When you guys started out how did you determine a accurate repair cost figure? Where did you come up with this to determine your purchase price? I have been debating on getting the "Home Repair and Remodel Cost Guide" has anyone used this? Was it helpful? Any advice or comments would be appreciated. :wink:
Originally posted by "deanna419":
I have been debating on getting the "Home Repair and Remodel Cost Guide" has anyone used this?
What is this guide??
My short answer to your questions is: get a honest, reliable contractor to give you cost estimates.
My long one, filled with unsolicited advice is:
What we found with investing is you need to have a team of people working with you. We have a mortgage guy (who does creative mortgages for us), a great property manager (who gets our rehabs rented out right after they're done), several real estate agents (who find us houses), and a honest, reliable and quick contractor who checks out properties for us tells us how much it'll cost to fix it up and most importantly can rehab ANY property in under a month.
Other people will tell you to do as much as possible yourself so you don't have anyone else cutting into your profit but you'll be shooting yourself in the foot. Everything takes you 5 times as long and you can't be setting up new deals if your spending all your time working on the current one. Here's the reason we need each person on our team and why we think it's better to use them than to do it ourselves:
Mortgage broker: we got into real estate without using any of our own money. If it weren't for this guy we would still be sitting on the sidelines dreaming of becoming real estate investors. Yes you need money to make money but that money can just as easily be a banks money if you have good credit.
Property Manager: Our property manager is great she ussually gets properties rented the same week they are available. This means we don't have to come up with any money for mortgage pmts on our properties. Also she gets us premium rents. She charges a 10% of the monthly rent commision but she pays for herself because she gets us rents that more than make up for her commision.
Real estate agents: yes we can find houses on our own and we do, but if an agent finds us a good deal we'll use thiers too, after all the seller pays their commision not the buyer.
Our contrator is the single most important person on our team. His quotes are accurate, he's honest and will tell us not to touch certain houses, and his is quick, quick, quick which means we never pay more than one mortgage pmt before the house is ready to rent. You need to find someone like this he is critical to your success.
Yes we could make more money on each house without using these people but we'd probably still be working on the first house we bought this year not our 8th. Tell me would you want to make $30k off the one house you rehab this year or would you rather make $10k/house and be on your 8th house?
Excellent advice, I preach consistency to my investors on a daily basis, we get so many people wanting to make a killing on every deal, much much more realistic and beneficial to make a little less CONSISTENTLY, I also cannot stress how important it is to have all aspects covered, which it sounds like you do, :tup: sunrise!
Outstanding post Sunrise. I am in total agreement with you and this is how I run my business. I have NEVER done any work in my homes, I just buy them and tell my GC to let me know when it is done. Beyond your team, I have also gone to hiring most of the crew that I need for all non-licensed work. I still sub out all licensed contractors (i.e. roof, HVAC, electric, plumbing,etc.) because these guys carry very high workers comp insurance that I don't really want to pay. Hiring the crew and the GC full-time on staff has really brought my contracting bills way down. The only risk with this strategy is that you have to keep them busy or they will start to get expensive.
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