What am I missing?

[Mr Ervans]

I just invested in a flipping houses course (I now know I could have learned most of it here, but it is very informative).  It talks about finding the deals and making the offers.  I'm using the MLS for most of my searching.  My problem is that most offers require proof of funds.  Also, I have no experience in valuating repairs.  How can I make a reasonable offer if I can't deduct accurate cost for any repairs. 

Can anyone suggest any assistance on getting started.  I have no money of my own, and my credit is in no position to assist at this point either.

Eric
Oceanside CA

[Bluemoon06]

Don’t guess you should always know what the costs are.  To estimate repair costs what I do is once I get an offer accepted I get a 10 to 15 day option period before I have to fund the earnest money.  During that 10 day period I get an inspection.  The inspection tells you the things that HAVE to be done (foundation, plumbing, electrical etc) then I add the things I WANT to do (paint, carpet, appliances granite counter tops etc).  I use those 2 lists to make my rehab list.  I take a contractor with me to give me a written estimate as to the list of rehab items.  Once we close on the house this is what he will charge me to fix all the things found.  If the repair estimate is too large I amend my offer to a higher amount.  If they don’t take it then I rescind my offer. 

[Mr Ervans]

...  To estimate repair costs what I do is once I get an offer accepted ... 

Thanks bluemoon, but that's the thing.  How do I estimate the repairs in order to make the offer?

[MichaelQuarles]

Good to meet you.

Here is a form I created to help.... As long as you understand what ugly looks like you'll be fine...

www.REIMentor.Us/Repair_Work_sheet_revised.xls

Good house hunting

Michael

[justin0419]

Experience will help you.  Until you have that, you need to have other people come look at it.  Find a carpenter, electrician, plumber, HVAC person, roofer, etc to check it out.

[Mr Ervans]

Thanks Mike and Justin.  I like your worksheet Mike.   Just one question though; Ceilings?  Can you give me some guidance on popcorn ceilings?  Thanks

Eric

[MichaelQuarles]

popcorn as in acoustic ceilings... Use two paintings... That worksheet is easy but you may need a conversation...

Good house hunting

[justin0419]

Be careful with those ceilings.  They used to have asbestos in them back in the day.

[ShortSaleArtisan]

I just invested in a flipping houses course (I now know I could have learned most of it here, but it is very informative).  It talks about finding the deals and making the offers.  I'm using the MLS for most of my searching.  My problem is that most offers require proof of funds.  Also, I have no experience in valuating repairs.  How can I make a reasonable offer if I can't deduct accurate cost for any repairs. 

Can anyone suggest any assistance on getting started.  I have no money of my own, and my credit is in no position to assist at this point either.

Eric
Oceanside CA

ERic, here is a site you can use to estimate repair costs, roughly:
http://www.homeinspectorlocator.com/resources/Costtorepair.htm

Also, for some more info on proof-of-funds letter, check out this blog post I wrote earlier ;
http://www.shortsaleartisan.com/blog/?p=171

Good luck!

[davewindsor]

popcorn as in acoustic ceilings... Use two paintings... That worksheet is easy but you may need a conversation...

Good house hunting

I'm curious how you'd tell people to quote a sagging popcorn ceiling in the living room or mold on a bedroom wall?  Sheetrock and a few paintings?

[MichaelQuarles]

davewindsor

Good to meet you...

Great question.. Naturally as someone becomes more acquainted with repairs cost and such they then have a good indication of actual cost. When I created my worksheet I had 2 buyers at the time who knew little about painting and carper and things like that.. So I had to create a down and dirty worksheet that they could use to set a price...  The worksheet is helpful at the moment.

We always had inspections and determined actual cost during the escrow purchase and at times renegotiated the priced based on those inspections.

The sheet is based on Ugly, Uglier, and Ugliest... and has number associated to those categories. And it is for a Typical house. The cost associated to the categories fluctuate to the quality of home so in those cases one would use a 2 or 3  rather then a one, thus multiplying 2 or 3 times...

Learning costs for repairs is something an investor, especially new one, should do beginning with the first week they decide to be an investor.  But most wait until they need something to learn...

As a guy who has a General Building contractors license determining value is somewhat easy... The most difficult thing is understanding what a home requires.  I have had many conversation with investors regarding windows and tile and cabinet replacement.. A home only requires what a buyer requires and you find that our by viewing 6 homes. 3 that just sold and 3 that are for sale and ask some very leading questions. The answers tell the story. 

Our rehabs consist of paint, carpet, new bathroom fixtures, tile floors in kitchen and baths, replacing all electrical plugs, switches and light fixtures, and we can get in and out of a 3/2 for less then 5k.

Happy house hunting

Michael

[Mr Ervans]

Thanks guys, Mike I have your worksheet and will be out this week 'practicing'.  I also found the website and articles helpful.

Eric