me the sewer hookups on the back row are "good enough for now" and I cannot figure out what now means

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