Portland, OR Cost of Repair Estimating

[John Williamson]

Hey Everyone,

I have been actively on the house search for just over 2 months now. We've made 10 offers on flip properties, but have been beat out by higher bidders each time. One good thing: my wife and I are being very conservative and are sticking to our Max Allowable Offer 'guns'. We back out if we believe the profit is too tight.

BUT our main linchpin for determining our offer is the fabled COST OF REPAIR ESTIMATE. I am not a contractor and don't have construction experience. We have walked through a couple of the properties with a contractor, but the prices he's dishing out are so dang expensive for (what we believed to be) low cost improvements. I'm afraid that we are oozing FIRST TIME INVESTOR and will be taken advantage of on the cost front with contractors. And this is taking me out of the game because my max offer is so low

I am about to engage in creating a comprehensive 'cost of repair estimating' worksheet for virtually any rehab item for a house. I will be spending countless hours in research and 'excel time' to do this. I just want a much more systematic and AUTOmatic way to quickly assess repair costs on a property given square footage, # of bed/bathrooms, size of kitchen, size of yard, area of roofing, etc.

My question to anyone out there: is there any tool available that will do this quickly and accurately (within +/-10%)? I am growing weary of spending upwards of 1 hr per property I'm analyzing, while maintaining a W-2 job, new marriage, and having fun with my awesome 5-month old baby boy (pic attached!)

Any help would be greatly appreciated for this desperate investor on a mission!!!

John W.

[Kuba F.]

Your perceived problem is that you can't get a contractor to quote you a cost that you think you should be quoted.  This is pretty difficult in a hot construction labor market when you already own the property as they have enough demand to quote you whatever they feel like, and you might need to find that one that really needs the work for some reason or has the extra bandwidth to give you a reasonable price regardless of market conditions.  Doing so pre-offer however is even harder and basically requires an established relationship with one you trust to give you a good price.

Your real problem is that you are making offers using investor math but all you have access to is consumer systems.

Let me explain:

Consumer systems:

Home source: MLS/Market priced homes

Construction: Retail GC/Market priced materials labor

Sale: Full serve brokerage/Market priced commission

Investor systems:

Home source: Off-market, distressed properties from direct mail, wholesale, relationships

Construction: Relationships, GC in-house, bulk material discounts

Sale: Negotiated cost brokerage or sales in house

Investor math is usually only possible if you use investor systems, or as many as possible. Outside of that your profit suffers and your MAO math is laughable, especially in a hot market both real estate wise as well as construction labor demand wise.

Not to discourage you, but initially you're looking at much smaller profits for the sake of learning how to access these investor systems, or try to hack them as soon as possible.  Usually that involves relationship building.