Using Cost Averaging to Make Quick Decisions
Flipping homes: fast decisions with cost averaging will provide you with quick tips on how to find the right “deal”, when looking to invest in real estate. To find one good buy, you often need to go through dozens of homes. Also, you must act fast, or you will lose the deal. So, how do you instantly price out the rehab costs on dozens of homes, without waiting on contractor bids, and still have accurate numbers?
The key is to know your market, and know your pricing. Otherwise, you need to find a realtor with the knowledge to do it for you. Then you can create a cheat sheet, enabling you to price out the rehab costs within minutes.
My “rule of thumb” offer is 70% of the ARV (After Repair Value), less the cost of repairs. Before entering the home, I already know the ARV. Then I take a quick walk through the home, use my cheat sheet to estimate repairs, and write my offer. The prices can vary, based on the finished product you intend on creating. Below is my most often used “cheat sheet” for homes I will sell in the $200,000 – $300,000 range. Feel free to use it, or adjust based on your finishing goals. Cost averaging, allows me to calculate repairs immediately.
Cost Averaging “Cheat Sheet”
|Roof||$6,000 average size (1500 sqft home)|
|Windows||$425, per 4×4 openning|
|Exterior Doors||$300 per door|
|Siding||$6 times sq ft of home|
|Exterior paint||$325 times sqft of home|
|Driveway(blacktop)||$6,000 average size (4-cars)|
|Garage door||$900 (2-car) $700 (1-car)|
|Interior paint||$2.50 per sqft of home|
|Interior doors||$150, including hardware|
|Flooring||$6 per sqft (average of all types)|
|Kitchen||$10,000 (average size)|
|Bathroom||$4,000 hall bath, $6,000 master bath|
|Electric||$1800 new panel, $2,000 re-wire|
|Water Heater||$800 average|
|Finish basement||$10 per sqft|
Feel free to share my blog Flipping Homes: Fast Decisions with Cost Averaging, use my cheat sheet, or call me anytime for more information!