How do you calculate / predict rehab costs on an occupied foreclosure when you have no access to the property until after the sale? I am finding so many occupied properties that cannot be accessed. Do you just walk away from these? Please advise. Thank you in advance.
@Jeffrey S. that’s part of the game, which creates opportunity if you know what you’re doing. Sometimes it’s as simple as knocking on the door and talking to the occupants. You can find out a lot about a house by just looking (and smelling) inside the front door. You can also talk to neighbors and ask if anyone has been over there to see what they know. Once you have a rough idea, you should be able to place it in a general bucket of rehab costs. Does it need 70k? 50k? 30k? 15k? Usually you can put it in one of those buckets, at least that’s what I’ve done.
Great ideas. Thank you.
@Jeffrey S. , I wouldnt walk away, I'd start by assuming the worst and do the numbers based upon that.
@Jeffrey S. It's also a numbers game and is an advantage to bigger players. If you always assume the worst, you will not end up with many deals since your bids will consistently come in too low. The bigger players do more volume, assume that sometimes they will take unexpected losses, and use average numbers when looking at deals.
It is a crapshoot at times. We've had great looking properties from the outside but total disasters on the inside. Other times, we're surprised at how nice some interiors are. By having a large enough portfolio, things even out and the homeruns lift up the few that don't do so well.