How To Calculate Rehab Cost On Any House (EASY Method)
youtu.be
The video provides a guide on how to determine the value of distressed rental properties using the max allowable offer formula. The formula involves multiplying the after repair value (ARV) by 75% and subtracting the cost of repairs. To determine the ARV, the speaker advises finding three recently sold houses within a third of a mile that are similar in size and layout. The speaker also cautions against opening fridges in distressed properties and advises including all costs associated with the project in the repair budget, such as utility costs, insurance, short-term money costs, taxes, and agent fees. They emphasize the importance of being conservative in the ARV and discount percentage and including all costs in the formula to ensure a profit. The speaker walks through a budget for rehabbing the property, including estimates for the kitchen, flooring, paint, windows, fixtures, bathroom, bedrooms, exterior, and hidden costs. They estimate the total cost to be around $51,000 and use the max allowable offer formula to determine the maximum offer they can make on the property, which is $87,750. The speaker advises viewers to negotiate a lower price, be aware of competition, and know the seller, wholesaler, and real estate agent involved in the deal. They suggest offering around $82,000 or $83,000 and leaving room to come up if needed. The speaker emphasizes the importance of practicing the max allowable offer formula to become confident in making offers on properties with minimal risk of losing money.
The video provides a guide on how to determine the value of distressed rental properties using the m