Long Distance Renovation Help?

Question

I am looking to do my first long distance deal and I am struggling with how to estimate rehab costs. I am decently confident with estimating cosmetic changes. Many of the homes Im looking at will need structural as well. Ex: flooded basements, rebuilding porches, repair/replace heater, repair detached garages.

Any tips on how to estimate this? I dont have the network there yet to ask a contractor to a house I dont have under contract. Should I just give it my best guess and then get a contractor in there after the inspection?

Christina Swaby · Answer

Many reasons. Cash flow, cheaper properties, significantly less property taxes/insurance, chance to improve the communities where we are from, etc. Not against Houston. We have a property here already. Just modified our goals for the near term and the area we are looking at made sense.

Christina Swaby · Answer

Thank you Andrew! Ill watch the video. Appreciate you sharing your tool and your insight into long distance. We do have an extensive network there, already own some property, and are in the area several times a year. Our lifestyle allows up to hop up there should there be some pressing issue. But I do recognize the extra challenge of not being to just drive there.

Christina Swaby · Answer

oh I didn't know they had a book on that. Thank you! I will get that. My husband is well versed in excel and I think could tackle a project like that over time.

Andrew Postell · Answer

@Christina Swaby well, to answer your question directly I made a video on how to do this when you walk a property that you can view HERE.

I would always suggest to invest local over other areas.  I'm saying this from being an out-of-state investor for over 15 years. This is often a debated discussion here - Which city provides the best returns?  And the answer is ALWAYS whatever city you can protect yourself in the best.  Meaning, what city do you have a trusted network of people?  When you invest out of state you may NEVER even see your property.  That's an enormous amount of trust to put in a stranger.  If "City X" gets 2% better numbers than "City Y"...but you have a network of trustworthy people in "City Y"...then choose "City Y".  One bad vendor, one botch job, one badly screened tenant, one repair not caught...will wipe out ANY benefit that another city or area will give us.

Now, it sounds like you might know people "where you are from" if I am interpreting that but just know that what you are about to do is really hard.  I mean, it's hard enough when doing it local...so doing it from a very far away place makes it even harder.

Hope all of this makes sense.

Brian Kantor · Answer

@Christina Swaby BP has a good book on this "The Book on Estimating Rehab Costs" by J Scott. The pricing is a bit dated following the post-covid inflation spike, but adding 20% to these costs should be a strong directional start.

To dig a little deeper, I created a Google Sheet and line item'ed out all of the major repair items I might encounter in a property. I split it between materials and labor. For materials, I went onto HomeDepot.com and priced out the exact materials I'd suggest using and hyper-linked back to the product pages on their site. For labor, I did a mix of Google Searches for what I might expect to pay and asking a contractor that I worked with earlier on a small project.

Everything is done with formulas, so I can just enter in the number of units to calculate a total price. Now, as I evaluate properties, I pop in the units and get a solid estimate.

Andrew Postell · Answer

@Christina Swaby is your profile correct that you live in Houston?  If so, why are you trying long distance?