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Improve Rough BudgetNow is the time to incorporate the cost of all noticed improvements you envision for each property.You are not attempting to put too fine a line on each cost. Just rough figures are fine.So when you subtract all the guestimated costs from the guestimated sale price, will you make enough to consider this property? At this early stage of consideration, you may not have a clear idea of all costs, but certainly if there does not seem to be enough difference at this point, then drop this property from consideration right away. The numbers will not likely improve.Refine the rough budget each time an accurate cost estimate is made. Be sure to add any aspect to the rough budget as you go along. This rough budget should not be in your head. It should be on paper. When ever it turns out that the cost to repair will not leave enough for you to be willing to do the coordination, that is the time to quit the project.Notice that you have not bought the property. If you determine that there is not enough difference between cost and selling price to make the project worthwhile, then you have only lost some time during this investigative phase. At least you did not make the mistake of buying the property and finding out later that you are loosing money on it.Think of the rough budget as the announcement device to let you know when to buy and when not to buy.
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Prepared 2006-2010 David Ullian Larson |