Tips for Real Estate Investors to Estimate Rehab Costs like a Professional
When beginning a fix and flip project, you know that it will undeniably come with rehab costs. A professional real estate flipper will know their numbers and estimate their rehab costs accordingly before investing. That estimate will help you better understand the potential return on investment or ROI for the project. An overview of the required rehab tasks can also help outline how long the project will take to”fix.”
Underestimating your rehab costs and budgeting can be the difference between a profitable flip and a project where you break even. When you walk through a potential investment, you can already start estimating your rehab costs. Check out the tips below so you can be sure to evaluate your rehab costs like a pro every time.
Research & Know Material Costs
It’s so important to have a general sense of how much different materials costs. When you conduct a walkthrough on a potential investment opportunity, you can see issues, such as the carpets needing replacement. Identifying these issues will allow you to quickly some math in your head. If you know how much carpeting costs, you can roughly estimate the cost of the replacement.
Understanding the averages of how much materials should cost will also help when you’re in the purchasing phase. You’ll never walk into a store and overpay. You’ll know when something is overpriced and look elsewhere.
Understand Timing & Rehab Costs
Before you purchase your first investment, it’s important to understand the timing of renovation projects. Some rehab plans will take a couple of weeks, while others can take months. Anything that has the potential to take an incredibly long time, costs you money. Lengthy projects result in you keeping the house longer than necessary, which in turn keeps your finances tied up. A professional real estate flipper can recognize which tasks will be more delayed and potentially avoid those homes. For example, while a minor kitchen renovation can take a few weeks, a complete kitchen makeover can take several months.
Another pro tip is to contemplate the season. If you’re purchasing an investment in fall, watch out for rehab projects that have to pause work during the winter.
Evaluate the Surrounding Market
When you’re interested in a real estate flipping opportunity, it’s likely safe to say that you’ve done your research. You’re probably buying an older home in a neighborhood that has recently transformed into an affluent, or developing, or trendy area. It’s important to consider what this means for your flip project. Your home is going to have to match the standards of those around it, to successfully attract buyers. If all the houses in the neighborhood have modern kitchens and high-tech bathrooms, you may have to do the same. Otherwise, you’ve slightly spruced up an older house that is competing with modern homes next to it. Review if you have the budget to bring your investment property up to “match” the neighborhood’s expectations.
Get Approved for a Hard Money Loan with Wildcat Lending
You’ve done the walk-through and believe your estimated rehab costs are within budget. Now, its time to take the next step with that investment opportunity. Wildcat Lending provides fix and flip hard money loans for real estate investors in Texas and Tennessee. A hard money loan is the perfect solution to ensure you don’t lose that investment opportunity to someone else. Hard money loans are a quick and safe option for real estate investments. Contact Wildcat Lending today to start your application.