Estimating Rehab Costs

Do not use a Rehab App Calculator

IMAGINATION (0:50)

• To some people things might need to be replaced, but using imagination you can often repurpose or just clean something up.

Determine your route (1:25)

• What is the general plan of action?
  • Buy, total rehab, then sell?
  • Prehab: clean it up and flip it to a beginner or investor
  • Fix it up to rent it out

Neighborhood: (1:45)

• The condition of the neighborhood will decide the quality of materials you will need
• Nice areas will involve more expensive materials

Labor Costs: (2:04)

• Cost does not always equal quality
• Often you can find great contractors at great prices
• Determine what HAS to be done

What to bring with to the initial walkthrough: (2:42)

• Tape measure
• Notepad and pencil or note app on phone
• Contractors can give a more accurate estimate when they have the square footage

Write Down Problems:

• Look for evident signs of distress
• Wet spots
• Carpet replacement?

What You Plan on Doing with The Home Determines What Needs to Be Done (5:52)

• If you want to buy, flip, sell then you typically need to make more cosmetic changes
• If you want to buy to rent out, not all changes or updates will be critical.

The Kitchen

• Buyers tend to be pickier about the kitchen, so spending money here is well worth it
• Cabinet condition.
• Appliances
• Stains under the sink indicate plumbing issues.
• Flooring

Quick Tip:

Negitation Strategy: Without having to overly point out every single problem you see, you can take notes instead. This will let a buyer know you see problems without you having to rag on and on about the house.

 

Tip For Quick Offers:

• Measure the rehab costs by $5,000s
• Hardly any work: $5,000
• Minor Cosmetic Work: $10,000
• Overestimating is a positive for you
• Underestimating is ok! Once a property is under contract, if your contractor lets you know the estimate is too low you can bring this up during due diligence.

More Tips for the Inside of the Home:

• A bedroom is not officially a bedroom unless it has a closet
• You can add a closet to an office space to make it into a bedroom.
• Look for signs of leaks
• Check the water heater.
• Check and see how old the breaker box looks

Tips for the Outside of the Home: (20:10)

• Take note of any obvious problems
• Paint
• Landscaping
• Water Damage
• Evidence of termites
• Yard Space
• AC unit condition
• Does it work?
• Note any model numbers or service stickers

Conclusion:

• Collect as many notes as possible during your first walkthrough
• Photos or detailed notes will help you remember
• Go over all your notes to determine whether to make an offer or not
• Factor in what you plan on doing with the home