Wholesalers: Provide Investors with which ERC: Retail Flip vs Rental?

[Chris Feltus]

When calculating an ERC (estimated repair costs) for a given subject property should the wholesaler provide an ERC for both Retail Flip AND rental? Or just one?

It seems to me giving them just retail flip ERC would be an option. That way if they are wanting to do a rent on the subject property, and you provided them with retail ERC, they should have plenty of additional wiggle room with their rent numbers, assuming you estimated retail ERC correctly.

Its the investors job to decide on the exit strategy for the subject property no the wholesalers. The wholesaler may offer their advice, but at the end of the day the investor decides.

Curious as to what others think, thanks everyone!

[Will Barnard]

Originally posted by Chris F.:

Will,

For those of us still learning to estimate repair costs and not actively rehabbing yet, would you recommend networking with a couple of contractors. Pay them a flat fee for their time and have them run through the numbers with you on houses you were thinking about putting under contract?

Repeat the above enough times throughout the years until you are experienced enough to accurately do it yourself . That's my approach anyways, in addition I have an excel database full of pictures of every single item you could possibly need for a rehab from home depot. I am also looking into visiting some lumber yards.

That is one way to do it. Here is another: Get out to Home Depot/Lowes and start pricing out material costs for all items of possible repair on a rehab. You will need a list prepeared so that you can fill in the costs for your area. I uploaded to BP mine for all to use. Go here:
http://www.biggerpockets.com/files/user/BarnardINC/file/70-repair-cost-form
Simply fill in the costs after spending a great deal of time reseraching prices at the box stores. They also have install prices (although they are much higher than you can get by hiring outside of Lowes/HD). Then go to as many REO properties as you can and practice your skill set.

Here is some more info that should help you:
Break up the home into sections - Kitchen, baths, flooring, paint, stucco, landscaping, plumbing (including fixtures), electrical (including fixtures), HVAC, interior doors, door casings/baseboards, windows/sliders/front door, roof, foundation, misc., and garage.

Once you know what the common costs are for each area for a specific size home, you can see how easy it will become to walk in and walk out 15 minutes later with a rehab figure in your head.
For instance, I know that a full gut and remodel including new toilet, new vanity, mirror, sink, glass door enclosure, stone/tile on shower walls, etc will run me $2500 per bathroom. So if I walk into a REO deal with 2 baths, I simply add into my head $5k for the 2 bathrooms and move on to the next section. i also know it costs me around $5k to paint in and out a 1500 sq. ft home. I have these basic figures locked in my head so when I identify sections in each home needing repair, it is simply to calculate in my head.

Hope this helps.