Estimating Rehabs when Wholesaling Distressed Houses (DFW)

[Tyler Blackburn]

Good Evening BP!

I sent out my FIRST direct mail pieces of 300 letters to pre-foreclosures about 6 days ago all around the Dallas / Fort Worth metroplex. So I am hoping that my phone will be blowing up over the next couple days with people needing to sell me their houses (hahaha!). That being said, since I am a new real estate investor and have zero experience estimating rehab costs, do you think it would be best to get a general contractor or experienced rehabber to walk the property with me when I get to the point of visiting it?

Furthermore, do you have any advice on how to find an ethical GC that would do that and walk me through how the estimate is done?

Thanks in advance!

Tyler

[Duane Kidman]

There are some general rules you can use in estimating.  One is the $20/sqft for a basic rehab, with add-ons for a new roof, new HAVC, etc.

You can also itemize what needs to be repaired and replaced, price it through Home Depot or Lowes, then double it to cover labor.

If you know absolutely nothing about rehabbing, or uncomfortable using the above methods, then bringing a GC is a good idea.  I know many experienced rehabbers that still bring their GC with them when walking a property, then determining their purchase price.

On another note, 300 letters is a good start, but don't expect miracles.  I know many wholesalers sending 20,000 a month, and getting about a 5% return calls (some of which or haters), then about 1-2% of those actually close.  Using these statistics, 1% of 5% of 300 is 1 closing at best.  I don't want to burst your bubble, just be prepared to stay on it, keep mailing, and the numbers will add up.  You will receive calls from 6 month old mailings, that is when it starts getting fun.  Congrats on getting started, you surpassed 95% of wannabe investors with your first mailing.  Best of luck!