Calculating Repairs Remotely

In hot real estate markets, opportunities that come and go daily. You have to move quickly to analyze a potential deal. The biggest question mark in single family investing is the cost of repairs. You need to know what it will take to make the house like new for a resale or put it into rent-ready condition. But you don't have time for an extensive inspection of every potential property.

Here's a quick way to make an educated repair estimate before taking the time to visit the property. In most flips, you will be focusing much of your remodeling attention on the kitchen and the primary bedroom and bathroom. These spaces account for about 25% of the heated square footage of a typical house. Multiply the average cost of construction for your area times the square footage of your property and then multiply that times .25. This gives you a beginning number.

But wait, there's more! A 15 year old house will need more than a 2 year old house of the same size. Things like water heaters, HVAC components and roofs deteriorate and wear out over time. So you need another number for obsolescence. Add another $5000 for every ten years of age (or since the last remodel).

Lastly, there are some repair items you will notice in the photos that just can't be quantified in the previous formulations. Let's call this the "weird stuff." Perhaps there is an old non-working fireplace. Or perhaps a 15 foot section of the driveway needs to be re-surfaced. AI tools can be remarkably helpful in providing a cost range for these items.

Put these three components together and you have a reasonable starting point. It won't be perfect, but it may tell you whether you need to take the time to visit the property in person.