Do you calculate anticipated abandoned home repair under expenses?


#1

I mean do you budget for that when evaluating NOI/cap rate? If so what area of expenses do you apply the possible 1-4k cost to fix a previously owned home they walked from?

For example, under:

  1. Property tax
  2. Management
  3. General park maintenance

Do you factor abandoned home repairs under a general park maintenance?

As always, thanks for your replies!


#2

yes i do but i dont think its the best way to do it. I am asking my accountant in jan.


#3

Buying a community is often very competitive so people often offer more than makes sense just to get the community.

But, yes, I would try to enter those numbers into my calculations and my negotiations. I would certainly want and need them to set up my pro forma if I was successful in buying the community.


#4

Do you pretty much calculate them under repairs/maintenance? My issue is lacking experience predicting what they are. I guess we all start there.


#5

Actually the tax man would consider putting that home in the photo in shape to be a capital expenditure. But if it just needed a little fix’n here and there, it could be rightly be added to the repair line on the P&L.

Where exactly where is the line drawn between capital expenditure and repairs & maintenance? It isn’t, exactly a line but gray zone.