Re: Apportion Costs vs. Size of Unit
From: Pablo Halpern (phalpernworld.std.com)
Date: Fri, 31 Mar 95 09:46 CST
> From: DianaLacz [at] aol.com

> How did you apportion the cost of land, common facilities, unit constructi
> and soft costs relative to the size of units and sales price?

This issue has been discussed several times on this list. I suggest you look 
at the gopher archives or, better yet, the new Web pages.

One thing to keep in mind is whether your development budget will be lower 
than, higher than, or approximately at the market rate for a development of 
your size in your area. If, as in New View's case, your development costs 
are close to or higher than the market rate for housing, then you will 
probably need to use a formula that is based heavily on the appraised value 
of each house. Otherwise, you are likely to have some families paying under 
market rate while others pay well over market rate. Given the usual 
realities of bank financing and resale, it would be difficult for many 
people to pay much over market rate for their house. (This is a practical 
answer to a practical question. Please, lets not start another discussion 
about whether the banking system is good or bad!)

New View had several intra-group conflicts caused by our appraiser changing 
his mind and/or misunderstandings between us and our appraiser. Having your 
house price determined by a pre-construction appraisal late in the design 
phase is no fun. One idea you might consider is to create a formula, based 
on square footage, bedrooms, fixed costs, etc., that is deliberately 
contrived to be close to market rate for each unit. Then, you might be freed 
from the tyrany of appraisals. Then again, you might not be. It was just a 
thought.

Good luck. From previous discussions on this list, it seems that this issue 
is one of the toughest many groups have had to face in the development 
process. It certainly was for New View.

- Pablo

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Pablo Halpern              (508) 435-5274         phalpern [at] world.std.com

New View Neighborhood Development, Acton, MA, U.S.A.
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