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If you’ve ever worked with real estate investments, or if you’ve ever watched HGTV, you’ve heard that no renovation goes as planned. This fact is one of the biggest concerns and threats to the success of a new real estate investor. New investors can often struggle with estimating the cost of performing the needed work, materials costs, and future sales prices. The biggest question we get asked is: “How do I estimate my rehab budget?” To help solve this we asked ourselves a few important questions:
- How do we make it easier for new investors to succeed?
- How do we help make potential investments less risky for our clients?
- How do we help our clients grow their businesses, and leverage our experience to get started?
As a lender, we do best when we can help our clients build and grow over time. Very few investors that I have met have wanted to purchase one investment property and stop. Most want to keep growing their business and keep pursuing more projects. The easier we can make the first few projects, the more our borrowers will grow, and the more a borrower will want to work with us throughout their growth. The biggest hurdle to that is our borrowers not making great profits on the deals they bring us. If our borrowers do extremely well on their projects, and we come through on our end, we will have repeat clients. This is why we will tell potential clients if we believe their deals are not in their own best interest, but that doesn’t go far enough. Sometimes we don’t know at a glance whether a deal is great. This is especially true if we don’t have accurate estimates. A deal that might work with a $35,000 renovation budget will likely perform differently with a $60,000. Recognizing that, we realized that we needed to develop a tool to help newer investors estimate their expected costs more accurately in order to succeed and grow. If we could take more of the risk out of renovations, give our borrowers more accurate information on costs and profitability, and walk new investors through the process, we would help our clients and in turn ourselves. The best part? This system is free to sign up for and use. There are links below for you to sign up to use the calculator if you’re intrigued. And links for videos about how to use the calculator, and how it might help.