Posted by Pboone on November 21, 2002 at 06:04:49:
not sure why you have to pay someone 200.00 per house but lets get to the point.
in your offer there should be a “professional inspection” clause allowing you to get estimates from qualified professionals usually within 7-14 days. Over time you will know the amount required for repairs.
If you are dealing w/ realtors they will push for you to bypass any logical steps in order to get their commission so do not allow youself to be swayed. CYA
Pat
Figuring repair costs “making offers” - Posted by Joshua
Posted by Joshua on November 21, 2002 at 05:42:52:
I need to learn how to get the repair costs of a certain property I want to make an offer on. Lets say I am looking at a property and I am told it has $5,000 worth of damages when it really needs $10,000 in repair. How do I learn to recognize this so I can make a better offer and don’t get burnt.
I am starting out flipping properties and want to make lots of offers. The problem is though, I don’t want to have to pay someone $200 to look at every house I’m going to make an offer on just so I can figure out what type of offer will work. That would cost wayyyy too much. Especially since I don’t expect all of those offers to be accepted.
So, how do I go about making good offers when I don’t know how much money it’s going to take to repair that particular property?
Find a contractor that specializes in rehabs. Tell him you will refer him to the investors you flip to if he will help you calculate the rehab costs. Tell your investors if they buy from you not only are they getting a home at a wholesale price but you will hook them up with YOUR contractor that you trust! All of the Newbie investors who will buy from you will be delited to know that you are going to help them rehab the house, and you become their “night in white shinning armor”. Everyone wins and you get free estimating everytime. You might want to advertise for these guys in the classified ads, screen maybe 10 or so, giving each one the pitch I just suggested.
Posted by Mike G on November 21, 2002 at 08:17:26:
Add the clause: “Buyer accepts physical condition of the property as is subject to approval of inspection reports.”
Then make your best guess and submit an offer. If gets accepted, then get inspected (shouldn’t cost you a thing at this point since most likely this person will end up doing the repairs for you) and see if you were right. If not, can either go back to seller and renegotiate or get out of contract (make sure you have another clause in there that limits seller’s remedy for your breach to your initial deposit as fully liquidated damages and make sure your deposit is something you can afford to lose…$10 or $100).
Posted by Eric C on November 21, 2002 at 07:45:21:
Hi -
I agree with Pboone’s post.
I have a thing about formulas – I don’t like 'em – too many folks substitute them for thinking which is never a good idea.
That said, there are several experienced rehab folks on the board who can help you. In addition, there are archives here which contain volumes of information on the subject. Use them.
As I recall, Joe Brilliant, who works the Atlanta market, posted sometime ago about the methods he uses to arrive at a ballpark figure quickly. Do a search.
Just remember that rules of thumb, shortcuts, formulas or whatever you call them can be useful when used correctly. And they can be deadly when you substitute them for common sense. Do another search on Joe Kaiser for more on that subject.