Im looking to flip my first property in what I see as a niche market. My first question is: how do you know what holds value? Secondly, how do you estimate repairs precisely?
How do you know what holds value?
I'm not entirely sure what you mean with the question?
Secondly, how do you estimate repairs precisely?
For me, I had to jump in with both feet before I fully knew/understood the cost. You could try having a GC come out and bid on what needs to be done prior to a contract on the house. Or if you wanted to act as the GC, bring in Subs to bid it out prior to contract.
I *thought* I knew what certain things would cost ... But as you can imagine, I lowballed most items on the checklist on the first flip. I now can fully grasp everything and I have bids from several different contracts (from electricians, to plumbers) for certain things.
Hey Alex welcome aboard bud.
As far as value, bottom line is, you need to know your market, that should tell you a lot of the story.
Estimating repairs is an art that if you are not and have not been in the construction fields will take time to learn, get some contractor quotes, ask questions and then take some walks around your big box home repair stores looking over materials and prices for what your current projects are.
There is no exact calculator for what each repair should cost, areas differ and quality of repair changes pricing too.
Rehabbers know, you make your money when you buy, not sell.
This might sound totally ridiculous, but take your best estimate after doing your research, and double it. If you get a contractors estimate, multiply it by 1.5. Until you have done a few of these you will grossly underestimate the costs. After the final tally, you'll ask yourself, "where did all of that money go?" One of the most common reasons that most people never do a second flip is that they totally underestimated the costs on the first one.
Thanks everyone for your input. It looks like I have to get a hold of a few contractors now. I found a great deal and it lead to another great deal. Would you recommend wholesaling one?
If you don't have the resources to buy both, yes. If this is your first flip, don't attempt to do two at once. Complete one before trying a second one. Plus, by wholesaling one of them, you will get feedback during that process that will give you some insight on how other investors underwrite their deals. That can be a valuable learning tool.
As to holding value, look to the first rule of real estate;
Location, location, location!
BTW, you never know if it's a deal until you sell it if you're flipping. :)
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