For a long time, I believed that in order to be successful buying distressed real estate you needed an equal combination of experience and luck.  Sometimes you win, sometimes you lose.  The hope was that in the end, you'd win more than you lost and it would all be worthwhile. The important thing was making offers quickly - just doing the best you could when it came to estimating repair costs - so that you could buy as many houses as you were able to.  You got a little better with each project and so did your chances for success right?

I spent time and money buying courses and trying to really learn the business.  The information I got seemed to support my mindset.  One real estate guru went as far as suggesting that you create 3 repair cost price points - say $5,000, $10,000 an d$20,000 and just use one based on the condition of the house instead of doing a complete analysis.  His theory was that if you buy the house at the right price, you can absorb unanticipated repair costs and still make money. This is certainly true in theory - but I found out very quickly that if you bid at this level you'll almost never buy houses....because someone who does a thorough analysis and knows what a safe high end price is will always outbid you.  Even if you don't have any competition, your offer will look so low that the seller won't even consider it.  I was either outbid or my offers were disregarded way too often. 

Boarded Up House I Bought. Main Water Shut Off Valve Had Failed & Water Running in Basement for Over 2 Weeks

I also saw a lot of statistics that seemed to support that the way I was thinking was just the way it was.  One documented that 26% of all house flippers lost money in 2006 - at the peak of probably the best market you and I will ever see.  They took an average loss of $16,814.  This was based on a statistic compiled by a company with 47 years experience in the real estate information industry....and one that's widely available on the internet.  I had no reason to doubt that it was both accurate and a good representation of how the business worked. I was trying to build up a thick enough skin so that I could wing it on repair cost estimates, write offers while I was still at the property if it looked like a good deal (based on the "eyeball it" method) and still get a good night's sleep. But it wasn't working.  I was stressed every time I bought a house - heck every time I even looked at a house.  And despite this intensity, I wasn't achieving the consistent success that I wanted.

I was operating using a modified version of the "3 cost" rule that I just told you about. I'd pick a cost range and then make sure it looked like enough to cover the big repairs (like replacing windows and doors) + had some $s left for the minor items (like painting and yard cleanup).  If it didn't, I'd add $s to create an overall repair amount that I was more comfortable with. But in the end, I was still "eyeballing it."  The result was almost constant worry from the time my offer was accepted thru the time the property was complete. Would I make a profit?  Worse, did I even have enough $s to complete the project?  Were the finishes I could afford high enough quality to attract buyers or even good renters?

2-Family House I Bought for around 50% of Market Value

When I bought a property for around 50% of its true market value and based on this method predicted a 30% equity gain...but ended up with around a 12% equity gain (that would have been almost completely wiped out had I sold the property), I decided enough was enough.  I couldn't go on like this. I spent a lot of time thinking about the investors I had worked with over 20 years as a Realtor and mortgage broker.  Most of them were doing the same thing I was (and were experiencing the same results)...but I remembered a few who were different.

The investors I knew that were getting serious results—all had a system that they used to evaluate every property that came their way.  They also managed each project exactly the same way. And that's what I was missing.  I needed a system based on estimating all costs quickly and accurately so that I knew exactly how much I could offer on any property.  This would also allow me to quickly evaluate any contractor's bid and decide whether it was fair or not....and also its impact on my overall budget. That's when I invested the time to create the Rehab Offer Calculator house flipping spreadsheet.  The tool proved to be so useful and unique that I started offering it to other investors via the Internet.

The Rehab Offer Calculator has been downloaded thousands of times and used by fixer upper house buyers all over the country.  The feedback I've received has been beyond my expectations. Easy to Use, Delivers Quick Accurate Repair Estimates, Allowed Me to Make an Offer Confidently are just a few of the comments I've received through email and conversations with my Customers.

As IPads and Android tablets started growing in popularity and becoming more powerful, some of my users wanted more.

I was getting requests at least weekly, sometimes daily, for a version that they could use on their tablet while they were still at the property. I spent a great deal of time working with Rehab Offer Calculator Customers who also used tablets to understand how they might use this new tool.  I then hired a local software development company.

After about 6 months of work, the Home Remodeling Cost Calculator was launched. My customers told me that the Home Remodeling Cost Calculator had to be web based so that it could be accessed from any type of device - IPad, Android Tablet, Smart Phone, PC or Mac Ultrabook or any laptop.

It was also clear that it had to be the type of application that people could just pick up and start using.  Real estate investors are busy people, often spending 20-30 hours a week on fixer upper projects while also working a demanding full-time job, so don't have the time to dedicate to learning software. I started by making the home page layout simple.

Every customer that I spoke with was concerned with making sure that the costs included were accurate for their area of the country.  Most also wanted the ability to enter their own Labor and Material costs at some point if they chose to.

Finally, my customers stressed the importance of having reporting that they could use to manage contractor bids and the renovation project once they had purchased the house.