“How do I know how much rehab this one is going to take?”
New rehabbers and wholesalers are always asking this question. They say, “I’ve already got my ARV. Alas, if only I had this one number down, I’d be able to formulate my max offer…and could then submit it with confidence!”
This was probably my most challenging obstacle to overcome when I started in real estate. For those who know me – I was not and still, AM NOT a handy person. It may or may not still take me 2 hours to change a light fixture or replace a doorknob, but I’d never tell my amazing crews that (except the ones who are subscribed to this blog – in which case, I’d say, get back to work and stop reading!). Starting out as a low-level banker, I knew how to cut a lawn, shovel a driveway, drive my car in and out of a blizzard, and I could sort the heck out of any excel spreadsheet you put in front of me.
Then it hit me.
Maybe getting into real estate did not require me to be handy – perhaps it’s all just a matter of knowing what repairs are needed, and around HOW MUCH they would cost if I hired a professional.
BINGO, I thought to myself.
After my first 5 deals went terribly wrong, I started out in wholesaling – and I got VERY good at it, seeing as it was literally my only way I was able to try and make a living in real estate, with no credit and no cash. Wholesaling taught me how to get out of my comfort zone, how to make a deal happen, and eventually, it taught me how to be very conservative on my rehab estimates, through a series of checklists I could tick off, that would add up to one figure. Some of the items, I literally made up and assigned a number so high, I felt it was stupidly safe. Others, I researched on my own. Four months into wholesaling, I finally got a contractor who helped me out a bit in refining all my numbers, and showing what things looked bad, and what things were OK.
I took our process and broke it into two levels – a “Quick & Dirty” estimation, for preparing offers on property, and then a full-fledged budget, which includes measurements and details from a descriptive scope of work, which your contractor will use to bid or to do the job. I wrote an article for each method with some quick tips.
If you want even more instructions on how to sharpen your rehab estimates, while significantly cutting down the time it takes, join me on November 10th for a full day of intense rehab analysis. This workshop is limited to only 12 people, so sign up ASAP!