How To Determine a Construction Budget For Your Flips

budget flip how to Sep 09, 2017

When it comes to construction budgets, you have to start with the end in mind.  You have to ask yourself:

  • is this for a quick flip with maximum profit?
  • is this for a rental property you plan to own?
  • is this a construction project for a friend?

The planned use of the project will most definitely affect the decisions you make in terms of the repairs and renovations you want to tackle, and at what price point the finishes will be for things like paint, flooring, appliances, etc.

The best way to determine a construction budget is to make a complete list of all the anticipated repairs and renovations, and include estimated costs.

This list might include:

  • roof repairs or replacement
  • masonry or siding repairs
  • new paint
  • plumbing
  • lighting fixtures
  • foundation repair
  • etc.

If you haven't already, it is best to develop a rapport with the contractors you use to help get quick estimates on any jobs you yourself cannot accurately put a price on.

Once you have a price for materials and labour, a good rule of thumb for any construction budget, is to add 20% for any unforeseen "uh-oh" expenditures.

Some people prefer to estimate repairs based on a price-per-square-foot method, and have different price points based upon the apparent condition of the house.  This method can work well if you are experienced and know what you are doing.

For more information about this, and many other topics about real estate investing, be sure to check out http://www.flipuniversity.com and http://facebook.com/FlipUniversity.

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