I’m brand new to real estate investing and i’m starting off just wholesaling properties
and i’m having a hard time getting a hold of good trust worthy rehab contractors
and was wondering how could i come up with good rehab estimates without contractors help
I’m also afraid that if i use them a couple of times and i don’t hire them for the job
then they wouldn’t want to work with me anymore due to me wholesaling properties
instead of doing fix & flips & don’t want to burn any bridges
Has anyone else ran across this problem and could please provide me some good feedback
on how i can move forward and be successful in my REI wholesaling business [/b]
Deon your going to need to learn, doesn't have to be perfect but just within a 5% + / - spread.
You can get a contractor but your likely to pay hundreds of dollars for a damage estimate since you can’t offer or negotiate a cost plus contract.
You need to learn how to calculate both linear and square footage in a room and calculate both labor, materials and overhead.
Spend some time at Home Depot, Lowes and your local supply house learning about finishes, costs and coverage so you start understanding materials costs, then get labor estimates from handymen and contractors / subcontractors on varies specific projects (Work Scope) so you understand labor and overhead.
There is a company called RS Means who compiles construction cost data for the construction industry every year, their residential data books used to be available at Lowes or Home Depot but you can also find them online at RS Means. Their 3 or 4 books that apply to residential housing cost $40 or $50 bucks each.
Make sure you take good measurements and lot’s of photo’s, once you get good at this you will be able to put fairly accurate prices to damages, deferred maintenance and rehab pretty easily.
Hi Deon, many investors and even some of the books I’ve read stressed the importance of knowing your rehab costs before marketing the property.
I have wholesaled a lot of houses, some needing major rehabs or tear downs & fire damaged with 80% of the structure destroyed and some that were rented needing just paint and carpet.
I have never calculated repair and rehab costs. A few times I was asked and I told them to go check it out.
Dear Cash Buyer, I have a house at 2334 E Turner, the price is $45,000
Now the buyers have an address and a price, they call or email me back if they want it. Many times within 2 hours. If it’s a mediocre deal it might take me 24 hours to sell it. And sometimes I have to run ads on Craig’s list with some creative ads.
If it’s as lousy deal and none of my cash buyers want it, I can usually get it sold to a newbie investor or an end buyer in 30 days.
So, don’t worry about repair costs, that’s your buyers job, to do his due diligence.
A lot of times I don’t even have photos cuz I never see the property,
When a homeowner tells me the house needs $40,000 in rehab, I know it’s probably $80,000
It always costs more than you think, it always takes longer than you think. Why wud I want to mislead or discourage a buyer by giving my estimates?
I can estimate the repair costs at $20,000 for kitchen and baths and floor covering, new doors and paint, but that don’t include the foundation that’s sinking into the bog and the plumbing is all corroded, & the roof is bad and the well went dry and it needs the swamp cooler thrown out and a new heating and cooling system with duct work and labor and then don’t forget the permits, oh yea and the driveway needs work, oh yea and the septic system has to be hooked up to the city and oh yea I forgot to tell you about the city liens and the Title is not clean.
Now if I tried to estimate the repair costs and sold it to my fav buyer and then he finds out all this halfway into the project that its going to cost twice as much, he’s going to be blaming me.
But, if I tell him to go check it out and he makes his own repair estimates, he can blame himself.
Gotcha. In both the formulas in the book, it calculates ARV-30 or 35%-repairs-profit=most I can pay.
Trying to figure out how to come up with my top dollar when putting an option on a house. I’ve got my eye on two properties. I know what ARV on them is now, but I thought I had to ballpark repairs and back that out of ARV.