New to mobile parks. Trying to wrap my head around some of the expense items that would come into play when evaluating a park.
The 2 i am confused about are:
Repairs & Maintenance
and
Replacement Reserves
Are these the same? ( i assume not). What i found is that R&M estimation is between $50-$100 per lot. What about Replacement Reserves?
I realized they would be much hight for parks with private utilities and would even be hard to estimate, but what a number should be for city utility park.
Thank you!
Reserves are to fund capital improvements - and they offset your deprecation.
If you have asphalt roads, you can only patch them so many times before you re-surface which costs more and you should allocate money for that every year. And upon using those funds capitalize that on the books and let the depreciation cycle continue in perpetuity.
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Sounds right for cap reserves. This is what our banks require as part of the monthly mortgage escrow.
Add on another amount in addition for R&M. This is an operational expense (not a reserve for capex). Another $50-100 per lot per year sounds right, but it depends on your park.
So you have two items, both are about $50-100 per lot per year.
Brandon@Sandell
Thank you for the feedback, @jhutson and @Brandon !