Whether you are an experienced real estate investor or a novice, sometimes it is difficult to estimate the cost of rehabbing a house. One needs to have a clear formula for estimating the cost of repairs for a house so that they can turn profits after they rehab and sell a house. Unless this is done, you may not make money when you buy a house. If you have New Jersey houses for sale, you should know how to estimate the cost of rehabbing such houses for better income.
How to estimate repair costs
The right thing to do in estimating the cost of repairs in Union City or Jersey City is to make a thorough assessment of the rooms that require repairs. Write down all the things that require fixing or replacing. To get the labor cost estimates, you can expect $0.50 to $1.0 in installation costs for every dollar you spend on materials. You can add from 10 to 20% of the total. This is a good guidance to your offer for houses that you intent to rehab and probably flip. The cost will also be determined by other factors such as labor, tax, insurance, permits and other hidden costs that cannot immediately be determined.
Estimating the cost of materials
To this end, you have to be sure of what needs to be repaired. Take enough time and investigate the property carefully to determine what needs to be repaired and how many repairs need to be done. How many windows, doors, ceilings, roofing or even electrical fixtures require to be fixed? Write down all these items down and take these to a repair shop where the estimates can be determined for you. It is advisable that you should always round up the cost and estimate higher than the anticipated real cost. Unless you plan on buying a house with cash and selling it quickly, rehabbing may not be your cup of tea.
Cost of labor
This can be tricky! Can you do most or some the repairs on your own? It is likely you can’t do most of the repairs and this means that you will need to hire a qualified and licensed plumber, electrician, and roofing experts since these kinds of repairs require a lot of precision and skills. If the repairs are many, you will need to hire a contractor who will come with their own skilled laborers for all your repair works. The contractor can either charge you a fixed cost or they can bill you based on time and material cost. Determine what works for you.
Insurance, Tax and Permit costs
You need permits from Jersey City Building department for the specific repairs you will do in the house. However, if you hire a contractor, ensure that they show proof liability and disability insurance. In the event that you will hire day laborers, get to know of their insurance status. If they are not insured, you will incur some cost in “landlord type” of insurance coverage. You will also need a building permit that on average goes for $908 in Edgewater City, Bergen County.
Apart from the above, there are hidden costs that you may have to attend to. There are health hazards that could have been unforeseen as you plan for the rehab. The emotional cost of the renovations is a hidden cost. To avoid this, get to budget accurately and do your research well before you start the repair works.