Here's The Easy Way To Estimate Repairs...

tape Hi Moguls, Lex Levinrad back again with my third and final installment of my mini-series all about estimating repairs.

In Part 1, I provided an overview of how to estimate repair costs by understanding the material costs as well as the labor costs. And I gave some solid reasons why you really don’t need a general contractor for this kind of stuff. In Part 2, we talked about specific examples of materials and their costs for kitchens and tiles flooring.

Today, we’ll cover more specifics of rehab and material costs for bathrooms and bedrooms, and then we’ll wrap up this series with valuable tips for vacant, bank-owned and abandoned properties.

Let’s get to it…

Bathrooms

With the bathrooms, you’ll want to estimate the cost of components such as the tile for the floor, the bathtub, the tile that goes around the tub (or shower), the vanity, toilet, mirror, faucet, etc.

If you find this process difficult, simply look at a house with an old bathroom, break down each component and write them down in your notepad. Then go to your local Home Depot or Lowe’s and price each of those components out.

Bedrooms

Bedrooms are even easier to estimate. If you are using tile, we’ve already covered the cost of that in Part 1, so go check that out.

All you are left with is paint and baseboards, and then repairing doors, handles, blinds, ceiling fans and closet doors. All of those items are available at your local home improvement store.

For paint, you can purchase a 5-gallon bucket of paint and it will tell you on the container how many square feet of paint you require.

Major Items

Beware of the following items that can add up and cost you a lot of money. Most investors get put off by the interior of a property – but do not pay enough attention to these major items:

Roof
A/C Unit
Plumbing
Electrical

getout You will need a licensed roofer, HVAC person, plumber and electrician to estimate costs on any of the above items, but they can add up quickly and cost you a lot more money than your kitchens, bathrooms and bedrooms.

So make sure there are no roof leaks, the plumbing and electrical are updated and the property has central air. If not, account for the cost of installing central air.

The Smell of Money

Many vacant properties like bank-owned and abandoned properties have not been lived in for years. They might smell of mold, water damage or other unsightly odors like cat urine. Many of these odors will permeate into the walls or the insulation… and both the drywall and the insulation will have to be replaced. This is especially true on water-damaged and smoke-damaged properties.

Don’t let these odors put you off. I see many new investors pass over a house that is really smelly and disgusting, which is a huge mistake. When you enter a vacant property, I like to call bad odors “the smell of money.” The more damage a property has, the more profit you can make as an investor.

Don’t let these smells turn you off.

Instead, take your notepad and start adding up each component and what it would cost to replace. And make your offer a little lower to compensate for the extra time and headache.

toiletpaper Major rehabs will scare away a lot of investors, especially newbies. But a couple of applications of a product called Kilz will usually get rid of that bad odor. But first you have to eliminate the source of the odor, which is in the drywall and insulation.

Good news, though. Drywall is cheap. It costs about $9.85 for an 8x4 piece of drywall, which covers 32 square feet. If you add up the square footage of a house, you can see that an entire house gutted to the studs is only a few thousand dollars’ worth of drywall (if that).

The key is the LABOR.

A warning: When you are considering rehabbing a property, it’s always best to use someone with a license or someone who is working under someone else who has a license.

And as an investor, it does not pay for you to do the work yourself. You are better off spending your time looking for more houses, making offers and getting deals.

Wrap Up

So, friends, now that you have your repair estimate, you can use the ARV Formula to estimate the maximum you should offer on a property. Remember that it will take time for you to get good at estimating repairs. Go look at a few houses and practice. You’ll be on your way in no time.

Questions or Comments?

Got any thoughts about rehabs and materials? Or maybe you have a hot tip to add. Share below.

Understand how to take measurements so you know how much of the materials you’ll need to buy.

Learn how much labor costs in your area – because it’s in addition to your material costs.

Become a champ at estimating repairs by looking at houses, knowing the necessary components and familiarizing yourself with home improvement store prices.

Always use a licensed HVAC guy, electrician, roofer and plumber.

Don’t do the rehab work yourself – your time is better spent doing deals.