Most real estate investors have developed excellent skills when it comes to finding properties, marketing for buyers, marketing for tenants, and even creative financing techniques. However, I’ve found that many investors still don’t have a good handle on their renovations. Keeping costs down and accurately projecting repair numbers are critical components to a real estate investing business.
Granted, some investors are content to do a few flips a year and perform the renovation themselves. While this is a great means of keeping costs down, it’s definitely not a good strategy for growing a business and potential income. Real estate investors that are serious about growing their business and the number of properties they can do in a year, absolutely need to contract the renovations to a reliable contractor.
In order to be successful in the fix and flip business, investors need to know how to accurately price a property (or have somebody you work with closely that can). Like anything else, the more houses you renovate, the better you get at predicting repair dollars. We’ve found that while you may be able to estimate a property within $5K to $10K of the actual rehab number within a short visit to the property, it takes time and attention to detail to estimate a renovation accurately.
Having hired and fired a number of different contractors over the years, we’ve learned that the way to control your costs is to control the estimate from the get go. Once you’ve got a handle on material and labor costs for specific repairs, you can build a template scope of work that will enable you to accurately project what your repair number will be on a given property.
Where most investors get burned is the lack of detail provided to a …read more