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Know the End Before You Begin To make this a reality, the following are required 1. The purchase price (some say all the money is made here) 2. The Final Sales Price (known from the CMA and valuation of improvements) 3. The cost of construction (best contained by using contracted costs) G r e e n E a r t h E q u i t i e s . C o m

Saving The Planet One House At A Time 1


Know what the finished project will sell for Here the Comparative Market Analysis (CMA) from your Realtor is essential. It’s hard to believe but many Realtors dont feel it’s part of their job to provide a CMA for each property or at least each neighborhood. See the next Slide for an example These are called Taxi Service Realtors. They are not the Professionals for your team!

G r e e n E a r t h E q u i t i e s . C o m

Saving The Planet One House At A Time 2


                                                                                                                                                                                                                                                                                                                                                                                                                                         

For more on the use of the CMA, See slide decks 90421 & 90505 Behind Planetsavers University tab 3

Easiest way to locate it is type the number into the search box at GreenEarthEquities.com

G r e e n E a r t h E q u i t i e s . C o m

Saving The Planet One House At A Time 3


Know your Soft Costs Before You Begin Interest Insurance Utilities, Gas & Electric Trash, Water, Sewer Lawn Maintenance Marketing Sales Commission Taxes, Proration Assessments

G r e e n E a r t h E q u i t i e s . C o m

Saving The Planet One House At A Time 4


Know Your Hard Costs Before You Begin With Proper Estimating based on: 1. Actual Estimates Where Possible 2. Unit Cost Estimates for trades that dont have Estimates... You can know your hard costs within 5-10% G r e e n E a r t h E q u i t i e s . C o m

Saving The Planet One House At A Time 5


Cos t Br Gre eakdo You enEar wn us ed b rs m thEq y uitie ay b e di s ffere . nt

1.

DEMO & TRASH HAUL

2. LANDSCAPE 3.

CONCRETE

4.

FENCES/GATES

5.

POOLS & SPAS

6. FOUNDATION REPAIR 7. EXTERIOR CARPENTRY 8. PLUMBING 9. EXTERIOR ELECTRICAL 10. ROOF/GUTTERS/CHIMNEY 11. WINDOWS 12. STUCCO, DASH & MASONRY 13. GARAGE DOORS/CARPORTS 14. EXTERIOR PAINTING 15. INTERIOR ROUGH CARPENTRY 16. INTERIOR ROUGH ELECTRICAL

19. DRYWALL & PLASTER 20. INTERIOR CARPENTRY 21. COUNTERTOPS 22. INTERIOR PLUMBING 23. CERAMIC TILE 24. INTERIOR PAINT & RESURFACING 25. ELECTRICAL FIXTURES 26. MIRRORS 27. FLOORING 28. APPLIANCES 29. HARDWARE & SUNDRIES 30. MAKE READY TO SELL Other Costs Contingency 10% Insurance Utilities Taxes

17. INSULATION & SEALING

Interest

18. HVAC

Other Total

G r e e n E a r t h E q u i t i e s . C o m

See Slide Deck # 90602 for more on Cost Breakdown Saving The Planet One House At A Time 6


Subcontractors or Employees???? A small operation run by an experienced, on the job, hands-on contractor MAY be able to produce better results with employees. All Others: Maximize the use of Subcontractors Reasons: You can contain your costs. You can control your quality. (if the quality doesn’t match the agreement, you dont pay until it is corrected) G r e e n E a r t h E q u i t i e s . C o m

Saving The Planet One House At A Time 7


Q. How Accurately Can You Estimate? A. The answer depends on how many firm costs from subcontractors & suppliers you have If you use employees, it is almost impossible to have a tight and accurate estimate. Instead you’ll need a large “Contingency” fund

G r e e n E a r t h E q u i t i e s . C o m

Saving The Planet One House At A Time 8


Q. The Biggest Reason For Cost Over-Runs? A. Incorrect Original Estimates Incorrect Job Planning, causing Waste of materials and labor. This is amplified if you have any hourly employees. You get to pay to 1. Do 2. Un-Do 3. Re-Do

G r e e n E a r t h E q u i t i e s . C o m

Saving The Planet One House At A Time 9


Short Term Pain, Long Term Gain Easier to just have employees do the work and charge for all the hours that it takes Or use a subcontractor with an open ended agreement, such as a “Cost Plus� But if you put in the effort to 1. Write clear Scopes of Work for all trades 2. Solicit firm quotes based on these Scopes 3. Use clear written contracts for all work You will minimize surprises and maximize your profit. G r e e n E a r t h E q u i t i e s . C o m

Saving The Planet One House At A Time 10


More Work Up Front Avoids Over-runs Later 1. Written Scope of Work 2. Written Contract 3. Written Payment Schedule 4. Written Agreement on Cause and Process of Termination (Firing)

G r e e n E a r t h E q u i t i e s . C o m

Saving The Planet One House At A Time 11


Have an “Estimating Party� Include The various Due Diligence Inspectors (Home Inspector, Sewer, Roof, Termite, etc)

The Major Contractors (Roof, Windows, Painting, Floors, Tile, Granite, Cabinets, Landscape, Plaster, Pool, Carpet, Concrete, etc) Do this as soon as the property goes INTO Escrow Then you will know your total costs (and profit) Before you even close escrow. You need your Realtor to facilitate this party with the Lock Box Access at this point. A good realtor will even assist in scheduling the due diligence inspectors. G r e e n E a r t h E q u i t i e s . C o m

Saving The Planet One House At A Time 12


Build Your “Unit Costing” Price List (per sq ft etc) These are available from national publications such as Home Tech. But your own localized pricing will be more accurate and valuable. Examples: Item

Description

Unit

Roof

30 year comp recover

Square or sq ft

Roof

Unit Cost

30 yr comp, tearoff & osb Square or sq ft

Eyebr. vent

Extra eyebrow vent

each

Gable vent

Gable Vent 14’‘x24”

each

G r e e n E a r t h E q u i t i e s . C o m

Saving The Planet One House At A Time 13


Unit Costing (examples) Item Ext Paint Ext Dash Dash-Lace Int Paint* Ceilings Travertine Carpet Kit Light Vanity Lite

Description Exterior Paint w Stucco Dash Coat over stucco Dash Coat w lace texture Interior Paint incl ceiling Remove popcorn, retexture

Travertine floors Carpet w 6 lb pad inst. Kitchen Light #123xyz Over Mirror lite #123xyz

Unit Sq ft (floor) Sq ft (wall) Sq ft (wall) Sq ft (floor) Sq ft Sq ft Sq ft each each

G r e e n E a r t h E q u i t i e s . C o m

Unit Cost

Saving The Planet One House At A Time 14


Unit Costing (notes) * The specifications for “Interior Paint� are listed elsewhere in the Scope of Work for each trade. The base price would include items that have become standard in our Wow! And Done Packages including: Two tone paint everywhere, ceilings and walls Three tones at chair rail locations All new colonial doors and stepped trim All new base and crown molding Prime paint of drywall in garage Extras might include: Painting bricks & fireplace mantels Resurfacing hardwood floors

G r e e n E a r t h E q u i t i e s . C o m

Saving The Planet One House At A Time 15


Sample CMA On A Real Estimating Party The Next Slides Show the CMA for 3405 N Miami, Fresno, CA 93727 Look it up in Cyberhomes.com Google Earth Local.Live.com Note: I still haven’t been inside, so the CMA and this other data is how I’ve made the offer and gotten this far... .... Should I proceed? What would you do? G r e e n E a r t h E q u i t i e s . C o m

Saving The Planet One House At A Time 16


G r e e n E a r t h E q u i t i e s . C o m

Saving The Planet One House At A Time 17


G r e e n E a r t h E q u i t i e s . C o m

Saving The Planet One House At A Time 18


5967 E Fedora Available $160,000

3332 n Ezie Sold $160,000

3405 N Miami $ ????

3328 n Purdue Sold $143,500

G r e e n E a r t h E q u i t i e s . C o m

Saving The Planet One House At A Time 19


G r e e n E a r t h E q u i t i e s . C o m

Saving The Planet One House At A Time 20

Know The End From The Beginning  

Knowing and controlling costs in a renovation project is essential to profitability.

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