Estimating rehab costs and General tips for wholesaling properties

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Hi,

I recently started learning about wholesaling properties. I have a good idea of the ARV around my area, however, I feel scared of making offers on properties since I'm not familiar with repair costs.

With that being said, how do you learn to estimate repair costs? I was thinking about bringing a contractor to these properties so they could make an estimate on the properties. However, this would be very time consuming if my offer doesn't even get accepted. Also, do contractors normally charge for repairs estimates?

Any help and tips would be greatly appreciated.

[Kyle J.]

I'm not a wholesaler but this is exactly why I so often question why wholesaling is frequently recommended for new people to start off with. On one hand, when you're new, you have little to no experience and/or money. However, to be a good wholesaler, you'll typically need both of these things. Just a short list of things that you'll need to do as a wholesaler include: marketing, negotiating, estimating repairs, determining the ARV, etc etc etc. It can take a long time to develop these skills.

With specific regard to the question asked about estimating rehab costs, even that can pose its own difficulties and nuances.  For instance, who are you estimating for?  In other words, who is your buyer?  A landlord who is going to hold the property and rent it out?  A flipper who is going to rehab it and try to get top dollar by reselling it to an owner-occupant?  These two types of people are likely going to do completely different levels of finish on their rehabs, so their costs will be different too.

I've bought wholesaled properties and, personally, I don't give much weight to a wholesaler's estimate of repairs.  For one, they're typically low.  For two, there's no way they could know what I intend to do to the property or how much I pay to have those things done. 

With all that being said, if you still want to work on your skills/knowledge pertaining to estimating rehab costs, you could look into picking up a copy of @J Scott's book on Flipping Houses and/or his other book on Estimating Rehab Costs.