Newbie Looking for Fix & Flips/Rehab Cost Assessment Questions

Newbie Looking for Fix & Flips/Rehab Cost Assessment Questions

Member since 2018 · 24 posts · 14 votes

Hi There. I am pretty new to REI and have settled on Fix & Flip as the way to start. I have seen numerous properties (both SF and small multis), all in Florida as there is a wholesaler there who is bringing me properties to review. He is a construction guy with a crew and is also offering to do the rehab work. Having never done this before, how do you begin to learn how to evaluate the rehab costs? He is offering the costs to rehab up front, but frankly, I have no way of knowing if he is giving me reasonable costs. I am also looking in Tennessee and Ohio, but having someone on the ground already in Florida makes it more attractive as a starting point. Concerns are whether or not he is charging appropriately for the rehab. I have worked with the calculators, but I am not sure how to go about getting the right numbers in place. Any help would be more that welcome here. I have said no to several properties because the numbers have not worked out, but I want to refine what I am doing to assess the properties. Thanks!

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  • Rental Property Investor · Detroit, MI · Member since 2016 · 3 posts · 0 votes
    7y

    @Elizabeth A Shatzkin please contact me if you ever consider investing in Detroit. I will help walk you through the process. I am the eyes and ears for my out of state and over sea Investors .

  • Columbus, OH · Member since 2018 · 218 posts · 134 votes
    7y

    Today I finished reading Jay Scotts "The Book on Flipping Houses". This is a wealth of information and a must read for anyone considering the strategy. He also wrote "The Book on Estimating Rehab Costs" which I will be reading next. The other thing to consider would be a fixed priced contract where you and the contractor settle on a price prior to beginning the work.

  • Flipper/Rehabber · Tampa, FL · Member since 2016 · 111 posts · 38 votes
    7y

    If you're getting a full-service wholesaler like that, he's likely up-charging you a little for convenience. But the benefit of that would be that he already knows the project and knows what needs to be done. This could eliminate your need for boots on the ground but I'd be skeptical. If he has the deal, the crew, and the know-how, why wouldn't he just flip it himself?

    To get accurate costs you're going to have to familiarize yourself with the market for 1 and for 2 you might have to call and get competing quotes for specific tasks. Try and get the itemized list of repairs from this wholesaler/contractor and then go in line by line and break the cost down per square foot (paint, flooring, roofing) or per item (doors, windows etc). 

    Construction costs are going to vary around the country too. Since most of the united state's lumber comes from Canada, framing could be cheaper in Michigan than Florida due to shipping. Maybe your market has a lot of painters but not a lot of landscapers. Landscaping would be expensive because of demand and painting would be cheaper. 

    If you want to get more specific on what you're trying to estimate, maybe I could help out more.

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