Estimating Repair Costs

[Bernard Williams]

I'm learning about wholesaling. I don't have the money to hire a contractor and I don't know much at all about inspecting homes or how much it costs. Is there a way I can get any help with this? I heard of cost of work sheets. Is there a way I can get one?

[Michael Dorgan]

Do you have any local investor clubs you can attend? There's a good chance that a few people there can give you some pointers for your area and help you out. When I'm doing a rough guesstimate when walking through a house, I use the 5k rule.

5k to fix/update any major house component. Half that for a minor componet.
5k to cosmetics (carpet, floor, paint, fixtures & covers, minor landscaping)

So a cosmetic fixer that needs a bathroom would be 5k to spruce up and 5k for the bathroom.

A more major fixer that needs 2 bathroom updates, a new kitchen, a roof/exterior paint (they usually go hand in hand), HVAC work, redone electrical, and drywall repairs throughout would be 10k + 5k + 5k + 5k + 5k + 2.5k or around 32.5k.

Keep in mind, this is not accurate enough for a full on bid, but it gives you a good ballpark idea of where to start.

To do this for real, you need to start doing some serious shopping and comparing. Call some contractors and get an idea of costs to use them for various repairs (they will be on the expensive end of what things cost.) Go to your local big box store and jot down prices for fixtures and other upgrades. Network with some local handimen and see what they charge for things (should be MUCH less than contractor pricing, but requires knowledge on your part to not get screwed.) Talk to some carpet companies to find pricing on flooring etc. Build a list and get a feel for costs. This will also turn into a future contacts list for when you really need these people to help you out.

It takes quite a bit of practice to be able to spot many of the things wrong in a walk-thru. This is where having some experienced investor/builder partners can really help out. It also helps out to be on site watching the installation/repair jobs for the first few times. When you see how simple some of the things can be, you'll be in a better position when you negotiate a bid next time (or perhaps do some of it yourself.)