The pain of estimating the rehab projects, value vs cost, and comparing contractor bids for labor and item price in Real Estate investing can make or break your spirit, and most importantly, your career.
There are a lot of platforms, apps, and programs that let you calculate the costs and compare cost estimates for common remodeling, repair services, installation, and maintenance.
In this feature, I will break down everything about Homwyse, and you will be able to learn about:
What is Homwyse as a platform/product
How can it be used by Real Estate Investors
How Homewyse can help you estimate the maintenance costs of a property
How to learn step by step to use Homewyse to estimate your Rehab costs for a property
How Homewyse can be used as a tool to help you calculate MAO
What platform works best with Homwyse for aspiring Real Estate investors (BLANK)
If these topics or questions are what you are after, we got you covered. Let’s begin.
What Is Homewyse?
So, what is Homewyse actually?
A platform? A service? A paid product? It’s probably a little bit of all these three.
Honestly, this is probably the most confusing part of this whole read. It was very hard to find or define what Homewyse actually is.
I’ve seen different names, explanations, recaps, etc.
I have refined in a sentence what Homewyse actually is. Here is what I think is the best definition for Homewyse:
A large database of costs related to home construction, improvement, and maintenance designed for professional service providers, who need a simple, accurate, and reliable way to generate quality job estimates.
The official Homewyse YouTube channel (about page) uses a different terminology: “Cloud-based project estimating and cost information.”
Homewyse is located in 19980 Glen Brae Dr, Saratoga, CA 95070, and to the best of my knowledge and research, owned by a gentleman named Melvin Badgett.
Homewyse is owned by Coswyse LLC, and according to all up to date info online, it employs one person only, Melvin himself.
The annual revenue of Costwyse LLC is just shy of 55,000 USD.
Interestingly enough, their website claims they are 14 years old, deduced from their Copyright statement “©2006-2020”. However, 3 different sources I cross-checked showed they operate for the past 8 years, not 14.
I think I know the reason why.
They did start with a completely free module (free platform), but today they have a paid option alongside the free one. The module is a monthly (or a yearly) fee.
Simply put, 14 years ago, Homewyse came to life. Then, 6 years later (8 years ago), Melvin Badgett formed the LLC Costwyse (a similar name to the actual website), because he added some paid features and started charging for some of the services. It aligns with the information I gathered.
Homwyse will run you $8.25 a month for the pro version. The free version includes 1100 pre-built cost items, and the ability to start your own lists (10 lists limit).
The pro version includes the basics plus the ability to add your contact info, your logo, unlimited list cap, and custom bid notes.
Enough the detective work. Let’s talk about the practicality of it all.
How Does Homewyse Actually Work?
Homewyse is based upon a system called ‘Lists’.
Lists is a fast and dependable way to estimate costs, materials quantity, and labor requirements for any type of service job.
“A List is simply an itemized collection of work tasks and materials. Information stored in the List is used to determine the quantities and costs of labor and material, based on the unique size and options for each job.”
They claim that:
“Lists uses the latest U.S. averaged Homewyse.com pricing data - which has been tested and trusted in over 10 million uses”, and that you can edit manually when needed.
Each List can be used for a different purpose or a different project. Lists could be used consistently and changed or edited to suit your needs.
Additionally, Lists could be saved on your free account and accessed on the go from different devices, such as tablets or smartphones.
Here is a breakdown of how Lists work, and how to use them.
Lists can be used for many types of projects, for example:
I am going to show you now how to:
Creating custom Lists from templates
Editing cost parameters for your List
Saving and reusing your custom List
You can build a List that contains your common service and product offerings. Think of it as your "master price list" that you can copy and reuse for each project you have.
Even though you can build your List from scratch, it is much easier to start from a Homewyse Template and manually adjust and modify that Template for your specific needs.
For this example, we will use the Basic Exterior Painting template.
If you haven’t created an account on Homewyse already, click here to sign up for your free Lists Basic account. Don’t forget to respond to the activation email (check your spam folder if you can’t find it).
Once logged in
Click the Copy Homewyse Template option
Choose the Basic Exterior Painting Template
In the Create New List enter a name for your copy of the Template
Enter the List wage to be used to calculate labor costs for your List
Now you are supposed to see the list itself.
On the top left, next to the List’s name, you have a SETTINGS button. Click it.
Then under the costs tab, you can adjust your hourly wage, and under the markup tab, you can adjust the material and labor settings, and therefore increase or decrease your margins and profitability. This is crucial.
On the top right, below the geographical area of your project (SF area in this case), you have the actual number (amount) of square foot you will be conducting your work in (or on). (100 in this case).
Additionally, there are four different quantities that are shown for each item.
I’ll explain each one from left to right.
Let’s use the first row (power wash) as our example.
First, you can see the surface area that needed to be cleaned (64F).
Second, you have the Hrs column, which estimates how long each task will take (0.3h).
Third, you have the labor costs associated with the item ($17).
Last, on the very right column, you have the material costs associated with each item ($5).
Obviously, if you change the 100 SF parameter, the costs will adjust automatically and reflect on each item.
At the very bottom of the list, you can see the subtotal and total for all checked items on your list (checkmark box on the right side of each item). You will see there the total time of labor needed, cost of labor, and item cost.
The template Lists are comprehensive, and you should find easily what you are looking for and checkmark the items that you need.
Right next to each item, you have the EDIT button. You can edit the time or cost for each item manually. You can also change the entire description of the list under the basic tab if you wish.
Also, if for example, you see an item (a service) on the List your company doesn’t provide, you can delete it from the list entirely. It is located at the bottom left of the edit menu.
Lastly, at the very bottom of the list, you can add an item, name it, and under each tab adjust the costs. You can also choose from a pool of already created items from a wide verity of categories on the right tab (picture below).
At the very bottom, on the right side, you should click SAVE (cloud icon), and that list will be available for you for future use. You can send it via email or print the list as well (share button).
Now that we covered how Homewyse works, let’s talk about how can you use their services to your benefit and enhance your Real Estate earnings.
How To Use Homewyse As A Real Estate Investor
There are 3 main reasons you would like to use Homwyse as a Real Estate investor.
Calculate MAO properly
Estimate Rehab costs
I am going to break it down step by step on how to use it for each of the three purposes.
How To Use Homewyse To Calculate MAO
First off, what is MAO?
These initials stand for Maximum Allowable Offer. It is the absolute max you can spend on a property you purchase based on your budget.
There are actually a few ways to calculate MAO, I am going to stick with one, and then show you how to use Homewyse to do so.
This method of calculating MAO is called the Itemezied method, and it yields the most precise results of all the other methods.
Determine the ARV (After Repair Value).
Calculate all expenses (such as closing costs & repair costs) and subtract from ARV.
Now take out the return you want to make (subtract the net amount you want to keep).
When wholesaling, you also need to subtract buyer profit and your wholesale fee.
Itemized Method When Rehabbing + Wholesaling
ARV is $200,000
Subtract the following from the ARV:
Closing Costs (Purchase and sale) $5,000
Holding Costs $7,000
Total of these costs = $61,000 (40k + 5k + 7k + 9k = 61k)
Next factor in what you want to earn net. For this example we will use 20k.
$200,000 ARV - $81,000 (all costs plus your return) = 119k MAO
Homewyse will help you to calculate the biggest chunk of cash on the list; Repairs.
You can do it yourself with the method I just showed above.
Use Homwyse to help you minimize the margin of error in your deal choosing and dealmaking by precisely knowing what is the cost of the repairs.
If you do it like a professional, you can make higher margins and keep more profits.
How To Use Homewyse To Estimate Rehab Costs
Rehab projects are usually bigger and more complicated than a regular touch up or home fixing. It usually involves fixes that involve passing regulations (such as hazard and fire).
Homewyse can help you find a professional to do this for you.
Go to the Projects tab on the very right on the Homewyse website.
Now you will see 3 options: Home, Kitchen, and Bathroom.
Let’s choose Kitchen for this example.
You will see a new calculator. At the top right, it’s important you adjust the prices according to your ZIP code.
Then, you have 4 adjustable sliders. Size, quality, expertise, and layout.
Play with them, to suit your specific needs for each job.
At the very bottom, you will have another button ‘Project Options’.
Press on it to get a list of features you can add to the project.
Once added, close this window, go back to the top, and press update if it hasn’t already automatically.
There you go, a tool to make your life easier when choosing a project, and to help you choose competing bids from general contractors for you to work with - or do it yourself for more profits.
How Homewyse Helps You Calculate Maintenance Costs
Holding on to a property for too long will cost you. It’s not just the lost cashflow, its also a liability. Besides the holding costs, you have maintenance costs in order to keep the property presentable for possible buyers.
It is a situation you want to avoid, but if you do get stuck with a property, Homewyse got you covered here as well.
On the Homewyse website, click the Maintenance tab (on the left to the Projects tab).
You will land on a page with multiple options.
Let’s choose Landscape Maintenance.
And now, for example, let’s pick the 5th option, Lawn Insects Service.
Voila. Make sure to adjust your zip code, and to pick your needed checkmarks.
Now you can factor even more precise costs into your deal choosing using Homewyse, making your Real Estate game more profitable altogether.