Plug the Holes, Fill the Barrel by Kogok Jason

Author:Kogok, Jason
Language: eng
Format: epub
Published: 2022-04-01T16:00:00+00:00

The example we looked at had one home at $400k close to town/amenities and one that was $250k but was further out, both with the relatively same 2,000sq.ft home on them. If the lot value on the home near town was worth $215k, then the building structure would actually be worth $185k. If we’re using a percentage applied to value, I think it’s more accurate to apply it to the $185k. If we look at the $250k home out in the country, where the lot value was maybe only worth $75k, then that home structure value would be $175k, and the percentage of repairs should be applied towards that amount. What we’ve done is more effectively focused on the home structure itself, which is where the repairs are most likely to happen. If we used one of the more common methods, such as the 1% of value, we would have had either a $4,000 repair budget or $2,500 for the same home. Now, with this revision, if we use these numbers and use 1%, the numbers would be $1,850 or $1,750 – you see, we’ve gotten much tighter within our range and tightened up our forecasting. The next step is to now decide on what percentage of that revised structure value we should apply for repairs for year 1. Should we only do 1% of that new value, or 2% or 3%, etc.? Again, presuming the home is in good condition, I think our multiplier factors should be based on square footages. For instance, you may use a range like this:

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