Jeff Leighton - How To Estimate Repair Costs On A Rehab: A Simple System For Successful Repair Estimates As A Real Estate Investor

Copyright 2019 Jeff Leighton

All rights reserved.

The information contained within this book is strictly for educational purposes. If you wish to apply ideas contained in this book, you are taking full responsibility for your actions. The author has made every effort to ensure the accuracy of the information within this book was correct at time of publication. The author does not assume and hereby disclaims any liability to any party for any loss, damage, or disruption caused by errors or omissions, whether such errors or omissions result from accident, negligence, or any other cause. This book or any portion thereof may not be reproduced or used in any manner whatsoever without the express written permission of the publisher except for the use of brief quotations in a book review.

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This book contains additional resources that I use on a daily basis as a real estate investor. Since I could not physically include these in the book, they are all available to download for free on my website www.jeff-leighton.com. That includes my deal analyzer, repair estimator, example contracts, marketing pieces that I use, recommended resources, helpful videos, and much more.

Dear Friend,

Welcome to How To Estimate Repair Costs On A Rehab. This guide was created to make it easier for you as a real estate investor to properly estimate repairs with real numbers and no fluff. Each section gives you valuable information on evaluating repairs, including one part with actual real-life estimates that you can use today. Additionally, you can download the exact repair estimator I use in my business for free on my website.

If you are a looking for a 5-hour manual on real estate estimating with fancy diagrams and blueprints, then this is probably not for you.

However, if you are looking for a no-fluff, straight-to-the-good-stuff training on how to estimate repairs for your rehabs, then you are in the right place. This book is mostly for newer investors, although I truly believe any level of investor can gain value from this book.

When I was getting started as a real estate investor, there was no training guide like this. I either had to buy a $50, 2000-page book on construction best practices written in contractor language or I had to search the internet and forums to find out how much different repairs cost. Neither of those were good options, so that is where this book comes into play.

Why should you listen to me? I make six figures per year as a real estate investor and have been mentored by some of the top real estate investors in the world. Im not saying that to brag, but instead to give you an idea of where my advice is coming from.

A word of note. Because of the different prices in each respective market, I give low estimates as well as high estimates, so you will have to adjust accordingly to your area.

Moreover, this book is not for houses over a million dollars. Once you get over a million, the level of finishes, size of the rehab, and other factors can be drastically different from a house below 1 million.

This book will help you become a savvier real estate investor because youll gain a better understanding of renovations and estimates. We will also go over how to find the best contractors, the best renovations you can do in terms of ROI, and mistakes to avoid.

I try to share stories from my own experiences throughout this book so that you can get a real-world version of it too.

I am looking forward to sharing my knowledge with you, so lets jump into it.

Before we jump into real-life estimates of all the components of a house, I want to go over seven general ideas when it comes to estimating repairs. This will help you better understand the real estate investing business and how much you should budget.

1. For starters, not every house will need a full gut renovation. You need to get a good sense of what the comps have been selling for and what condition those properties sell in.

   Sometimes the highest-selling properties are not fully renovated; they are just in good livable condition. In that scenario, it would be riskier to do a full-scale renovation and try to set a neighborhood record for price.

   Instead, you should do the sufficient repairs to bring it up to the comps, and perhaps slightly above the comps so that it stands out.

   Ive seen investors simply trash out the property, fix up the landscaping, and re-list the house a week or two later since the numbers still worked. Always keep the comps in mind when it comes to the scale of your renovation.

   You dont always need to do a full-scale renovation unless the other sales in the neighborhood have been fully renovated.

2. Next, we have the old debate of being the project manager yourself or hiring a general contractor. Unless the job is small, I almost always prefer to hire a general contractor, even though there are pros and cons to each.

   If you come from a construction background, then you could save some money by overseeing the project yourself and hiring out the different HVAC, electrical, plumbing, and other contractors that are needed. General contractors usually cost around 10% more.

   That being said, if you can find a good general contractor, they can save you a lot of time and headache since they will essentially be your project manager. In a later section of this guide, we go over how to find the best contractors.

   You will still have to oversee them and make sure they are hitting their timelines and cost estimates, but it should save you some time so that you can find more properties.

3. The third thing to keep in mind is the area you live in and the finishes that are required in that specific area. One neighborhood versus another neighborhood can be drastically different.

   In an area where homes sell over a million, a full kitchen might be 40 or 50K, while in another part of town a kitchen could be as little as 10K.

   You want to look at the comps to make sure you are not overdoing it or underdoing it for your specific area.

   The great thing about real estate, though, is that nowadays all the comp information on previous sales in your neighborhood are available online on sites like Redfin, Zillow, and others and include pictures of the properties and their level of finishes.

   Study the comps online so that you know what level of renovation you will need to do. You can also get great ideas for what types of renovations to do by looking at past and actives sales in your same neighborhood.

4. You will improve. When you are first getting started with repair estimates, it can seem intimidating. However, after doing a few estimates and using some of the strategies in this book, you become an expert in estimating repair costs.

   Even once you gain a level of comfort with estimating repairs, you should always seek out further knowledge through books like this, other real estate investors, training events, talking with contractors, and anything you can do.

   There is always something you can learn from other successful investors when it comes to estimating repairs.