Assessing Repair Cost as a Wholesaler?

Question

How does someone new starting out assess repair cost on a property if they have no experience in this arena? For example, you find a motivated seller, they meet you at the property and you see it's a mess, what is the next step to getting those cost?

Matthew Bond · Answer

Charles, I'm also a relatively new wholesaler, and had the same concerns starting out. This is what I've done, and it's worked out really well so far. Find a few reputable General Contractors in your area, and give them a call. Explain to them what you do, and ask if they would be interested in helping you estimate repairs for your potential deals. In return, you need to be to be willing to pay them for their time.  I'm working with two different contractors, and one guy wants a flat fee for the estimates, and the other guy is willing to get paid when the deal goes through (for a higher fee of course).  How much you pay them is completely up to what they need, and what you can work out. Trying to guess these numbers as a beginner can be detrimental to your success as a wholesaler, so it's absolutely worth the small fee. Make it clear that the more you can help each other out, the more you'll both make. I've also let them know that should any of my buyers need a contractor, I would give them the referral. If they end up getting the job, I don't pay them a fee.

Here's the trick to making sure this a win/win for both of you...you HAVE to vet your deals thoroughly before even considering looking at the property with the contractor. You need to be as certain as possible that the person is motivated, and you'd be able to get the property under contract for the price you need. If you don't vet your deals thoroughly before hand, you'll be wasting a lot of time, and a lot of money.

One last thing..when your contractor does come out, do the walk through with him, ask questions and take notes. Have your own repair sheet, and write down the numbers, so you'll have them as a reference for the future. The idea is that you'll slowly learn to estimate the repairs yourself.

James Wise · Answer

You should bring G.C's in to give you estimates.

Paul Timmins · Answer

@Charles Rivers

Two Great reads, I bought both J. Scott The Book on Flipping Houses,  The Book on Estimating ReHab Costs  http://www.biggerpockets.com/flippingbook

Good Luck

Paul

Stephen Chatto · Answer

Don't over complicate repairs.   Whatever number you get from one GC will be hugely different from another.   And the number your end buyer uses will be completely different then the 1st two.  Plus you don't know if they will be doing an addition, or knocking down walls, or what they plan on doing.

When I advertise my deals that are fix and flip I say:

-Kitchen is 10 years old-Bathroom is 5 years old-Furnace is gas, forced hot air, and 25 years old-Roof is 7 years old

Etc Etc Etc...   Let the buyer determine their own costs.

In my mind, as a general rule of thumb I think in 10k guesstimates.

Assessing Repair Cost as a Wholesaler?

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