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Author Topic: How to estimate cost of repair with no experience?  (Read 3727 times)

Offline cadw2005

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How to estimate cost of repair with no experience?
« on: November 06, 2011, 10:23:42 pm »
Hi all,
My plan is to buy cheap houses for cash and flip to investors or retail buyers depending on the condition of the house. Now, I have zippo experience in contracting or carpentry. How do I go about giving the seller an offer when I can't accurately determine the cost of repairs?

I have an imaginary meeting with the seller at their house in my head and it goes something like this: Already got the basic info from seller over the phone such as remaining balance of mortgage, asked about anything that could possibly cloud the title, what repairs they think need to be done, why they are interested in selling, etc. I do research on the area's comps and then head over to their house for pics and to talk business. I look around, see that they may have understated the amount of work that needs to be done, but I'm no expert and although I see uneven floors or cracks and suspect foundation work, I can't put a dollar amount on it. Then the seller wants to know my offer. I freeze up because I don't know!

Since this is dealing with the owner direct, do I just tell them I need to have someone come in to take a look (contractor to provide the estimated cost)? Any other ways to do this as I may be dealing with owners that are sensitive about their home?

Thank you!

Offline Gold River

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Re: How to estimate cost of repair with no experience?
« Reply #1 on: November 07, 2011, 05:07:32 am »
Hi,

    Use your phone and call a flooring, painting, kitchen and bath, landscaping, roofing, window, drywall, electrical, plumbing and HVAC contractor and ask them to give you a few minutes of there time, tell them you and your wife are looking at buying your first rental property and need some help determining what various repairs or new systems would cost now for say a 2000 sq. ft. home!

Write these numbers down and then you can pro rate any home from this data by figuring out a sq. ft, sq. yrd, or linear foot and come up with a number? Ask a few questions and describe a repair scenerio IE: painting one room, fixing an electrical circuit, unplugging a drain or replacing a faucet, replacing a heat exchanger or replacing an exterior compressor, etc, etc, etc!

This way it helps prepare you for what you see! If your area has a lot of foundation problems call and talk to a structural concrete contractor about what new stem wall or pier posts or pilings cost and what's involved with engineering and permitting? What to estimate for ??? what you see?

Ask questions, get out and look at a lot of properties currently on your market for sale, listen to your real estate agent or other agents descriptions IE: this is pretty average for our market! This is terrible for our market? This is custom and above average finishes for our market? it gives you an idea what is reasonable to still get a retail sale without work, so you don't look at something and go "This I think needs $20k worth of work"; and in reality it really is sellable without doing any repairs?

I always recommend to the newbies to get out and look at 50 to 100 homes a month for 3 or more months just to get familier with your market!

You can also say to a would be seller: "I need to determine what my repairs will cost before I make you an initial offer, can I drop my offer off tomorrow night" just to give you a little time!


             GR

Offline motivatedceo

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Re: How to estimate cost of repair with no experience?
« Reply #2 on: November 07, 2011, 05:18:06 am »
Gold River gave some excellent advice. Here are a few more tips too...

- Consider becoming a certified home inspector, or at least taking classes that they get (I have not done this, but plan on doing it in time)
- Consider becoming a licensed real estate agent, or at least taking some classes they get (I have done this, but I never actually took the state license because in Texas it would be a hindrance to an investor in some cases due to not only the fees, but the disclosures that are required when running ads or making a deal)
- Take the time to learn the costs of materials & installation costs ... I have done this. It will take you many months to learn what tile, carpet, paint, new ceiling fans and other things cost at Home Depot and what they will cost nearly exactly to install...but that knowledge is invaluable. For me, that stuff is easy to do, but I have been doing this for about 3 years now. I am actually good enough now I can estimate the cost of a foundation repair fairly accurately, just by looking at a house, and that again takes time to learn.
- Build a relationship with a general contractor, who can come in and write up a low priced bid for you. However "throw him a bone" periodically and give him some work to do, of course. This again will accelerate your learning process as he will probably share how he came up with his figures
- Build a relationship with a licensed home inspector, if you don't become one yourself. I have done this. I can get a home inspected for $100-$125, while most people in Dallas will spend $300 or $400+. I don't always get homes inspected nowadays, but for the more expensive deals or on any deal where I have a question...I definitely do.

Good luck!!!



Hi,

    Use your phone and call a flooring, painting, kitchen and bath, landscaping, roofing, window, drywall, electrical, plumbing and HVAC contractor and ask them to give you a few minutes of there time, tell them you and your wife are looking at buying your first rental property and need some help determining what various repairs or new systems would cost now for say a 2000 sq. ft. home!

Write these numbers down and then you can pro rate any home from this data by figuring out a sq. ft, sq. yrd, or linear foot and come up with a number? Ask a few questions and describe a repair scenerio IE: painting one room, fixing an electrical circuit, unplugging a drain or replacing a faucet, replacing a heat exchanger or replacing an exterior compressor, etc, etc, etc!

This way it helps prepare you for what you see! If your area has a lot of foundation problems call and talk to a structural concrete contractor about what new stem wall or pier posts or pilings cost and what's involved with engineering and permitting? What to estimate for ??? what you see?

Ask questions, get out and look at a lot of properties currently on your market for sale, listen to your real estate agent or other agents descriptions IE: this is pretty average for our market! This is terrible for our market? This is custom and above average finishes for our market? it gives you an idea what is reasonable to still get a retail sale without work, so you don't look at something and go "This I think needs $20k worth of work"; and in reality it really is sellable without doing any repairs?

I always recommend to the newbies to get out and look at 50 to 100 homes a month for 3 or more months just to get familier with your market!

You can also say to a would be seller: "I need to determine what my repairs will cost before I make you an initial offer, can I drop my offer off tomorrow night" just to give you a little time!


             GR

Offline cadw2005

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Re: How to estimate cost of repair with no experience?
« Reply #3 on: November 07, 2011, 10:21:45 am »
GR, great advice! I'll be calling some RE agents this week and will let them know that I want to look at lots of houses. I will probably buy my first home with them, but after that I'll want to go to the owners direct. I'll also call some contractors as you mentioned for estimates and will also do as Motivatedceo suggested and have a general contractor write up bids for me on the first couple houses until I become more comfortable and learn more. That way I'll have 2 avenues of approach for the estimate and if they are radically different from each other I'll know I have more digging to do. Can't wait until I can post here saying I made my first deal!

Offline justin0419

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Re: How to estimate cost of repair with no experience?
« Reply #4 on: November 07, 2011, 04:02:34 pm »
You can also see if you can find a good handyman who can do most things or has contacts who can get your work done.  For example, the guy I use for stuff I don't fix is a licensed plumber and electrician.  When I first started investing here, I used him for that stuff but nothing else.  After awhile, I learned he could do most everything or had friends who could do whatever I needed.  Now he does roofing and other carpentry if I need it as well as anything else.
He's a LOT cheaper than a GC.  Just something to think about.
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Offline cadw2005

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Re: How to estimate cost of repair with no experience?
« Reply #5 on: November 07, 2011, 09:39:04 pm »
More great advice - thanks Justin

Offline bashir

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Re: How to estimate cost of repair with no experience?
« Reply #6 on: November 09, 2011, 10:53:44 am »
To be honest with you, as long as you have a good idea of what the ARV is you can just do a ball park guesstimate of what the repairs are and then make your offer subject to suitable contractor rehab estimate.  No point in getting paralysis of analysis if there is no deal lined up.  Line up the deal based on your repair guesstimate and once you come to an agreement with the seller, then you bring in a contractor to give the real figures and adjust your figures based on the contractor estimates since your offer is "subject to contractor repair estimates"  A bit different if your working with bank owned houses.
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Offline twakelin

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Re: How to estimate cost of repair with no experience?
« Reply #7 on: November 22, 2011, 02:55:10 am »
GR, great advice! I'll be calling some RE agents this week and will let them know that I want to look at lots of houses. I will probably buy my first home with them, but after that I'll want to go to the owners direct. I'll also call some contractors as you mentioned for estimates and will also do as Motivatedceo suggested and have a general contractor write up bids for me on the first couple houses until I become more comfortable and learn more. That way I'll have 2 avenues of approach for the estimate and if they are radically different from each other I'll know I have more digging to do. Can't wait until I can post here saying I made my first deal!

Will it's hardly to estimate the cost because there are different basis which are for plumbing, electrical and etc. You probably call different repair agency. As what as i did.

« Last Edit: November 22, 2011, 02:46:31 pm by kdhastedt »

Offline travistane

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Re: How to estimate cost of repair with no experience?
« Reply #8 on: November 22, 2011, 06:52:10 pm »
I would likewise suggest you contact general contractor about your problem and take an advice from them to look after of your idea of buying houses. they may give ideas about renovation cost .

Offline luxuryjones

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Re: How to estimate cost of repair with no experience?
« Reply #9 on: November 24, 2011, 03:50:47 pm »
Here are some good links you can use to estimate contracting prices. In my experience these prices are marked up about 33%. So if you come in at or near that number based off of your zip code and have a professional presentation and some references that can be validated I would say odds are in your favor that you win the deal. However a good chunk of my business is 203k loans , so I have a good grasp of how much their actual budget is.

http://www.remodelingmyspace-costs.com/

http://www.benjaminmoore.com/en-us/for-your-home/paint-calculator?utm_source=msn&utm_medium=cpc&utm_campaign=Search-NonBrand%3ETools%20&%20Accessories&OVMTC=p&OVKEY=painting%20estimator&timestamp=msimpts}&creative=957707&adcid=5037337

http://homerepair.about.com/od/workingwithcontractors1/a/renovation_roi.htm

Good Luxx

Offline cadw2005

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Re: How to estimate cost of repair with no experience?
« Reply #10 on: November 29, 2011, 01:27:32 pm »
Sweet! thanks for the links

 




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