Last month, we held our second Rehab Road Trip where Nick takes a very small group around to three different potential projects to perform rehab analysis. The goal of this hands-on workshop is by the end of the day
Along with finding the ARV, being able to properly estimate a rehab budget is vital to every real estate investor. An accurate rehab number will make or break a deal. (Don’t believe me? Read Nick’s post “The #1 Reason why Wholesale Deals are REJECTED!”) If your rehab is too high, your offer isn’t competitive enough. Too low and you are putting yourself or your investors in a risky position. The better
Like any skill, this requires Practice.
As you might remember from his previous blog posts, Nick has broken down Rehab Estimation into 2 different levels:
In the first house, the students learned how to quickly estimate a preliminary rehab budget in under 10-15 minutes! Of the two ways, this is surprisingly more difficult for the students to get a hang of. It’s very tempting to want to take note of absolutely every tiny detail, eventually spending hours in over-analysis.
At the next house, the students learned how to write up a detailed Scope of Work that a contractor can easily understand, cutting out as much miscommunication as possible. Before getting started on that, they individually practiced the 10-Minute Estimation and compared their results with rest of the group.
The third house was a culmination of everything learned–from the 2-hour classroom portion, to the 10-Minute Estimation, to the detailed scope of work. Like the spring Rehab Road Trip, this last house had some very bad structural issues. How much does it really cost to fix caving fieldstone and rotten joists? How many joists and support beams? And how much does each cost? What exactly needs to be noted on the scope? (No, “Fix foundation” does not count!)
Overall, we had such an intense day full of questions and content!
See you at the next Rockin’ Rehab Road Trip!