Hi All! South Florida Aspiring Rehabber here.....

[Kristin Britt]

Hi Everyone!
I am really happy to have found these forums. It's good to hear from others with the same interests and it's really interesting and informative and fun to read the newbie experiences and the experienced investors as well.

My husband and I have 7 long term buy and hold single family rentals in various cities (some are more and some are less profitable). Our short term goal is to achieve financial freedom within 5 years through passive income. We both have full time jobs, and I would like to be able to just be a full time investor eventually. Our longer term goals are: $1M+ annual income, 100+ units, and transitioning from full time work to full time investing. We intend to use our earned income as well as leverage to fund our goals, but we also want to accellerate our goal acheivement by completing multiple rehabs each year.

We have done one full gut rehab, but spent way too much money and it took way too long, and we ended up selling it in 2 weeks, but losing money. THEN, we took some extensive professional rehab training, got our real estate licenses, created an LLC, and started making offers. So far, we have been unable to get any offers accepted, and I think my offers are too low, but I am concerned about repair price estimates, having not done a rehab down here. I am just worried that it will all cost more than I initially estimate, or that I won't be able to find contractors to take me seriously and get me investor pricing vs. retail pricing.

Thanks for any advice or insight or even just encouragement or sharing you give! I appreciate it. :)
Kristin

[Luis A.]

Welcome Kristin. My first question to you is why do you think your offers are too low? What are you comparing them to?

I can tell you that if you say that because you are not getting offers accepted remember there is the possibility of others are paying too much. This has happened to me dozens of time and I have learned to let others pay more. I feel confident in my cost estimating and probably one of the most valuable disciplines in rehabbing is sticking to your maximum offer price.

You say you lost money on one of your rehabs, that probably means you paid too much...

Like you I had no idea how to do construction estimating when I started this business. There are several things I did to improve this:

- Spend a lot of time at Home Depot/Lowes and when you hire someone try to buy the materials. You will quickly learn how much stuff costs.

- Find a home inspector or general contractor that you can use to do home inspections and rehab estimating. Walk through a potential project with them to make a list of repairs needed and their cost. You will probably have to pay them for this and it is well worth it.

- Talk to other investors This is one of the most important ones. I have met, talked and walked through dozens of other investor projects (includes J Scott from 123flip.com) and that is a great way to find out who they are hiring and how much they are paying.

Cost estimating is not rocket science and it is not the hardest part of this business IMHO. But it can certainly make or break your project.

Also make sure you start out with a small project. Estimating a $10,000 rehab budget is a lot easier than a $50,000 rehab. Also if you mess up the smaller budget you will probably be fine while if you mess up a complicated budget it can cost you thousands…

Also be very clear when you hire someone to let them know when they need to be finished. For every contractor establish clear, written scopes, schedules and guidelines. That way there will be no confusion whether something is done right or not and you protect yourself. If they don’t perform to the mutually agreed guidelines do not be afraid to fire them. Holding on to a non-performing contractor is bad for everyone involved. Ask me how I know...

The whole investor pricing vs. retail pricing is easily solved by calling contractors that have been referred to you by other investors and by getting several quotes for the work.

I have gone into a lot more detail on this on my site if you want to find out more. Let me know if I can help.