Wholesale Tips: Estimating Repair Costs

Estimating repair costs is one of the biggest challenges all real estate investors face and presents some of the biggest hurdles that can make or break them.

Problems accurately assessing repair costs are often primarily associated with those buying homes for rehab and remodeling, but can also be a real minefield for buy-and-hold investors. In fact, many may be surprised that help estimating property repairs is also one of the most requested wholesale tips.

Getting this part of the equation right is just as important to wholesalers, if not more so, and remains critical whether properties are preserved or not.

Unfortunately, many new and even some seasoned real estate investors make this an immensely complex, expensive and time-consuming part of their business. If they are not careful, this will not only slow them down and cause them to lose endless deals, but it will also deplete their net profits.

So don’t make it too complicated. Yes, accuracy is important, at least in terms of a total figure, but taking days to calculate the cost of each screw and hammer hit that someone else (your end buyer) might spend will backfire. Of course, once you start doing it, you’ll be able to identify most jobs with laser-like accuracy from a relatively short walk in most cases, but in the meantime, most will find the easy fix. in professional inspections and bidding contractors. . Some have gone to ridiculous lengths like breaking it down into the smallest line items and hiring and paying their own project managers to complete hourly inspections. This can often be accomplished much more efficiently and effectively by simply doing a home inspection and putting the job out to bid.

Still, wholesalers should not or cannot afford to underestimate the importance of their due diligence and getting correct scope of work and repair estimates, even if they will never get their hands dirty. Sure, you could pawn the most troublesome property to someone else at a low estimate and ‘forget’ to reveal the hidden flaws, but that quick dollar will certainly come back to bite you.

Even if the buyer does not sue you, you will surely lose them as a customer and lose your reputation in the industry. Of all the wholesale tips, know that your future success and volume depends on being seen as a trusted source for wholesale deals and cultivating a group of repeat buyers who will instantly take advantage of whatever you have to offer because they know you they can trust their numbers.

This doesn’t mean you should add too much padding and make your offers unappealing to serious buyers, but you’ll make a lot more profit by doing good deals and providing good repair quotes.

Remember, you want your investor buyers to be profitable. The more profitable and successful they are, the more they can afford to buy from you.