If you’re thinking about rehabbing properties for a living, you need to know how to accurately estimate repair costs – otherwise, you could end up spending a bunch of money and not getting it back at the closing table. This is particularly important if you’re getting a hard money loan to buy a property.
How to Estimate the Cost of Repairs
You’ll want to estimate the possible cost of repairs on a house before you actually make an offer to protect yourself from a bad deal.
Some investors have a $20 per square foot” rule that says most – but not all – houses will cost the new owner (you) about $20 per square foot to bring them up to a profitable value. That includes:
- All-new flooring
- Fresh paint
- New baseboards
- New electrical fixtures
- New kitchen and bathrooms (cabinets, countertops and appliances)
- New window treatments
- New doors
That doesn’t work in every situation, though, so it’s important that you’re especially careful estimating repair costs until you’re extremely experienced. Make sure you go through the property, room by room, to estimate repair costs manually instead of relying on a $20 per square foot formula.
Are You Looking for a Hard Money Loan to Buy a Property?
Call us at 404-814-1644 or contact us online to find out whether you might qualify for this type of funding. In the meantime, check to ensure that you meet our loan criteria. Our loan amounts can be up to 65 percent of the after-repaired value of the collateral—and if you use the loan for renovation or construction, the loan amount can be based on the collateral’s improved value.
Read our frequently asked questions and take a few minutes to learn about the hard money loan process.