Wholesaling For Newbies: How To Estimate Repair Costs

[Cody Evans]

Hi BP,

I want to start a series of threads for newbies starting out dirt broke like me to utilize as a step by step process (very concrete and not ambiguous) so they can reach their first wholesale deal. 

I was reading on this blog written by Brett Snodgrass (some big, successful BP guy)

https://www.biggerpockets.com/renewsblog/why-whole...

about how to get an estimate of repair costs for a property you are looking to wholesale. He states that you should find roughly 5 contractors to estimate repair costs. The issue is that if you don't have much money like I; getting these estimates can actually cost a lot of money. Just to try and  get an ESTIMATE to make an electric outlet for my stove the other day the electricians wanted $100-$150. If us newbies were to do this 5 times to get 5 quotes as Brett suggested it would be much less feasible to try and wholesale. I commented on the blog and Brett promptly responded that "the better relationship you have with them, the more likely they are to waive a bid fee."

The question is: How do you develop these relationships to that point before making your first deal with these contractors? I think estimating  these rehabs, which is essential to the mathematics of determining a proper price to offer your distressed seller and a big reason wholesalers get a bad rep, for a reasonable cost could make or break the beginning wholesaler.

[Pratik P.]

In my experience, the absolute best way to learn rehab cost estimation is to actually flip a house. Once you do one, you'll have a solid idea of what things usually cost. You'll be able to walk through a house and go "5k for this, 2k for that, 3k here...etc"

Till then, you could visit your local suppliers of cabinets, granite, flooring, roofing and see what kind of prices they charge including installation. You should also look up stuff online for Home Depot and Lowes. Look up things like doors, windows, fixtures, lighting, paint, appliances. 

Having a bunch of contractors give you estimates every time is going to be just extra work and cost for you! They would probably give you high prices too since they can tell you don't know what things truly cost.