Estimating rehab costs during initial analysis out of state

Estimating rehab costs during initial analysis out of state

Investor · Member since 2018 · 11 posts · 5 votes

Hi BP, no matter how many times I re-read David Greene's "Long-Distance Real Estate Investing" book, I still have trouble understanding how to quickly estimate rehab costs when you are looking at multiple different potential deals being sent over from out of state.  
I am currently looking at properties in Montgomery and Indianapolis (I live in San Diego) where some of the deals fit the 1% rule at first glance which warrants deeper analysis but this is where I get hung up...  I can see through pictures that some parts of the house could use a touch up, paint, new appliances, or tile in the bathroom but I'm having trouble quickly understanding what this number would be and what I should make as an initial offer. 

I understand the concept of having your contractor go in and getting an itemized scope of work, estimate materials and labor, but by the time this is done, one of you other OOS investors already swooped in and took the deal ;)   As we all know...a good deal will go quick, so I think the skill of being able to quickly estimating these rehab numbers when analyzing a "good" deal,  especially being out of state, is absolutely critical. Do I ask my RE agent, contractor, PM to help?  

Thanks for reading through and any insight would be greatly appreciated!

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Deland, FL · Member since 2017 · 2k+ posts · 1k+ votes
5y

Why are you not looking local?

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  • Deland, FL · Member since 2017 · 2k+ posts · 1k+ votes
    5y

    Why are you not looking local?

  • Investor · Durham, NC · Member since 2020 · 1k+ posts · 691 votes
    5y

    @Michael Colello I'd see if you can build relationships with a local contractor and send them out. 

    If you're doing a quick analysis, you can simply assume if it's cosmetic= $10/sq ft, medium= $20/sq ft, extensive= $30-$35/sq ft.

  • Jaron WallingPro Member
    Rental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
    5y

    You need boots on the ground. End of story. 

  • Indianapolis · Member since 2019 · 288 posts · 179 votes
    5y

    Like you said - a good deal goes quick!
    I'm from San Diego myself but I made the jump to move to Indy a few years ago to get into this market - OOS investing doesn't have to be tricky and quick assessments of properties to compete in this market is a must, and fortunately right up my wheelhouse. Happy to connect and share my opinion what's being done locally, and strategies for OOS investors, to keep up.

    Best of luck to you!!

  • Cincinnati, OH · Member since 2020 · 4k+ posts · 3k+ votes
    5y

    @Michael Colello, there is no replacing on site inspection.  Your options become: make a guess with contingencies in contract should you be way off, roll the dice and make a guess with no contingencies, or partner with a local that can be onsite.

    Really it comes down to no risk, no reward.  Or another way: the more risk you hedge (i.e. waiting for a contractor to tour, or putting contingencies in contract), the lower the reward (i.e. you likely will not get as many deals, or as good of deals).

  • Investor · Member since 2018 · 11 posts · 5 votes
    5y
  • Nick GiulioniPro Member
    Rental Property Investor · Carmel, IN · Member since 2016 · 1k+ posts · 615 votes
    5y

    Hi Michael, from Indy here. Rehab costs can be very critical. Drop me a message. I would love to chat with you and help you in any way I can.

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