Preliminary Analysis. How to account for rehab costs.

[Anthony Ryan]

As a real estate agent, I think it would be a good idea to run at least a preliminary analysis on as many multifamily properties found in the MLS in my target area (greater Buffalo NY area). My concern is, how do I account for potential rehab costs? I have a contractor on my "team" that can assess the costs when doing a final analysis. I'm just looking for an idea on how to do a preliminary analysis to show potential investors.

Do I:

1. just include a wide best estimate (ie 20-60k and  show what the return would be for a number of different values. Keep in mind  when doing the analysis, I'll only have a handfulof pictures (if any) to go off of.

2. Leave them out conpletely (not sure how valuable of an analysis this would be)

3. Something else

Thank you in advance for any help you can offer!

[Kuba F.]

@Anthony Ryan in that case, depending on the volume of properties, I would take rehab costs out of your filtering criteria, instead use some other minimum filter such as potential cashflow, cap rate, % of market value, as a way to determine which properties to visit, and only add rehab costs if they are worth pursuing further, and then only do you advertise a potential deal.

Start with one which has the best potential and stop when you get tired of doing it.  You'll find that there's actually not that many deals out there and eventually will find a pattern in how much things cost.

As an investor I definitely appreciate when my realtor comes to me with a deal that is well researched, and where I don't have to educate them on what makes a good deal, or one that has the ability to imagine on how to add value to make a deal worthwhile.