Getting into the real estate investment market is difficult. Whether it is identifying valuable properties, estimating rehab costs, evaluating financing opportunities, or finding potential investors or buyers, the basic functionalities of the career are difficult enough on their own, even if you have tools like house flipping spreadsheets or value calculators.
Now add in the fact that you are competing against seasoned pros right from the start, and you are seemingly always at a disadvantage when it comes to acquiring information, you have to be a quick study, and the actual market is working against you.
It almost seems almost unfair.
However, it shouldn’t be this monumental task. In my opinion, getting into real estate investing should be a joyous endeavor that brings with it challenges and new obstacles, but doesn’t wear you down. You should be able to experience the things that bring you joy or that you thrive in, while still being able to manage the difficulties.
Therefore, let’s tackle one of the challenges that I consistently see mentioned as a time-suck, that I have specifically seen done incorrectly, and that scares off a lot of new investors – estimating rehab costs. Whether you are looking to buy and hold, fix and flip, or wholesale, estimating rehab costs is a consistent hurdle to clear before you can really get started making money.
Why Are Accurate Rehab Cost Estimates Important?
Pretty simply, this directly impacts your money.
In order to arrive at an accurate maximum available offer (MAO) and avoid losing money on your investment, you need to know exactly what it will cost to get the property up to the resale value that will allow the property to be sold. Homebuyers don’t want to move into a project or a dump, they want to live in a nice house and they want to feel like they got the best property on the block.
Additionally, when you have rehab costs broken out and specified down to the dollar, you can make a more compelling case to any other investor who might want to buy the property off of you and provide you with a nice, quick, profit.
Are Fix and Flip Properties the Only Times This Matters?
While it is true that fix and flip property investors will be primarily concerned with getting a specific estimate for a home due to the nature of how they experience an ROI on their purchase, understanding an accurate picture of what repair costs will result in for any home can be critical to the homeowner or investor at any phase.
As one might imagine, it is difficult to find quality and trusted rehab estimators out there, and it is even harder to find contractors who will perform the work at the rates that your estimates show.
Simply put, it is difficult to get something as simple as a bathroom remodel estimate template to give you a little confidence when approaching a contractor to hopefully have them accept your remodel bid template.
Whether you want to determine a gut repair cost, or you want to wholesale a property, or you need a kitchen remodel cost calculator, or you are looking to perform a flip for profit, investors and homeowners of all kinds can benefit from a more accurate understanding of their rehab costs.
What Options Are Available To You?
At this point, you might be asking yourself, ‘if it is so important and vital to the success of any investor, then there is most likely tons of support online on ways to quickly and accurately estimate these costs’.
Well, not to call your ‘self’ dumb, but your ‘self’ is so wrong it is embarrassing.
Ok, not really. There is a ton of helpful information out there, from calculators to forums discussing the topic, to guides on how to properly go about estimating rehab costs. However, all of this support has one, crushing, theme to it: It is NOT HELPFUL.
The vast majority of the rehab calculators that are available to you are trash. They rely on you to input all of the key information in yourself, such as how much does the labor cost to repair the roof or how much does the material for a new kitchen countertop cost.
How in the hell are you supposed to know these numbers? Isn’t this what the calculator should be doing for you? You can add, so if you knew all of those numbers, then why the hell would you need their calculator.
Seriously, don’t just take my word for it, go and do a search for rehab calculators.
Tell me if any of the options available to you on the first page of Google actually provide you value. Go on, I will wait.
Ok, so by now you have seen that all of the options available to you either force you to manually input each of the values yourself, use broad generalizations such as ‘Mid-Grade’ for appliances, use national averages to estimate the costs, or are the least mobile friendly calculators in existence.
Have you ever used Excel on your phone? Of course not, because it is a God awful experience.
Do you know what is really difficult to bring with you while walking through a property that you are trying to evaluate? A laptop!
So why in the hell would someone sell you a calculator to estimate rehab costs that operates out of Excel? They are basically telling you to walk through the property, take SUPER accurate notes (as in down to how many outlets are in each room or what the square footage is of the bathroom) and then translate your notes into the proper Excel categories at home.
Sorry, went off on a tangent there. I personally just find it frustrating when someone is selling a product that simply isn’t a feasible solution to the real market needs.
Wouldn’t it be better to simply walk through and as you see things in the property, click a button on your phone? Simply check off a yes or no based on the room you are in, or have a running counter for every light switch that might need to be addressed, and have that produce for you an accurate estimate of the total rehab cost of the property before you leave the house.
In fact, if this phone app could also break down how much of the rehab costs are attributed to general contractor fees, you could also find areas that you could save some money based on your connections.
This is the type of support that I am looking to create.
I don’t want to give you another bullshit article about 6 ways to estimate rehab costs where one of my “methods” is to ‘think like a rehabber’ or ‘prepare for the unexpected’ or ‘understand the steps and costs’. (Are you kidding me with these tips? Why would I be reading an article about estimating rehab costs if I knew what the steps and costs already were??)
Why an Upgraded Rehab Calculator is Needed?
If you can’t tell already, I have done a ton of searching for options in this field.
I have tried every calculator out there for estimating rehab costs, I have talked with investors, realtors, contractors, and property inspectors, and I have tried to take notes walking through a property and researching the costs after the fact.
The one consistent thing that I have found is that all of these options suck.
It either takes too long, or it is inaccurate, or it requires me to have information that I can’t possibly have, or I am supposed to make a massive decision on whether or not to buy a property that needs rehab work done to it, off of a general standard estimate.
I apologize if I don’t want to just take the square footage of a property and multiply it by $75 to make my decision to buy a property for $50,000. That is never not going to be a ton of money to me, and to make a decision regarding spending a ton of money, I would like a little more accuracy than ‘meh, that sounds about right’.
Taking this a step further, now think about a $300,000 investment. Investing this type of money usually requires the use of a hard money lender with interest rates that can get as high as 10%. You literally can’t afford to be wrong or to miss something in the property that you should have caught.
Therefore, we have built the first mobile web-app that can be updated easily on your phone and instantly shows you the total rehab costs and the costs to hire a general contractor to perform the work. Our math is supported by decades of research and the most up to date costs of material, and our calculator allows you to simply turn on or off specific enhancements based off of the property demands.
Everything from re-doing your kitchen to estimating a complete gut-job, our calculator has been tested by industry experts and our numbers have been more accurate estimating rehab costs than said professionals.
We have provided prompts and checklists to ensure you have accounted for everything. Similar to how there are tax services that walk you through every section of a return to ensure that you don’t miss any deductions or exemptions that you might be able to claim, so to does our calculator provide you a detailed walkthrough of the property to ensure you have accounted for every possible improvement needed.
We can also guarantee you that your process of home review will become far more efficient as our calculator generates a report of everything you clicked on and their estimated costs on the spot, so you have a complete checklist and total repair cost by the time you walk out of the front door.
Gone are the days of you taking copious notes and then estimating the costs at home with your trusty Texas Instrument TI-84 calculator. Get the most accurate data immediately, without needing to write anything down or needing to understand the cost of finished wood floors.
If you would like to get in early and test out our calculator for free, sign up below and let us know what you think.