How do I estimate the repairs required on a property 2000 kms away?

[dasilvja23]

Just curious what type of methods one would use to evaluate a property and determine what repairs (rehab) might cost. I'm looking at properties in the US market and have considered selling the wholesale or fixing them up and selling them for more.



Does anybody with experience in this area have any suggestions?

 

[3canctheayr]

IMO, you either need a reputable, competent local contractor to assess them for you or you need to do it yourself, if you have the skills, time and money......

 

[Thomas Beyer]

You hire someone that has those skills, and pay this person by the hour or by the project. Then, once the project is finished you need to gauge the accuracy of said estimates. Like juggling, flying a Cesna or playing the piano, flipping takes skills and repetition and you get better at it with experience. Flipping properties remote from where you live works once you have the skills and contacts, and do sufficient volume of it. Do one or two and see of the margins work, then set up a system to do it repeatedly.

 

[REQRentals]

Speaking from experience you inspect 8-10 properties to find each one that is worth making an offer.



The good ones are usually multiple offers and you land maybe 1 in 3 or 4 depending on how aggressive you want to be.



The competition are generally contractors and agents who flip houses. They have cheap borrowing rates and their own commissions and margins on their side.



The other option is to partner with an organization with a proven record doing it.



Very inefficient way to deploy capital also as no control over production flow.



If you get your money out of one it might take 3-6 months to find and land the next. That is a lot of dead time on your money.



Better to hold it and rent so as to at least pay lower taxes and take the transactional costs and margins against better gains..

 

[dasilvja23]

Thanks everyone. This is all really great information but I think you're misunderstanding. I'd like to know how to evaluate the property so I have a general idea what it would cost to repair IF I decided to buy it. Say I've got a property in mind. Let's just say a foreclosure property way down in Florida or Texas or something.



Let's just say that it looked like it could, potentially, be a great deal depending on how much I would have to spend rehabbing it. What could I do from so far away to get an idea of what kind of repairs are needed? Do I hire a contractor to take a look? That's the only way I can think of, short of going and looking myself.



I was wondering if there are any "tricks of the trade" someone might know. A different method one could use to have a rough estimate what a property might cost, even though I can't physically see it myself.

 

[REQRentals]

Find a contractor, agent, experienced person



Tell them you want to be a financial partner on a flip and do they know of any. See what type of numbers they come up with as local professionals vs the estimate you have.



If you have one already and the numbers look good then say you have a flip and would they be interested to do a deal.



You will pay for materials and subs but not pay him anything until the house is sold.



When the house is sold however they will obviously make more as your partner than if you just paid them.



But you will have far lower risk and cost going in.


Perhaps more importantly if the deal is a pig the contractor/agent etc will want no part of a profit sharing arrangement.

 

[Thomas Beyer]

[quote user=dasilvja23]



Let's just say that it looked like it could, potentially, be a great deal depending on how much I would have to spend rehabbing it.
How would you know it is a great deal ? It is reasonable to assume that all the local guys have passed on the deal as they found even better ones.



As such you have to spend some time becoming an expert IN THE AREA and also IN THE PROPERTY TYPE (say townhouse, or duplex, or single family house with a pool, or 2BR condo).



As such, find an AREA you think hs upside first. Then fly there, spend a week doing research and building contacts. Then research properties for sale. Write offers. Once a few are accepted, fly down again to look at them, bring a property manager or expert with you, then buy one or 2 of them if it still makes sense. Then, after the 3rd or 4th you will actually make some money if you did the first two or three well.

 

[REQRentals]

It sounds like a lot of work and expense to go down all of those times and become an expert in a market that you are only investing in part time for diversification or a transient circumstance..



I guess could make sense if doing volume but most who do volume have substantial assets to look after here, medical and law practices, businesses of various kinds to occupy their time....



Out of curiosity what type of numbers did you hope for ?



If you would like to see actual numbers below are actual financials on a smaller house we purchased last month in Tampa, renovated and just leased today. About 95K in. Leased for $ 1,350.00.



https://docs.google.com/spreadsheet/pub?key=0AjW3hG2_efV-dDhwVmF1TmFYNGt5RkZDZF9qc1BKeVE&output=html



I was in it before we closed but the investor has never seen it and never left Ontario for the whole time. It is the 7th one he has done this way with us so there is something of an established trust.



The house is worth about 100K but there is not enough margin to sell it. If you start adding a weeks stay and 3 or 4 trips to Florida it would be underwater.



Good area also. Knock it down in 4-5 years and build a new house.



if you are looking for a quicker turn around and better margins the builds are better than the flips.



More margin. Less uncertainty. Standard repeatable process.



Like a manufacturing business