Estimating repair costs off MLS pictures...okay to do? Or stupid?

[Kingsley Okwerekwu]

How can I estimate rental costs on a MLS listing from my computer?

I am looking to begin my first flip in the next 2/3 months...is it okay to see fixer upper appear in my market and just make an offer of what I “think” the numbers would be? This “estimated repair cost” is the toughest part about “doing the numbers” for me.

Are there certain major expenses (roof, heating etc.) that may be hidden from the pictures and the mls listing? Or will all agents have to disclose that information, for a fear of not disclosing a defect?

Would a better option be to make an offer and then ask a certain list of questions that may not be disclosed? Or should everything I need to know already be disclosed on the listing?

I have this super huge fear of buying something that I thought was good, finding out it will cost WAY more, and then my parents and everyone around me calling me a massive failure.

Thanks!

[Patricia Steiner]

First, ask for a seller's property disclosure.  If there is one, it will tell you the age and major defects (the ones the seller can't hide) about the property.

Then, go on the property appraiser's website to check on square footage (the MLS is marketing so "let the buyer beware") and also check for any permits that were pulled on the property. Also check for any outstanding code violations. When you buy the property, they become yours if you don't put it back on the seller contractually.

You'll want to walk the property so ask for a showing. Check the exterior as well as interior.  There's a lot to look for and if you don't know what you're looking for, then it's just a walk and won't be all that helpful.  You need to know the life of the major components and their condition:

Foundation - any repair needed will be a costly one.

Plumbing - if cast iron, it rusts from the inside out so you never know when it's going.  Tree roots can damage any plumbing as well as the foundation.

Roofs - in my market, they last 15 years and you need 5 years of roof life remaining to get insurance. This is a big ticket item.

AC - you'll need 3-5 years of life remaining to engage insurance coverage.  

Electrical - is it to code?  Knob and tube, aluminum wiring - just not insurable.

And, when estimating rehab costs to make an offer, remember that you're not entitled to "new." You're buying a "used/very used and abused" house, not unlike when you buy a used car.  

Then check property values so you'll know whether it's worth doing in the first place. If you rehab it and you'll be over market value, then it's a why bother.

As a buyer, you don't pay commissions so why not add bench strength by finding an investor focused realtor who has sold a lot of properties for flipping and bring that expertise into making the best decision.

Real estate investing is a complex business.  Please don't go it alone when it will cost you nothing to do it like a pro.

Best...