All Forum Posts by: Will Barnard

Quote from @Kevin Sobilo:

Quote from @Will Barnard:

"Anyone have a PRICE/SQFT. guideline that they currently using to accurately estimate their rehabs??"

The problem with the above is that you can't "accurately" estimate rehab costs by using a price per SF. If you want accuracy, there are no shortcuts, you must make a SOW (scope of work) and price each line item out to be accurate allowing for a % for buffer at the end as hidden or unforeseen items are not only common, but probably, especially when the rehab is heavier vs lighter.

Lots of people suggest having 3 bids from contractors but when you don't own the property and are merely trying to put a budget together to make an offer, contractors are often not going to put forth all that time in effort on the off chance you do get the deal and do hire them, so you would have to pay for the bids. That would not be efficient at all and as such, knowing how to price out a rehab on your own is essential to your success as a real estate investor working with rehabs (for flips or holds). There are many, many threads here on BP on how to properly estimate rehab costs in which I and other pros have gone into great detail on how to perform this task. 

@Andrew Oliveri, I echo @Will Barnard, but I also add that I do something in addition to that.

I will do a scope of work but initially I might do it at a high level and then only after a deal looks good will I refine and work with it more.

In my scope of work for each line item, I assign a % confidence I have in my estimate. Then I use that to calculate a high and low estimate value. For example if a roof is $10k and I'm 90% confident in that number the high value is $11k (10% more) and the low value is 9k (10% less) based on that 90% confidence number.

When I add things up I have a low and high total estimate in addition to my middle estimate. If my high estimate is still "ok", I feel good about the deal because that is worst case and I know that with good project management I can bring it around the middle estimate the vast majority of the time.

This allows me to do estimates well enough without contractor bids early on when I'm trying to negotiate a deal. 

This is very sound advice and a great idea especially for newer flippers as you developed a cushion in the event you go over budget. It is similar to simply adding a 10% across the board “contingency expense”. That said, attempting to do that during the very competitive sellers markets we had would put your offer too low making your offer success rate very low so you must also keep the market conditions in mind. During market up tick cycles, your buffer ends up being the appreciation while you hold it. In a downturn market, you absolutely need buffers, perhaps greater than 10% as you need to allow for rehab buffer and market depreciation buffer as well.

That is a fantastic problem to have @Bob Stevens, perhaps you can hook up with other local rehabbers and wholesale a few off to them and capitalize on all your leads.

Gurus push anything that helps them sell their products/services to newbies and they make it sound as easy and as cheap as possible to get them on the hook (which is when your credit card is charged).

I'm not sure specifically why gurus (or if most do) push DF$, but I do know this: If you are going to start out and do any type of marketing, DF$ is a good thing to do, especially when starting out as the only cost is your gas/time, and wear and tear on the vehicle but you gain something you don't get with any other type of marketing including SEO of your website: Experience and knowledge of your local market. By driving street to street, neighborhood to neighborhood, you get a good sense and idea of what is going on in that area, which are the bad streets and which are the good ones, which have heavy traffic and which do not, which have more run down homes and which do not. Driving for dollars puts your boots on the ground and while you are doing this research of your market, you might as well knock on that run down house door sitting in a great neighborhood! This is the MAIN reason why I would push DF$ (and I am NOT a guru).

Quote from @Bob Stevens:

Quote from @Urvashi Vasishtha:

Here's a take on why people think it's easy to find profitable flips.

People assume that whatever information is readily available is common. This bias skews our perception of reality. If you watched a show about flipping houses and the flipper in each episode makes around $40,000 to $60,000, you get the sense that it’s easy and everyone can do it. It appears that way because you are not noticing the number of people who are losing money on their flips.
Let’s take an example. If you haven’t played basketball and only watch Michael Jordan playing basketball, you will say that playing basketball is easy. You’d feel that you can shoot hoops like that. Hundreds of talented players felt that way only to be crushed by MJ time and time again. The reason novices don’t know how hard it is is that the only examples before them are those of successful people.

What are your thoughts on it?

It is easy if you have a good network. I can get as many as I want in my market. I just got 4 in the last month. examples, 3 /2 all in 60k, ARV 125k, rent will be 1400, I may keep it. 10 unit All in 360k, ARV about 460 NET rent about 58k, on gross of about 90k, 4 unit, all in 115k, arv about 175k,

Again its all about knowledge and your network  

 One example/case study is not enough to support the claim that "it is easy". Try coming to my area of Southern CA with your network and see how well you fair right off the bat? It won't be easy! It likely wasn't easy when you first started either, it took time to learn and build your network and team. So many try to go about this by skipping necessary steps and then fall flat on their face. There are no shortcuts and it is NOT easy or EVERYBODY could do it.

Even with the pics, it is impossible to say if your budget is on par or not, but guessing, it does sound low but that depends on your SOW. WIthout that, nobody can tell you if your are on or off.

Get a full detailed line item SOW and then price it out. Or you can just leave it up to the wholesaler cash buyer to come in and make you the offer based on their own numbers.

Read your own sentence, I did not restate what you said. You stated workers comp is specifically for w-2 employees (which is a correct statement) but then went on to state that "It is not even available to sole proprietors." That is incorrect, any sole proprietor CAN get workers comp insurance.

$2784 for flooring of a 980SF home is $2.84 per SF. That seems low even if you use $1 tile or laminate material throughout as the labor will certainly be higher than $2 per SF for install. This is where you need to adjust pricing according to your local costs in these calculators, if not, garbage in, garbage out.

For counter tops, remember those measurements are meant for square footage, not linear footages. Your counter top depth for a kitchen is 2ft so if you have 14 linear feet, you have 28sf. Other countertops would include bath/laundry/bar/misc. These calculators are only as good as the person inputting the correct numbers, otherwise they will be off which defeats the purpose.

Quote from @Russell Brazil:

Workers compensation insurance is specifically to cover W2 employees. It is not even available to sole proprietors. 

This statement is wrong, any sole proprietor with employees would need worker's compensation insurance and can certainly obtain it.

Several times above, people are referencing liability insurance which has zero to do with workers comp insurance, they are two totally different insurance policies and a GC should have both (if they have employees, including temp help).

The HOA in this instance is absolutely correct in requiring this proof of insurance before allowing work to start.

"Anyone have a PRICE/SQFT. guideline that they currently using to accurately estimate their rehabs??"

The problem with the above is that you can't "accurately" estimate rehab costs by using a price per SF. If you want accuracy, there are no shortcuts, you must make a SOW (scope of work) and price each line item out to be accurate allowing for a % for buffer at the end as hidden or unforeseen items are not only common, but probably, especially when the rehab is heavier vs lighter.

Lots of people suggest having 3 bids from contractors but when you don't own the property and are merely trying to put a budget together to make an offer, contractors are often not going to put forth all that time in effort on the off chance you do get the deal and do hire them, so you would have to pay for the bids. That would not be efficient at all and as such, knowing how to price out a rehab on your own is essential to your success as a real estate investor working with rehabs (for flips or holds). There are many, many threads here on BP on how to properly estimate rehab costs in which I and other pros have gone into great detail on how to perform this task. 

Never heard of a condo without an HOA, they have shared public space, typically shared walls and/or shared roofs, etc. so it would require an HOA. As for pricing, as with any deal, you need to perform your due diligence on the specific property, community and area. I too skip over condos as dealing with the city is difficult enough, adding in an HOA and their management company adds yet another layer of possible hurdles and delays which negatively impacts profit margins. You also have to contend with (often times) tighter work spaces, lack of staging areas, neighbors with shared walls, etc. On top of that, in an uptick in the market, condos typically appreciate slower and in a downturn, faster than your single family homes adding yet another hurdle to profits. This is just my opinion and experience with condos which is why I avoid them personally as investments.