All Forum Posts by: Austin Davis

I was speaking with a local real estate investor that mentioned his quick glance rehabbing formula he uses on houses he doesn't have the time or ability to do an actual walk through on (he does a lot of volumes, and quite a few of his deals in different markets). I was little skeptical at first because I've seen quite a few gurus trying to sell systems for virtual wholesaling to automate or make a simple formula for rehabbing estimates, or sell you some software. He basis his rehab formula based on the market and he does the following:

1). He picks out of 7-10 "common" rehab category cost items (replacing carpet, painting, etc.) , for different trim levels.  

2). Get between 3-5 estimates for  each category and then averages the cost of each job. He gets pretty specific on the estimates (asking for name brand paint or carpeting). I got a little confused at this point if he's basing the average on a sqft or per job.

3). Once he has the average cost per category for the 5 categories he's chosen, he'll compare each local category cost to the national average (which I believe he's getting from home advisor possibly a more in-depth service).

4) He takes the difference between the local average and the national average, and then averages the difference. I.e.  category a; local- $10  national- $20 ; category b: local-$20  national $10 ; category c: local 10  national 20. "local cost category modifier"= category a: (+10) + category b (-10) + category c (+10)/ 3. "local cost category modifier"= (+$3.30) more than the national average. 

5) He'll make arrangements with local house inspectors to do a walk through the of house and take extensive documentation. If he can't get a house inspector or similar to do a walk through, he'll assume worst case scenario based on his notes and go from there.

Said the entire process will probably take him anywhere from 3-10 man hours (most of that time is spent contacting, communicating, and reviewing estimates from the contractors in step 2). He outsources alot o the work to his VA's and he won't do a deal in a new market if he's not sure he'll do at least 3 more in that same market over the next year and/or if he can't identify the potential for more deals. He ties the "local modifier" to local cpi or something , and he'll use it for about 3 years before updating it again.

Honestly it seems like a rather ingenious way of estimating rehab costs if you don't know the local market all that well. Obviously it probably won't be that accurate, but probably gets you in the ball park. From talking to this guy and seeing the deals he's done....seems like its working. Thoughts?

another idea, use the reddit rule for self promotion.  For every one post you make thats self-promotion, you should have at least 5 posts that are genuine contributions to the community.

 basically introduce yourself to the community, add value to the community, before you try and extract value from the community. 

 Jeff, would you mind explaining your arrangement with realtors in a little more detail? Sounds really interesting. I'm about to get into the wholesaling market with a friend in the Seattle market. We are looking heavily at partnering with other wholesalers and other real estate professional and agents. 

 "Don't buy anything you wouldn't live in" is that its a rule of thumb. I think the basic gist of the generalization is that you shouldn't buy a property in area that isn't safe or if the house (even with repairs) is gonna be overall a **** hole. Obviously this sort of generalization goes out the window if you want to do section 8 rentals or class C / D neighborhoods (not that your rentals should be crappy). My dad (did buy and holds when he was younger) always said never buy anything you wouldn't let a family member or friend stay in.

 Ryland great advice, and thanks for the local insight on Seattle. My friend/investing partner (who is local in Seattle) are in the midsts of starting our wholesaling operation up and getting our first direct marketing campaign launched. 

You're in a similar. My business partner and very close friend are getting ready are going to start wholesaling in the Seattle market (which is where he's located). We've got about 2-2.5k allocated for marketing. We're working the tried and true absentee owner market, along with code violation. Right now we're focussing on doing direct to mail, but were looking at other option as well. @Dev Horn  that is a brilliant idea with the hangers!. Also I'm exploring setting up a website to do inbound leads, but that might be for further down the road. Seems like when you get it working it works great, but it would take a lot to get it set up. Direct mail is a lower barrier to entry.

If youre willing to spend a little money, use listsource to pull recent absentee owner purchases for the past 6 months. Look for multiple appearances of the same name, thas who you want to marketing too. 

Hop on craiglist and try and find recently remodeled houses. Look for rental units. Contact those listing, see if they are looking to purchases any new properties. If you find a professional property manager, leasing agent, or realtor number,  reach out to them. Ask them if they have any clients that are looking to obtain new properties. Offer some sort of incentive for referrals, and/or referral for referral.

Talk with some hard money lenders in the area. See if they know of any clients who are looking for new properties. Offer an incentive to them for referrals and/or referrals for referrals.

The City of Seattle has an up to date code violation list which you can download in an excel file. I applied a simple sort field to the headings and was able to sort out commercial properties, and cases which have already closed. I filtered for residential properties with cases that are still open from the last six months and got 300 properties. I can't say the list will be 100% accurate, but just spot checking about a dozen properties I'd say that atleast 75% of the list is decently workable. As I worked with the list more I'll probably pick up on more. I'm  gonna use a virtual assistant to fill in mailing address for the property owner and use that for direct mail campaign. 

Never mind i found the informaiton!