Estimating Rehab Cost

3 Replies

what do you find as the best way to estimate the rehab  costs for a wholesaler? I have a good understand of the costs of labor and material but a significant a wholesaler what should I assume needs to be rehabbed?  Do cash buyers want to Do upgrades or simply builder grade fixes?

Daniel,

It really depends on the exit strategy if the property will be a rental builder grade finishes should be fine, for a flip it would e based on the COMPs. You want to give a general description of rehab because it will be left up to the investor

That should be part of how you intend to market the property, which should follow from the deal parameters and your buyers' needs.  

For example, if you have a thin deal, or the property is in a rental neighborhood, then it doesn't make a whole lot of sense to market it as a high end flip.  

You should also know your buyer, so that if your buyer is a high end flipper, then it might not make sense to market a rental neighborhood to them.

Figuring out what needs to be rehabbed:

1) You need to be the cash buyer. You need to be the flipper. You need to know the end buyer, and you need to market according to your cash buyers needs, specs. You can't just answer this question with a simple answer.

2) Know your cash buyers on your list. Know what each like/want/ needs. Based on their needs can you estimate what needs to be rehabbed.

3) Team up with an agent and have her (because obviously we ALL know all agents are female!) walk the properties with you when you get a lead ( this is what I do),

4) do the comps yourself and look at all the properties on the market currently for sale. Do they all have stainless steel appliances? Yes , then get them. Do all the properties have granite? Yes? Then get them.

Now look at all the recently sold houses. Find a trend.

All recently sold houses that were on the market for longer than 6 months.. what do thy have in common, and more importantly where do they differ from all the houses sold within 2 to 3 months on the market?

Do the quick sales have hardwood floors and the long listed properties have laminate?

Yes? Well there you go.

Come on, that was an easy question. Give me a challenge!!