Next Steps

[Chris Green]

Hello BiggerPockets,

I have sent a direct mail campaign in Omaha, Ne. I had a lady call me and stated she has 3 properties she wants to sell. She currently lives in another state and doesn't want to deal with them anymore.

The price she stated for out of each property was close to list price. I know she is going to come out rigjt away with a low offer.

My question is what is my next step. I have a real etate agent checking the comps and getting an ARV. I then substract 20 percent for profit, 10 percent holding fees, and anywhere from $10-$30 per sqft for repairs.

Am i on the right path and would you have any suggestions on going foward.

[Jim Adrian]

@Matthew Swisshelm

I cheat and use the RS Means cost estimate book! I have also seen in other forums and spreadsheets use $30 / $40 / $50 per sf based on floor area.  For example let’s look at painting & carpeting a 10’x12’ room with an 8’ ceiling. All cost includes material, install, and contractor’s overhead and profit. Now if you are doing it yourself you can reduce by 40% - 50% but remember you are now working for free.

Example: To paint 2 coats on the walls and ceiling it’s about $1 per sf.

2 walls x ((10’x8’) x $1) = $160 / sf,

2 walls x ((12’x8)x $1) = $192 / sf

Ceiling at $120 / sf.

Paint total = $360

Capet runs $41 a square yard

120sf = 13.3 sq yards $41 x 13.3 = $546 ($4.55 per sf)

Need carpet pad? Well that’s ~$2 per sf = $240

$360 +546 = 240 = $1146/ 120 sf = $9.55 per sf of floor area.

Now gut check time… As it’s all about the bottom dollar… Will we shop for deals? YES!I think the $4.55 for carpet listed in RS Means you should get carpet and padding for that price. My RS Means book is for Commercial products not Residential as this will drop the price as well. This will quickly tells if we are in the ballpark or not.  I would always care a 25% contingency.When something go wrong its usually several thousand dollars and caring a high contingency will cover this. Now prices will vary from different parts of the country.This example is on the high side I feel.  I hope this helps everyone.