All Forum Posts by: John Sherron

@John Sherron

That is the big question.  Networking is the best way.  Do you have any local REIAs or meetups that you can attend?  You can ask around at those groups.

You might try the search function on BP for Houston contractors.

Then you have to do some due diligence and check other references.

@John Sherron

You may find contractors are subjective.  You would have to find the right contractor who understands that you are trying to get the house rehabbed for the right price.

This means understanding that paint instead of replace might be a better option for instance.

But they also need to be looking for big ticket items that may be show stoppers or reasons to renegotiate the sales price.

no it didn't, fortunately I'm actually doing this rehab for a friend so it's a "customer job" and they can pay the extra because they want to live there. If I was selling we'd still see a profit on it though, they got a good deal. I've done enough projects to have a good idea of costs, I typically add an overage of around 10%, more or less depending on how confident I feel in my repairs estimate. For line items that can vary greatly I'll generally overestimate a bit until I get more firm pricing as well, I look at it as stashing cash under the mattress for a rainy day. Just have to be careful about not overestimating repairs as much as underestimating, don't want to price yourself out of a good deal. 

imo it's going to be hard to rely on a contractors bid until you find a contractor with workmanship and pricing you can afford. Contractors can be $20k off from each other. I had a dude try to tell me it was going to cost $7k to do some clearing and grading on a current rehab, it will cost me under $1k. Gotta learn your local prices.

@John Sherron

It's probably more my love affair with home improvement, which includes spending copious amounts of time at Home Depot & Lowes!  Plus, I grew up building things with my grandfather.  I can do almost anything other than heavy electrical & plumbing or any HVAC.  But, what really helped me put it all together was J Scott's estimation worksheet included with The Book on Estimating Rehab Costs.  I took that document and re-engineered it to the way I look at and walk through a house, then I literally went through and got prices for as many things as I could.  I used that doc to create a ROM estimation form (I'm an IT geek, so I also have a love of all things Excel!) that is based upon the sq ft of the property, major areas &/or systems of a house, and the finish level I would need for a particular project.  I use the ROM estimator to generate my numbers for my initial, "is there potential here", analysis, then I use the detailed estimator for my walk-thru and to generate the SOW for my contractor.

The detailed spreadsheet is available in its original format with the J Scott book.  If you want to PM me with your email address, I'll be happy to share my entire analysis workbook, which contains both estimators.

Doesn't hurt to get a 2nd set of eyes on a house. Reality is sometimes you can't see it though. Just bought a house that had major termite damage but there was no way for us to see it until we had it demoed. Just don't get yourself into skinny deals and you should be ok. 

Doesn't hurt to get a 2nd set of eyes on a house. Reality is sometimes you can't see it though. Just bought a house that had major termite damage but there was no way for us to see it until we had it demoed. Just don't get yourself into skinny deals and you should be ok. 

How comfortable are you with identifying everything that needs to be done?

I posted an example a couple of days ago of a property we walked that an investor had bought.  It appears they missed major foundation issues and they are now trying to get out of this house as quickly as possible.  I fear they will be taking a financial hit.

You are in Houston where there is very expansive soil.  I would suggest taking a contractor or at the very least hiring a home inspector to look at the property.

With the home inspector report you will have a scope of work to price.  From that you may have to add cosmetic work like new floors and paint.

There are some great tools in FileSpace for helping with rehab estimates. Also, if you haven't gotten. Both of J Scott's books - The Book on Flipping Houses & The Book on Estimating Rehab Costs - do not pass go or collect $200, until you do!!

Seriously, I do my own estimate ROM's (Rough Order of Magnitude) for the initial analysis and offer. With the ROM, you're trying to be within +/- 50%.  Then I use the time I buy under the TREC Section 23 Cancellation Option to get an inspection done. I use my list from my walk thru, plus anything the inspector finds to complete the SOW for my contractor. Then I have my contractor walk through the property and estimate the cost against the SOW, which should bring me in at not more than +/- 5%. I then apply a 10% contingency to arrive at my final cost for the deal. 

My initial estimates are pretty good now. On our last project, I was only off by $2500 on a $28k contractor bid, so I was pretty happy with myself!