Performing the repairs on a real estate rehab investment can take longer than any other aspect of the project - and can also be your biggest expense, often more than the actual purchase price for the property. That’s why it’s important to properly budget for the repairs ahead of time, so there will be no surprises to your bottom line! Help set yourself up for success by following these tips from the experts at Catalyst Funding.
A Good Rehab Budget Starts With a Comprehensive Form
Make sure you have a budgeting form you can take with you into every house you visit. This form can be printed on a piece of paper or you may be able to find an app for you smartphone that suits your needs. The important part is to make sure the form includes all of the information you’ll need to budget for throughout the process if you choose to move forward with the project.
Know your form inside and out, and make sure you can calculate the pricing easily, to ensure you are able to get through the house efficiently while still being thorough and not missing anything.
In order to get the best deals when buying from wholesalers and homeowners you’ll need to move very quickly. Having your budget filled out on the spot can help you determine if the deal is right for you and will allow you to make an offer ASAP, before another investor beats you to it.
What To Include On Your Rehab Budget Form
There are things you’ll want to make sure are on your form so you don’t forget anything. Some of the common categories to include are:
- Foundation Repair
- Paint (both inside and outside)
- Bathroom Fixtures
- Kitchen Cabinets and Appliances
- Doors and Windows
- Heating and Air Conditioning
- Landscaping and Clean Up
Tips To Help You Calculate Your Rehab Budget
When creating and filling out your budget form, try to get as many items as possible down to a price per square foot. This will save you time while walking through the house. The smaller, focused approach will help you spot the little things that might otherwise get missed, such as plugs, switches, door knobs and door stops. Paying attention to the details will also help you determine what you may be able to keep as is, what can be reused with minor repairs, and what will need to be completely replaced.
While having your budget form ready on the spot will allow you to make an offer quickly on the property, it’s always wise to know your exit strategy before visiting the house to begin with. What if something happens and you aren’t able to start the rehab project as planned? Will you be able to wholesale the property to another real estate investor? What if you have trouble selling the house after the rehab work is complete? Will you be able to rent the property until you can get it sold? Having a backup plan in mind will make your entire rehab project much less stressful.