Do I Need To Be Able To Estimate Construction Repair Costs To Wholesale Houses?
November 21, 2009 by admin
Filed under Real Estate
Eddie Case asked:
Almost all of the properties that wholesalers will \”put under contract\” will need some degree of repair work. These repairs can range from some new carpet and paint to a complete \”gut job\” where you will have to remodel the entire house inside and out!
Unfortunately we as wholesalers MUST be able to calculate the rehab dollar amount. We must be able to plug this critical \”Rehab Value\” into our Wholesale Formula Spread Sheets. These spreadsheets tells the wholesaler if he has a real deal on his plate or not!
More on how to calculate your spreadsheet numbers some other time! But for now, just know that this rehab dollar amount is a critical variable when figuring out how much you will offer on the property you are looking at!
So, if you know absolutely nothing about estimating repairs on a rehab project this could be a problem for you. So here\’s what I suggest you do if your new to the business. CALL A CONTRACTOR TO HELP YOU CALCULATE THE REHAB COSTS! Then, open up your ears and your eye\’s and pay attention to what the contractor tells you about the project at hand.
Estimating repairs is not rocket science. It just takes a little practice to get it right! I suggest that new investors should be walking through as many distressed properties as they can with a notepad, a tape measure, and an open mind! I can teach anyone in 30 Days or less, how to calculate rehab numbers and have excellent ballpark repair numbers on just about any project.
I have put together some generic project cost sheets that will help put 90 % or more of the repair totals together for you. Just plug my numbers into your Rehab Value Spreadsheet and you will be more than on your way to arriving at the complete project cost totals that you will need. In my e-book \”Wholesaling Smarts\” I have included this project estimating cost sheet.
You may have to pay your contractor a few bucks for the first few estimates, but do it anyway! Think of it as the price of an education! While the contractor is doing his thing, you should run your own numbers using the cost estimating sheet in my e-book. Then, after the contractor has given you his numbers, compare them to yours to see how you did on your project total. Be patient, it will take some practice, but anyone can learn how to estimate like a pro! After a while, you will never need to call the contractor again, I promise!
YOU MUST HAVE AN ACURATE REHAB COST VALUE TO PLUG INTO YOUR WHOLESALE DEAL SPREADSHEET, WHETHER YOU ARE ESTIMATING THE REAPIRS OR YOUR CONTRACTOR IS DOING IT FOR YOU. IT\’S AN EVIL NESSESSITY THAT ALL WHOLESALERS MUST CONTEND WITH IF THEY WANT TO BE SUCCESSFUL WHOLESALERS!
More Free FAQ videos about real estate wholesaling here?www.FAQMentor.com
Almost all of the properties that wholesalers will \”put under contract\” will need some degree of repair work. These repairs can range from some new carpet and paint to a complete \”gut job\” where you will have to remodel the entire house inside and out!
Unfortunately we as wholesalers MUST be able to calculate the rehab dollar amount. We must be able to plug this critical \”Rehab Value\” into our Wholesale Formula Spread Sheets. These spreadsheets tells the wholesaler if he has a real deal on his plate or not!
More on how to calculate your spreadsheet numbers some other time! But for now, just know that this rehab dollar amount is a critical variable when figuring out how much you will offer on the property you are looking at!
So, if you know absolutely nothing about estimating repairs on a rehab project this could be a problem for you. So here\’s what I suggest you do if your new to the business. CALL A CONTRACTOR TO HELP YOU CALCULATE THE REHAB COSTS! Then, open up your ears and your eye\’s and pay attention to what the contractor tells you about the project at hand.
Estimating repairs is not rocket science. It just takes a little practice to get it right! I suggest that new investors should be walking through as many distressed properties as they can with a notepad, a tape measure, and an open mind! I can teach anyone in 30 Days or less, how to calculate rehab numbers and have excellent ballpark repair numbers on just about any project.
I have put together some generic project cost sheets that will help put 90 % or more of the repair totals together for you. Just plug my numbers into your Rehab Value Spreadsheet and you will be more than on your way to arriving at the complete project cost totals that you will need. In my e-book \”Wholesaling Smarts\” I have included this project estimating cost sheet.
You may have to pay your contractor a few bucks for the first few estimates, but do it anyway! Think of it as the price of an education! While the contractor is doing his thing, you should run your own numbers using the cost estimating sheet in my e-book. Then, after the contractor has given you his numbers, compare them to yours to see how you did on your project total. Be patient, it will take some practice, but anyone can learn how to estimate like a pro! After a while, you will never need to call the contractor again, I promise!
YOU MUST HAVE AN ACURATE REHAB COST VALUE TO PLUG INTO YOUR WHOLESALE DEAL SPREADSHEET, WHETHER YOU ARE ESTIMATING THE REAPIRS OR YOUR CONTRACTOR IS DOING IT FOR YOU. IT\’S AN EVIL NESSESSITY THAT ALL WHOLESALERS MUST CONTEND WITH IF THEY WANT TO BE SUCCESSFUL WHOLESALERS!
More Free FAQ videos about real estate wholesaling here?www.FAQMentor.com
How Do I Know For Sure If My Real Estate Wholesale Deal Is A Good Or Bad Deal?
May 6, 2009 by admin
Filed under Real Estate
Eddie Case asked:
As with every type of real estate deal that\’s ever been put together by a successful real estate investor, the answer to this question will be found in the deals \”NUMBERS\”!
Real Estate investing is a numbers driven business! PERIOD! The number 1 Cardinal Sin in real estate investing is \”Falling in Love with the Real Estate that Your Thinking About Putting Under Contract!\” What a property \”looks-like\” has NOTHING to do with whether or not its going to make you any investment money!
Every real estate deal is really no more than a mathematical equation. Nothing more, nothing less. If the numbers do not add up to profits and positive cash flow, then the deal is NO GOOD! PERIOD! End of DEAL! DON\’T DO THAT DEAL!!!!!!!! Its really very, very simple to figure out which deals are good and which deals will harm you as an investor. And it all boils down to how well the investor can calculate the numbers on the \”Deal Formula Spreadsheets\”
Each type of real estate deal has its very own spreadsheet formula! Each of the following type of deal has a specific deal spreadsheet that will determine a good from bad deal:
* Buy-Fix-Sell
* Buy-Fix Rental
* Wholesale Deal
* Lease Option (rent to own)
* etc……
Once an investor masters plugging ALL of the correct spreadsheet VARIABLES into the Deal Formula Spreadsheets the margin for selecting a \”Bad Deal\” will be greatly diminished if not eliminated all together!
Wholesalers have a very specific Deal Spreadsheet Formula that works on every deal that we analyze. Taking into consideration that most of my wholesale buyers (Investor Buyers) will be financing their deal using a Hard Money Lender, I will use the following formula to figure out my purchase offer:
Note: Home has a $ 100,000.00 (FMV)
Note: Hard Money Lender will lend up-to 70% LTV (Loan to Value)
Note: Repairs will cost $10,000.00
Note: closing costs will cost $6,000.00
Note: My minimum net profit is $ 7,500.00
***Fair Market Value (FMV) X 70% = $70,000.00 (max. loan amount)
+$70,000.00 (max loan)
-$ 10,000.00 (Repairs)
-$6,000.00 (Closing Costs)
-$7,500.00 (My Net Profit)
= $46,500.00 (My Max. Offer to the Seller)
My SAFE offer to the seller will be $ 46,500.00. If this offer is accepted by my seller I will make $ 7,500.00 when I wholesale this deal to my investor for $54,000.00
$46,500.00 (my offer to seller) + $7,500.00 (My profit on the deal)
= $54,000.00 (Wholesale Price that my buyer pays me for the property)
Using this formula my Buyer is going to able to borrow 100% of the money needed for his:
* Purchase price
* Repair Costs
*All Closing Costs
+$54,000.00 (My Buyers Purchase Price)
+$10,000.00 (All Repairs Money)
+$6,000.00 (All Closing Costs)
=$70,000.00 (Max loan from the Hard Money Lender)
Total time invested in this typical wholesale deal averages just 2 hours per deal! $ 7,500.00 in just two HOURS! Not a bad hourly wage wouldn\’t you say!
Blow the Spreadsheet Formulas and you could end-up losing your cookies! Not using them at all is next to real estate investing financial ******* for the new and experienced investor alike!
Use your Deal Formula Spreadsheets and always remember this: \”The Numbers Don\’t Lie!\”
20 FREE FAQ videos about real estate wholesaling here? www.FAQMentor.com
As with every type of real estate deal that\’s ever been put together by a successful real estate investor, the answer to this question will be found in the deals \”NUMBERS\”!
Real Estate investing is a numbers driven business! PERIOD! The number 1 Cardinal Sin in real estate investing is \”Falling in Love with the Real Estate that Your Thinking About Putting Under Contract!\” What a property \”looks-like\” has NOTHING to do with whether or not its going to make you any investment money!
Every real estate deal is really no more than a mathematical equation. Nothing more, nothing less. If the numbers do not add up to profits and positive cash flow, then the deal is NO GOOD! PERIOD! End of DEAL! DON\’T DO THAT DEAL!!!!!!!! Its really very, very simple to figure out which deals are good and which deals will harm you as an investor. And it all boils down to how well the investor can calculate the numbers on the \”Deal Formula Spreadsheets\”
Each type of real estate deal has its very own spreadsheet formula! Each of the following type of deal has a specific deal spreadsheet that will determine a good from bad deal:
* Buy-Fix-Sell
* Buy-Fix Rental
* Wholesale Deal
* Lease Option (rent to own)
* etc……
Once an investor masters plugging ALL of the correct spreadsheet VARIABLES into the Deal Formula Spreadsheets the margin for selecting a \”Bad Deal\” will be greatly diminished if not eliminated all together!
Wholesalers have a very specific Deal Spreadsheet Formula that works on every deal that we analyze. Taking into consideration that most of my wholesale buyers (Investor Buyers) will be financing their deal using a Hard Money Lender, I will use the following formula to figure out my purchase offer:
Note: Home has a $ 100,000.00 (FMV)
Note: Hard Money Lender will lend up-to 70% LTV (Loan to Value)
Note: Repairs will cost $10,000.00
Note: closing costs will cost $6,000.00
Note: My minimum net profit is $ 7,500.00
***Fair Market Value (FMV) X 70% = $70,000.00 (max. loan amount)
+$70,000.00 (max loan)
-$ 10,000.00 (Repairs)
-$6,000.00 (Closing Costs)
-$7,500.00 (My Net Profit)
= $46,500.00 (My Max. Offer to the Seller)
My SAFE offer to the seller will be $ 46,500.00. If this offer is accepted by my seller I will make $ 7,500.00 when I wholesale this deal to my investor for $54,000.00
$46,500.00 (my offer to seller) + $7,500.00 (My profit on the deal)
= $54,000.00 (Wholesale Price that my buyer pays me for the property)
Using this formula my Buyer is going to able to borrow 100% of the money needed for his:
* Purchase price
* Repair Costs
*All Closing Costs
+$54,000.00 (My Buyers Purchase Price)
+$10,000.00 (All Repairs Money)
+$6,000.00 (All Closing Costs)
=$70,000.00 (Max loan from the Hard Money Lender)
Total time invested in this typical wholesale deal averages just 2 hours per deal! $ 7,500.00 in just two HOURS! Not a bad hourly wage wouldn\’t you say!
Blow the Spreadsheet Formulas and you could end-up losing your cookies! Not using them at all is next to real estate investing financial ******* for the new and experienced investor alike!
Use your Deal Formula Spreadsheets and always remember this: \”The Numbers Don\’t Lie!\”
20 FREE FAQ videos about real estate wholesaling here? www.FAQMentor.com
