Flipping Houses QuickStart Guide by Elisa Zheng Covington

Author:Elisa Zheng Covington
Language: eng
Format: epub
Publisher: ClydeBank Media LLC
Published: 2022-08-15T00:00:00+00:00

To create a budget, you’ll need to know the approximate costs of all materials and labor (see figure 52). You’ll probably want to use contractor bids to derive the budget, and you’ll want to make sure all the bids you get include labor; rough materials such as lumber, drywall, insulation, and piping; and finishing materials such as paint, flooring, and tile. Some contractors quote labor only, and some quotes include only labor and rough materials. Get clarifications and ask them to help you figure out material costs based on the unit price and the quantity needed for your house. In the beginning, you may want to visit the stores or websites to understand the unit price for the specific materials you want to use. It’s useful to familiarize yourself with the costs of materials and labor. Being aware of approximate costs can help you catch a contractor who is overcharging.

Once all the bids include labor and materials, you’ll be comparing apples to apples. If you get multiple contractor bids, create your budget based on the median price, not the lowest price you can find. You’ll learn more about working with contractors in chapter 7.

Once you’ve gotten prices for everything in your SOW, consider budgeting for some of the optional items you identified—those special touches like a double vanity or a kitchen pantry that will catch the attention of buyers. You can create a spreadsheet to record the estimated cost of each item and keep track of all rehab expenses.

When you’ve completed your budget, take some time to examine it and make sure the majority of expenditures are for essential improvements and those that will bring you the highest return on investment, such as the kitchen, bathrooms, flooring, paint, landscaping, and any other necessary repairs. Consult your budget frequently during renovations, taking time to make sure the costs seem to be in line and talking with contractors about any changes that need to be made.

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