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...:)
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?
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