Rehab Investors??
I am new at rehabing properties and would like to know how to determined the cost of repairs from contractors. I have interview a few contractor and they are just fishing too deep if you know what i mean. Also what is the best formula to use for buying rehab properties?
Good question. I would also like to know.
The best way is to get a contractor. Keep calling around trying 2 find one. They will be able to determine a price for ya on things. Just keep looking.
[addsig]
Not sure what you mean by "fishing too deep" unless you mean they want to run the rehab costs up. You need to buy contingent on getting estimates or bids. Certainly getting more than one bid will bring reality into what costs are likely to be. You might also tell the contractors that you will be doing many more and you are looking to build a working relationship for future business which means reasonable profits each time for the contractor and not a one time killing.
Hello,
I ran into the same problem with you, so I got a couple of guys that have years of experience to do drywall and painting, I did all the tile work in all baths and kitchen, go a company to lay carpet and hardwood with 12 months interest free financing, had one open house and house in under contract, will make about $25k on my first project.
Try do do some work yourself if you can, the things I did anyone can do them if you take your time and read instructions.
Now I'm looking for second project.
Decide how much you want to make on the property and how much it will realistically sell for, subtract the cost of purchasing the property, and what you have left can be used for contractors and holding costs and closing fees. I like to make at least 20%, but 30% is sweeter.
cost of property: $60,000
Sell price (based on comps): $100,000
20% profit = $20,000 - which leaves $20,000 for repairs and other costs
30% profit = $30,000 - which leaves $10,000 for repairs and other costs.
If the property costs more to repair, then maybe look for another property.
Just my two cents.
I tell you what... I have had a total nightmare with contractors. Some of the long-term locals have told me it's because I'm a woman. Out of probably 20 companies, I got one actual quote. ONE!
Several of these guys came out and looked (one of them told me it was just because my neighbour told him I was attractive).
Fortunately I only needed one permit and was able to have a family member do all the work for me.
I've definitely learned my lesson on this one. Thank God for male friends to call contractors for you and pretend they're your husband! That is definitely the route I'll take in the future.
Sometimes it's just best to work within the system you've got rather than beat your head against a brick wall.
A thing to remember, all good deals, aren't great deals. And even some good deals, are not good enough to persue. Don't short change yourself. There is a lot of property out there, and a lot of money to be made, be patient, and find a great one to work with. Look at it this way, do you want, quantity ( many jobs with little payout) or quality (less jobs, but bigger pay checks)?
[addsig]
I do all the repairs myself (unless licensed electrician or plumber is needed) however if your not into doing the work yourself then go to your local book store and ask for the National Contruction Estimator. It has every possible conceivable element of residential and commercial contruction. It also has a Job Cost Wizard that turns estimates into invoices and exports to quickbooks. You can track job costs by item or category in your estimate. Then you can compare estimated and actual costs for each part of any job. It handles progressive billing and invoices for each phase of the job. The book cost about $45 to $50 and included CD-Rom.
What the estimator does is list every aspect of contruction and then tell you how many people it should take, how long and at what the price costs per craft and estimated cost of materials.
Construction costs were compiled by comparing 700 communities throughout the US and Canada. This covers Labor, Equipment, material cost, labor productivity, climate, job conditions, and mark-up. Modification factors are listed alphabetically by state.
Example: A job done in Boston you will add 5% to Materials 37% for Labor and 4% for equipment for total of 16% above the national average.
It s not prefect but it will surely get you very close.