S Cook, can you please answer this? - Posted by Sadie

Posted by SCook85 on March 17, 2002 at 11:07:14:


I don’t always recommend that beginners make offers site unseen. It took awhile before I was comfortable with doing it, but I do it all the time now. Once you become intimate with an area and the homes in it then it gets easy. You also have to understand the types of rehabs that I do and it will make everything clearer.

As you know after reading my course, I would renovate homes that I could not wholesale. Well today my primary focus is on rehabbing. I still do a lot of wholesaling but I primarily look for homes to renovate myself. When I do a renovation I always redo the entire home. I don’t try to salvage anything. Based off of the size and age of a home I know whether or not it is going to cost me $15k, $20k, $30k or more to renovate. When I make my offers I base it off of these renovation numbers. The amount that it will cost me to renovate the homes the way that I renovate them. This does a couple of things for me.

First I wait for counter offers from sellers to see who is motivated. My offers usually come in pretty low because of this. If I get a counter offer that is in the ball park then I’ll go out to the home to get a better feel for the actual repairs and I may look at it from a wholesale perspective rather then a rehab.

If I can get a home in fair shape using my numbers it creates a lot of room for wholesale profits.

I like renovating homes that are trashed. I’m usually not interested in just doing a quick paint and carpet rehab. I know others like them and if I pick up a home like that really cheap, then I wholesale them and make pretty good money because I usually get them as if I were going to do $20k worth of work and someone else may be able to fix it for $7k. This leaves much more profit for me.

I hope this helps,

Happy Investing,


S Cook, can you please answer this? - Posted by Sadie

Posted by Sadie on March 16, 2002 at 09:47:44:

I have read and reread your book. Please excuse my ignorance, but I am unclear on how you can make offers on a property without first estimating the repair costs. I think I understand the formula you use,(maybe I am out of sequence here). I want to submit an offer on a vacant house but may not see the inside until after the offer is accepted. Is there a baseline value you use to assume the house needs complete rehab, use that number in your offer, and can renegotiate the purchase price if rehab costs are not what are expected? I realize estimating repairs comes with experience but I would hate to get myself in over my head on the first deal.
Thanks Steve