The Book on Estimating Rehab Costs: The Investor's Guide to Defining Your Renovation Plan, Building Your Budget, and Knowing Exactly How Much It All Costs (BiggerPockets Presents...)

Pre offer Due Diligence:

1:52: The pre-offer phase of due diligence is all about determining what you should you base your offer on? This should be a systematized approach where, say, you scale to reviewing 150-200 offers a month, you can’t spend all day on this.

4:00: Andrew has a 26 line item review for pre-offer rehab costs and adds a 20% contingency on top. Don’t talk yourself into doing the deal by making allowances to make it work. Plan for the worst and hope for the best.

7:04: Pull your comparable properties, or comps, on the MLS, Redfin, Trulia, Zillow, PropStream to determine your actual retail value (ARV).

8:23: Ryan plans that he’s buying an eviction. At least get copies of rent ledgers and if you can get copies of lease agreements, the better.

If you’re in a Subject To loan agreement:

12:41: Confirm the terms of the loan. Check the rent ledger, ask questions. “Have you had any sewer/electrical/flooding/roof issues?” Knowing these questions upfront may aid you when it comes to negotiation.

15:50: Since Stewardship Properties wanted to get back out of a flipping strategy into a more buy and hold, the midwest and southeast markets had stronger cashflow than it would on the coasts. And so we (Andrew & his brother Philip) just decided to you know, pack up and start a branch out here.

Post-Contract Due Diligence:

16:05: Post-Offer Due Diligence is all just simply verifying everything you did previously and then go deeper.

20:32: Our offers also have a 30-day contingency that it’s based on an inspection. We recommend going with the inspector when you’re starting out so that you become more and more familiar with what to look out for when you’re touring the property in the pre-offer phase.

25:39: Get a contractor bid as well. Andrew uses a 150 line item sheet when he reviews the rehab costs, largely inspired by The Book On Estimating Rehab Costs by Jay Scott. But sometimes, you may miss something, and that’s okay, it’s always worth trying to get out of a property.

28:00: The $50,000 foundation/mold/asbestos repairs have come around to us before.

BOOKS MENTIONED:

4:11: Jay Scott’s, The Book On Estimating Rehab Costs

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