Estimated repair value
So im just starting out learning the wholesaling business and my question is how do you know how to estimate a house for repairs to make a offer? If I'm not use to what things cost how would I know?
@B Lacy I use 10% of the After Repair Value here in California, which is an expensive state to flip. I would check with a local "Investor" or Realtor in your area to see what their numbers are.
Good Investing...
@B Lacy the first step is to accurately determine WHAT needs to be fixed. From there determine the quantities (units) and quality of what needs to be fixed.
When you have this data in hand, ask 3 or 4 contractors to provide their bids. Be sure to have them base their quote on the same data to ensure that you are getting “apple to apple” proposals.
Thank you, I'll keep that in mind
Use a contractor on a few property walkthroughs and learn, also find average costs for every major repair (flooring, windows, bathrooms, kitchens, roof ECT..) Once yo have done a few flips it becomes easier
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Originally posted by @Barry Ruby:@B Lacy the first step is to accurately determine WHAT needs to be fixed. From there determine the quantities (units) and quality of what needs to be fixed.
When you have this data in hand, ask 3 or 4 contractors to provide their bids. Be sure to have them base their quote on the same data to ensure that you are getting “apple to apple” proposals.
What Barry said.
And mind you... what he is REALLY saying is... don't just figure out what needs to be fixed. Make sure you know what does NOT need to be fixed. Overimproving is dangerous. Mind you.. We ALWAYS overimprove our flips. We do not flip houses the standard investor does it. But we have our reasons and it is paying off 10 fold already. But we are experts. I say get a few flips under your belt the safe way, then you can experiment and have more fun (when you have your own money to play with).
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You will need to find a contractor who is actually willing to spend time walking a property and providing you with an accurate SOW. To give you an accurate number, they will have to spend a good amount of time on it, like 10 hours..... Why would they do that for free?
OTOH, if they just do a quick walk of the property and throw out a number, it is likely to be inaccurate. No number is better than a wrong number.
What I'm saying is this: #1 - Be careful, you need a real number.... #2 - Make it worth a Contrs while to spend time with you and give you that real number. You will probably have to pay.....
@B Lacy my son is going into wholesaling and I made a short but potent Excel workbook for him. DM me and I will send you a copy.
Along with a worksheet that details rehab elements and costs it does analysis on the performance of the of the wholesaler’s Buyer based on a fix and flip and buy and hold scenarios.
This drill confirms how the deal works for the Buyer as the Wholesaler’s customer.
@Barry Ruby Would you mind sharing a copy of that with me? I am looking for my first property to flip in Baltimore and I would love to have some assistance with how to calculate rehab costs . Thank you.
read J.Scott's estimating rehab cost. It will tell you how to break it down.
Go multiple houses determine what needs to be done in the house, what need to be updated etc...
Make a list.
Then use calculators like home depot ones and spend some time in hode depot web site to decide material cost.
After that you need to determine your scope and talk to plumbers, electricians etc.
Have some kinda a scope and details list for them.
You should be good to go.
You need to spend some time, nobody can tell you exactly what it is.