I want to start dialing the phone on my leads. It has been about 5 days since I have hit the roadblock of how to estimate repair costs. My current plan is to
1) Use a real estate agent and get comps for neighborhoods I found houses in.
2) Call and negotiate with sellers by asking what repairs are needed and subtract that cost from a (.60 ARV) and give them that as a first offer OVER THE PHONE. If they dont accept: á¸¦ow close can you come to that number? If there counter isnt low enough I say Â¨thank you very much, if you are interested somewhere down the line give me a call.Â¨ If the numbers work then I schedule a meeting at the property ASAP.
3) Call a GC and schedule them to walk through the property with me to estimate costs on that meeting date. I lower my offer based on these estimates. Go through signing of Purchase to Sale agreement right there.
4) Contact my buyers and let them know whatś CRACKIN!
I am concerned as this is my first deal and low on cash (only 4k in bank) that I will be wasting a lot of money on GC estimates. Shouldn´t these estimates cost me $100 for the whole house? What do you guys think?
@Cody Evans I'd suggest you start in reverse and talk to your end buyers. Ask them how much a standard renovation in your farm area costs and use that in your calculations. When we wholesale properties we use general bands for repair estimates based on the condition of the property and make our offers. You don't have to be exact. Usually being in the ballpark of what it would cost is enough to make a good offer.
@Cody Evans have you spoken to any local GCs? I would be asking them first and foremost if they are even willing to do this for you? A lot of them are busy, and won't take the hour or two off their day to drive to a house you plan to wholesale for $100. Are you planning to bring one GC in, or 2-3 per house? This could get very expensive (especially if you are only working with $4000 in the bank). Also asking a homeowner what their house needs will get you nowehere. I did this on an FSBO, and he told me the house was clean, just needs a shower surround... The house ended up needing $50-60,000 in renovation to make it retail "flip" ready. The seller ended up VERY unhappy that I didn't buy his house that day and proceeded to scream/chew me out over the phone! That was someone actively selling their house (this was 3-4 months ago and he still hasn't sold it)!!
My opinion is wholesaling is better left to those with a lot of experience and can crunch their own numbers during a single fairly quick walk through. Your best bet if you need the assistance of a GC for pricing is start calling and asking them. If you need a realtor to pull CMAs, start by calling and asking if any of the local ones will do this for free, and never get a listing from you. Then work on lining up the sellers... Just my .02.
The only reason I talked to sellers was to find motivation. If they had some, schedule a walk through. Asking them what their house needs will get you nowhere. I've been there more times than I care to remember, seller tells me it needs paint and carpet, I get there and it needs $30k in repairs lol.
As for the contractor question, @Marvin McTaw was dead on, figure out good, conservative, ball park numbers. For instance, in my market a bathroom rehab I always estimated $5k. Most of the time it is less (about 3,500) but I'd rather be high on the rehab estimate than low, and if it has bigger problems than visible and/or is a bigger bathroom that $5k goes quick. You really don't have to be exact here, and always try to be too high rather than too low. Never lower you rehab estimate just to make it seem like a deal.
Wow this post brings back memories! This is from 3 months ago. Knowing what I know now, I would not schedule a GC walk-through or inspection. I have my list of repairs and estimate average cost based on area and also consult with buyers to see what standard repair costs are for an area.
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