When setting a maximum offer price, it's customary to assume some estimated repair cost, correct?
I assume it's generally a good idea to see the property (and thus have a better idea for repair estimates before you place an offer? Is it appropriate to bring a contractor along to help in estimating these costs?
If you can't get into the property, how do most of you estimate repair costs to factor into your offer price?
Maximum offer price = ARV - Fixed Costs - Repair Costs - Repair Costs Contingency - Profit
So yes, the repair cost estimate is a very important and necessary factor of calculating the maximum purchase price you should offer for a property.
I generally have a rough idea of what I think it will cost to rehab the property based upon property photos before I go to the walkthrough. Once I've walked the property, I will go back and create a detailed cost estimate. I generally don't make offers on properties unless I've walked the property.
If you have no experience estimating construction costs, it would be wise to get in touch with a contractor that could walk the property and get you a rough estimate.
Also, Jscott has got a nice book about estimating rehab costs to help get educated on construction costs...there are also some good spreadsheets out there that can help with this process as well...:)
David Robertson | 816‑388‑0197 | http://www.houseflippingspreadsheet.com
Thanks @David Robertson ! I plan on getting the book, I've just been procrastinating at getting it. Any idea how much it'll typically cost to have a contractor check the place out with you?
Free eBook from BiggerPockets!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you
You must be a BiggerPockets member to post on the forums
Join the world's largest, most open Real Estate Investing Community online, 100% free forever!