Why Accurate Rehab Quotes Are Valuable
By Peary Perry, CFO – Fast Track Remodeling, LLC
Someone brings you a deal. A friend’s relative died or somebody from work has a house to sell. You look it over and BAM….you think that if you can get the repairs needed completed within your budget you will make a bundle…
So, you see a remodeling crew working in your neighborhood and ask them to come over and price the work that you think you may need.
So, Chuck and his truck show up at your property…take out their trusty Big Chief tablet and a calculator and give you a bid. You look it over and then add in the cost of the house and compare this to what the houses in the neighborhood are selling for and you think you have a deal, right?
Wrong, wrong, wrong…..
Let’s say you can buy the house from your friend at $100,000 and the houses in this area are selling for an average of $165,000 to $175,000….then Chuck tells you he can remodel the house for $25,000.
You are home free, right?
Wrong, wrong, wrong.
You are thinking that if you buy the house at $100,000 and pay $25,000 for the repairs and the closing costs are around $7500, then your total cost is in the neighborhood of $132,500 giving you a potential profit of $38,000 if you sell it at $170,000.
Does this sound about right?
Ok, let’s look at a couple of things.
Suppose Chuck is a really great cabinet maker, but he has never completed a bid or fully remodeled an entire house?
Suppose he didn’t know about the bad hot water heater, the roof that needs replacement or the complete overhaul of the HVAC system? Perhaps the sag in the foundation isn’t noticeable, but has crushed the sub slab plumbing and will require the foundation to be torn apart so the toilets will flush and drain? Or suppose he didn’t want to include these things in his quote because he needed the work and he knew all you wanted to spend was the $25,000?
No, suppose you accept his bid and his estimates and then find out (much later) that the real cost of the repairs is closer to $50,000 not the $25,000 you initially thought?
Then it takes you several months to actually sell this thing and you have to reduce the price to $165,000 to get it sold….and now your actually profit is closer to $7,500 and not the $38,000 you had originally thought you would earn?
Factor in all of the hours you spent worrying over the project and time lost with your family checking on Chuck (who took longer than you thought to do the work) …was it really worth it in the long run?
Does this make you more or less inclined to venture into the rehab/flipping market?
Well, experience shows us that once burned you tend to shy away from the things that are unpleasant.
Wouldn’t you have been better off with a rehab contractor who will give you a complete and as accurate as possible quote to rehab your property?
We try our dead level best to give you a quotation that encompasses everything we can see to get your property in the best shape possible to either sell or rent.
Ask yourself this question when you are evaluating which contractor to choose to do your work…
Which bid covers (in writing) the entire scope of work needed as closely as possible?
Make the right choice: choose
Fast Track Remodeling, LLC
Get it done
Get it done fast
Get it done right.