Estimating rehabs and refinancing

[Carlos Mezquita]

Hello everyone, I'm pretty new to the real estate investment world and I'm analyzing my first properties, but I have the following questions regarding rehabs and refinance... How do you accurately estimate for closing costs? (A breakdown of what are the specifics closing costs would help) How do you estimate rehabs accurately? I see there are many things to consider and it depends a lot on the property conditions, but how do you get some ballpark numbers if you haven't seen the property yet? Is there any database online with materias and labor costs? About refinancing thinking on the BRRR strategy, how can you be sure that your property will get refinanced to pay off to your investor? If you don't get the refinance what other alternatives you have pay your investor? What would be the best alternative exit plan? I'm sorry if my questions are a little bit open or unclear but I still trying to figure out if I want to focus on buy & hold or BRRR. Thanks!!!

[Jeremy Paschedag]

Hi Carlos, welcome to BP!

I echo what @Jordan Grimstad said about the book The Book on Estimating Rehab Costs.  You can get it here or on Amazon.com.  And about what Jordan said on closing costs.  With rehab costs, prices vary depending on area for both materials and labor.  You could measure your kitchen floor to get an idea of floor square footage, then go to a big box store to price materials to install.  Ditto for cabinets, bathrooms, waterheaters, etc.  Then you could call a handyman to get a rough idea on labor for a couple projects.  Then call a contractor and get the same.  Don't call more than one or two, they have jobs they need to work to get paid.  Then you should have a rough idea of the different costs for various project work.

The key to a successful BRRRR is buying below market value. Usually this means a distressed property, estate sale, foreclosure (may involve a LOT of rehab work) (my understanding is these are slow moving deals just to get to the closing table).

Buy and Hold and BRRRR are similar. Both are buy and holds, but with BRRRR the idea is to repeat the process in short time. This is done through buying below market value and refinancing. You make money when you buy, you just don't realize it until you sell.

The first property will be scary.  You'll make mistakes.  Forgetting some costs or expenses.  Learn from that and hone your process.  You'll get better.  Don't let the NOs get you down.  Keep your dream in mind.