Need clarification on judging rehab costs.

[David Vander Pol]

This question is in reference to long distance investing using the BRRRR process, and about analyzing deals, figuring out rehabs costs, running numbers and estimating ARV's etc, etc.

Almost every listing/lead I receive typically only has a few pics. With so little information at hand it is often–almost guaranteed–to be impossible to calculate any sort of rehab cost based off a small amount of pics or what an agent or wholesaler says needs to be done. 

Yes, you can pay a GE to go out there and take a look and report back to you with an estimate. But that typically will only happen AFTER you get an accepted offer, during your due diligence period. And that SEEMS plausible only if your lucky enough to have a GE willing to take the time to do that–even if you pay them. So you get caught in sort of a catch 22 situation where you can't really calculate an offer amount unless you have a rehab cost, yet you can't really get a rehab cost unless you make an offer allowing you to send a GE out to get a quote.

So how is everybody doing this?

Just to be clear, I have not done this process yet, as I never get past the running the numbers part. They always seem like bad deals because I'm trying to parse ALL the things listed in Jay Scott's Book On Estimating Rehab Costs, and there's just no way to suffice all that info based off of a few pics and what an agent/wholesaler might say a property needs. Pretty much every property that I've tried to analyze becomes impossible to do so due to not being able to figure out everything that needs to be done.

Ex: I can look at a picture and see that it needs a complete rehab, but I can't really measure the counter space to find out rough costs, or measure the flooring to do the same, or know what pipes are going to need to be replaced, or how much open square footage of wall space there is in the kitchen that needs to painted to calculate that. None of that can be determined off of a pic. And that doesn't even count if it's a 3b/2b, but there's only one pic of one bedroom and one pic of one bath, or how high a tree is that needs to be cut down, or what the square footage of that walkway is that needs to be repoored.

Overall, it just seems impossible to do calculate any rehab cost at all...ever.

So what am I missing here?

Thank you all!

-Dave

[Frank Wong]

Hi Dave,

The big problem is that you have no one trusted to do this for you.  Honestly, you need someone there that you can trust.   What is your main objective in doing this long distance investing?  Is it to flip or buy and hold?  

If you are trying to flip like this.  This is not sustainable and will never work in scale.  Maybe you do 1 or 2 flips a year.  All that work and drama for so little money and risk. 

Now if you are trying to buy and hold.  I suggest you look at properties with less work needed.  This way you can get in and out quickly and there won't be a big surprise in repairs and time to complete it.  Start with one with less work and then work your way into bigger rehab projects as you begin to build a team and scale to more deals. 

Best way to get accurate costs is to complete a deal. 

I live in the Bay Area and I buy in TX and do rehabs from here.  I can tell you without someone you fully trust its nearly impossible.  A good GC is not enough in my opinion.