| Fixer-uppers - The Right Way |
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mochilero
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Cash: $ 2.60
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Joined: 22 Aug 2005
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| Fixer-uppers - The Right Way |
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Years ago an investor friend taught me the right way to approach fixer-uppers. I watched others just buy a house for what they thought was a good deal, without a plan. My friend pointed out the flaws in that approach. You don't think price until you do your homework. You have to start at the end. Here's an outline of how he did it:
1. Determine what the house will sell for when it's ready.
2. Figure every expense: buying, repairing, holding, selling, and $1000 for unexpected things.
3. Subtract this from the expected sales price.
4. Subtract the profit you want.
Now you have the absolute highest price you can safely offer, so you offer less, of course. He never lifted a hammer, prefering to let others do all the manual labor. I watched him do 14 houses one year, making a profit on every one. This is the safe way. Hope it's of use to some of you.
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Thu Aug 25, 2005 8:20 pm |
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joseanes
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Location: Marlborough, MA
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| Re: Fixer-uppers - The Right Way |
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And also...
Factor your skills: do you know who to hire to do the work. Can you do it? How much would you substract for your time, etc...
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Tue Aug 30, 2005 4:21 pm |
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nick_alan79
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How do you estimate costs of repairs/remodeling these properties? I've wanted to do something like this for years but have been afraid of underestimating my costs and losing a lot of money.
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Mon Jun 26, 2006 2:05 pm |
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mots32
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Joined: 04 Oct 2004
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To estimate your rehab costs you need to know your supply costs and labor costs. For supply costs your would have to educate yourself on how much these thing cost. Home Depot used to have a CD of all there products and prices. See if they still have this CD. So you would have this at your finger tips.
Your labor costs would be what you negotiate with whoever is doing the work. If you are starting out, you might want to interview some contractors and have them give you estimates on jobs. You may even want to partner with one. Ultimately it would be cheaper to be the contractor yourself and hire out the labor and buy the supplies directly.
After you do your estimate add a 10% fudge factor, this should keep you from underestimating.
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Mon Jun 26, 2006 5:20 pm |
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