Rehab costs in 15 minutes

Before I dive into the content of this article I would like to ask you a few questions. First, do you know how to determine rehab costs? If so, how long does it take you? And most importantly, how close are those initial costs with you finished rehab project? I feel this is an important subject for ALL real estate investors because no matter what strategy you are using you need to know how to determine rehab costs. Determining rehab costs can be learned so don't think just because you've never swung a hammer or installed a toilet you can't estimate rehab costs effectively. Before I give you the bulk of information let me first say I will not be giving you any costs associated with construction. Why, you might say? Well you need to familiarize yourself with the costs for your area. Simply put, material costs and labor differ depending on your part of the country. For example you can expect to pay a little bit more for a re-plumb in New York than what I get it for in Florida. In essence, building codes, weather, demand, proximity of manufacture all determine costs associated with materials and labor. Enough of that let's get into it. Any single family home no matter what the condition should have 5 categories for rehab costs. They are as follows: 1.Roof 2.Plumbing 3.Electrical 4.Heat/AC 5.Structure. Now from here everything gets a little easier because all other costs are just cosmetic. Thats right put kitchen, baths, flooring, painting, etc in the cosmetic chart. My suggestion is this, now that you know the five major categories call around to professional licensed contractors and talk to them about there costs. For example, let's take a roof. I would call a roofing contractor and ask him how much does he charge per square to install a roof, for those of you that do not know a square is a 10' x 10' section. Now that I know how much he charges per square all I need to know is how many squares there are in a home. While I am on roofs let me give you a quick formula for determing squares. (Total Square Footage x 1.5\100= ___ squares x cost per square) It is that simple, and in less than 30 seconds I will know within $300 how much that roof will cost. Let's venture to plumbing, call several reliable plumbing contractors and ask them how much it is to re-plumb a home around 1500 square feet. You will get several prices from them and then you can adjust according the size of your rehab project. You will do the same with all 5 categories. Taking the time and learning construction costs and estimates will save you thousands of dollars, trust me I know. You get the idea of the five major categories now lets move on to the cosmetic side. Here are some examples of cosmetic repairs: Exterior and Interior paint, windows, carpet and flooring, appliances, bathrooms, kitchen, doors, demo, landscaping, driveway, misc (door knobs, light fixtures, fans, trim) and last but most importantly your hedge fund. Hedge fund or "oops fund" I sometimes call it is crucial. Do not and I mean do not forget to put a "oops fund" into your rehab costs. A typical hedge fund should be approx. 5-10% of your total rehab costs. If you don't use it, great more profit for you on the back end but make sure you account for the oops occurances because they will happen. I have written a whole course on rehab costs and handling contractors the right way, if you are interested send me an email at scott@jaxhomebuy.com and say you are interested in the "rehab course". Also as my bonus for those of you that want to really go to the next level in real estate investing I will send you my cheat sheet "Property Analysis Sheet". This has all the formulas and costs built into the sheet so you can truly do this in 15 minutes. If you want this for free email me at info@jaxhomebuy.com and enter the words "cheat sheet" and I will send it out to you right away.