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Estimating Rehab Cost Per SQFT

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Doug P.

Florida

Jun 29 '09, 05:11 AM
1 vote


Reading the book Flip they have a rule of thumb chart for quickly estimating the cost per SQFT of rehabbing or remodeling a home.

Here is how they chart it.

Standard finish rehab - $15
Designer finish rehab - $18

Standard finish remodel - $25
Designer finish remodel - $30

Is this accurate or something anyone here uses for a quick idea of whether a property is worth further pursuing?

Also in the book I can't tell if they include new floors in a rehab but I assume they do.


Edited Jun 26 2010, 08:47


Corey Demuth

Real Estate Investor from Queens, New York

Jun 29 '09, 05:47 AM
1 vote


wow i'm no expert but that idea that you can generalize repair/rehab/remodel costs based on square footage sounds crazy...

no way to factor in the extent of wear/damage etc...

one rehab project might be mainly a case of new counters, cabinets, kitchen and bathroom fixtures, maybe some new flooring... etc.

another rehab might require re-wiring outdated electric systems, new plumbing, mold damage.... who knows??? i kind of feel like each case is unique

*edit* also you need to factor in location. i doubt you will find contractors in new york, for example, who are willing to work for the same rates that contractors from florida might work for.


Edited Jun 26 2010, 08:47 by Corey Demuth


Doug P.

Florida

Jun 29 '09, 06:01 AM
1 vote


Yea I really didn't see how something like that could be accurate.

Thanks


Edited Jun 26 2010, 08:47


Steve Babiak

Real Estate Investor from Audubon, Pennsylvania

Jun 29 '09, 06:08 AM
1 vote


Here are a couple of threads that go into what some rehabbers have paid per sq ft, and some even offer before / after photos.

http://www.biggerpockets.com/forums/67/topics/29363-gut-rehab-semi-gut-

http://www.biggerpockets.com/forums/67/topics/21771-gut-rehab-costs

You might also want to look at the "related posts" that show up at the top of the thread for more info.


Edited Jun 26 2010, 08:47 by Steve Babiak


Steve Babiak, Redeeming Properties, LLC
Telephone: 6109082183
...


Doug P.

Florida

Jun 29 '09, 06:18 AM


Ok so it does work in some ways.

It seems like if you know the prices in your area you could set something up where you knew how much it would cost for a complete cosmetic gut per sq ft not keeping anything.


Edited Jun 26 2010, 08:47


Adam Anderson

General Contractor from Dallas/Ft. Worth, Texas

Jun 30 '09, 04:34 AM


If you want an idea of how accurate those numbers are, try calling a 5-6 contractors and ask for a square foot cost. My guess is you will be lucky to get an actual number out of them.

The more precise the information you use for your estimate the more accurate the estimate. When you are talking square foot costs for a building they can vary greatly. As you break down your estimate into smaller more manageable pieces such square foot cost for a particular room your estimate accuracy increases. As you break down a room into individual components such as flooring, painting, trim work, your estimate accuracy increases even more.

If you are just starting out I would estimate the work with as much detail as possible just for the learning experience. Relying on a rule of thumb for remodeling or rehabbing work is just asking for trouble.


Edited Jun 26 2010, 08:47


Jonathan Rexford

Real Estate Investor from Vero Beach, Florida

Jun 30 '09, 05:34 AM
2 votes


Figuring repair or rehab work is local in price. Adam gave you a good idea of calling on local contractors.

You can have FINISHES on flooring that can range from 3-25.00 PSF.

If you get your local contractors you can get an idea.

When I look at a home I have what I call 5K
10K
15K
20K and up. That is because I can look and see. 5K is a paint and minor carpet in a basic home


Edited Jun 26 2010, 08:48


Jonathan Rexford,
E-Mail: [email protected]
Jonathan Rexford Jon Buy a Home www.jonbuyahome.com 772-321-2290


Tom Tarrant

Real Estate Investor from San Diego, California

Jul 03 '09, 09:38 AM
2 votes


Those numbers sound optimistically low however one persons designer update isnt the same as anothers. I would stay away from using $/s.f. alltogether. You need a way more specific handle on your costs. Go line by line, item by item and get bids from your contractors after they've seen the property. There are way too many variables to just use a blanket $/s.f. number. I hope that helps.


Edited Jun 26 2010, 08:50


Alfred Castillo

Real Estate Investor from Bronx, New York

Jul 10 '09, 04:27 AM


So when it come to rehabbing a home its based on the local area pricing?


Edited Jun 26 2010, 08:55


Shanti S.

Real Estate Investor from Central, Massachusetts

Jul 10 '09, 04:38 AM
2 votes


Absolutely. I think $75 per sf might be more realistic in my area for a complete gut and rehab - and maybe even higher depending on the type of work and the area.

If contractors are in high demand in an area then it's going to cost you a lot more to hire out the work. Sometimes good ones are so busy that they throw out ridiculous prices - they don't really want the job but figure if you'll pay THAT much they'll take it - and people still do.

In MA and NY, tradesmen can certainly make six figures if they're good and good at running a business. You're competing with all the yuppies and businesses for their time :-(


Edited Jun 26 2010, 08:55 by Shanti S.


Jon Holdman Moderator

SFR Investor from Wheat Ridge, Colorado

Jul 10 '09, 05:32 AM
1 vote


Yes, these costs vary widely depending on local conditions.

If you're competing with "yuppies and businesses", you may not be finding the right contractors. Just like we talk about wholesale and retail for houses, there are wholesale and retail markets for contractors. If you're a homeowner looking for remodeling, your criteria are different than if you're a flipper. Some years ago, before I got into this, I paid $50K for a high end kitchen remodel. After doing a couple of rehabs, I'm sure I could now do the same work for half, or maybe even a third, of what I paid. May not have been the same cabinets or same granite fabricator, but it would look just as good. In a rehab I did last year, I had more wiring done than I did in my house, and yet the price was only half what I paid. And, yes, they were licensed and permits were pulled (for that entire rehab) and all inspections passed. In fact, I was much happier with his work than what's in my house.

Shop around, get multiple bids. This is money out of your pocket.


Edited Jun 26 2010, 08:55


Jon Holdman, Flying Phoenix LLC


Tom Tarrant

Real Estate Investor from San Diego, California

Jul 10 '09, 09:30 AM
2 votes


We've done rehabs in both California and Texas. Costs can fluctuate greatly depending on where you are. Try and stay away from calling people from the phone book. We call these "yellowbook" prices. I've found my best resources in Home Depot parking lot hitting people up (I know, sounds crazy) or by referral. Another good way to find sub contractors if you are new to an area is to walk onto jobsites, check out their work and ask for their number. We moved out of state to rehab houses and had to start from scratch finding subs and managed to pull it off seamlessly, even netting 6 figures on our first project there.Good luck!


Edited Jun 26 2010, 08:55


Jeff and Cheray Warner

Real Estate Investor from Grants Pass, Oregon

Jul 11 '09, 05:23 AM
1 vote


Originally posted by Tom Tarrant:
We've done rehabs in both California and Texas. Costs can fluctuate greatly depending on where you are. Try and stay away from calling people from the phone book. We call these "yellowbook" prices. I've found my best resources in Home Depot parking lot hitting people up (I know, sounds crazy) or by referral. Another good way to find sub contractors if you are new to an area is to walk onto jobsites, check out their work and ask for their number. We moved out of state to rehab houses and had to start from scratch finding subs and managed to pull it off seamlessly, even netting 6 figures on our first project there.Good luck!


Tom,

That's encouraging for a guy like myself that has not done a rehab yet, especially after looking at your site and seeing the finished product. I'm very impressed, you have flipped some nice looking homes. Good work.

Jeff


Edited Jun 26 2010, 08:55


Will Barnard Video Moderator Donor

Real Estate Investor from Santa Clarita, California

Jul 11 '09, 11:41 AM


Anyone claiming you can factor your costs of a rehab by sq. ft. is either a fool, or a guru pitching some BS product for you to buy.
There is NO way to put a price per sq. on rehab work even if all the rehabs were in the same state!
Costs vary widely per state and even per city. You also may have to put in an entire kitchen in one rehab, and not in another. By that methodology, your price to rehab both scenarios would be the same which is ridiculous at best.

I am a rehabber as well and I can tell you that the ONLY way to estimate yoru costs is to have the knowledge and experience necessary to know what specific items cost so that you can plug THOSE numbers in, not some GENERIC formula.


Edited Jun 26 2010, 08:56


Medium_be_logoWill Barnard, Barnard Enterprises, Inc.
E-Mail: [email protected]
Website: http://www.barnardenterprises.com
http://www.InvestorExperts.com


J Scott Moderator Donor

Real Estate Investor from Ellicott City, Maryland

Jul 14 '09, 05:42 AM
3 votes


Originally posted by Tom Tarrant:
I've found my best resources in Home Depot parking lot hitting people up (I know, sounds crazy)


Just to follow this up (and no Tom, it doesn't sound crazy!), I highly recommend going to Home Depot at about 6:30am to find good contractors.

The guys who are there that early are the ones who take their job seriously, and get to the work-site by 8:00am. Start handing out your business cards (and collecting theirs), and ask them where they're working and if you can stop by to "visit" the job-site.

This is how we found most of our contractors originally...and most of them have done 5-10 houses with us at this point.

Btw, the guys who are in Home Depot at 10am are the ones who like to sleep late or who didn't do a very good job of estimating their materials purchase the last time they were in there... :)


Edited Jun 26 2010, 08:58 by J Scott


Medium_lishproplogoJ Scott, Lish Properties, LLC
E-Mail: [email protected]
Website: http://www.123flip.com
CHECK OUT MY BIGGERPOCKETS BOOKS: http://www.biggerpockets.com/flippingbook


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