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Forums » Rehabbing and House Flipping » Learning to Estimate Repair Costs Accurately

Learning to Estimate Repair Costs Accurately

13 posts by 13 users

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Landlord · Dallas, Texas


To find a great property it requires two things: accurate ARV and precise ERC. When learning to estimate ERC correctly I was thinking the best way to go about it is to find active rehabbers at REI clubs, see if you can tag along to a few of their properties if you get to know them.

Or call around and find general contractors/ contractors familiar with working with investors. See if they would allow you to visit properties they are working on, perhaps in exchange for future business if your wholesaling or even just offering them lunch.

Curious what others here would suggest.



Wholesaler · Valley City, Ohio


Samantha,
to be exact on repair cost is an art form. I actually wrote a book on estimating repairs on a house, but never put it out to the public. The best thing to do is to get 3 estimates on every deal and compare. You need to keep the neighborhood in mind when figuring the cost. You will not figure the same level of rehab of something in the burbs as you would something in the ghetto. There is a program out there that is 100 bucks per month called exactimate that is used in insurance restoration. You can use that, but cut the cost in half. good luck!!



Real Estate Investor · Springfield, Missouri


Samantha, how's the appraisal porcess going....?

Rehabbers, I know J Scott like these deals and for awhile I did them and realized it was not worth my time, I even had the construction company to proft from.

My dad and I use to spend time at the lumber yards like kids in a candy store. If you are going to rehab residential (or commercial) properties and you don't know the cost of pre-hung doors, vasement windows, cove molding, sheet rock and screws and can't use a tape measure you have no business rehabbing!

Estimating costs seems such a crock as "investors" think they are going to go in a house, and get estimates from someone else. That means you are paying a contractor instead of knowing what the heck you business is all about. If you can;t be the general on any rehab, my advice is not to rehab.

I can sit at a desk and "estimate" to get true costs you need to know what the plan is and know what material and labor costs will be. It's not rocket science, it takes effort and time.

Any Harry homeowner can call a contractor and get estimates.....


Financexaminer@real estate investor dot com


Real Estate Investor · Little Rock, Arkansas


I am learning from bloody knuckles. I know what my last rehab cost. So, I am applying numbers from it to my next project. I am getting estimates from a contractor on exterior work even before I make my offer. Don't listen to Gurus when they tell you to use 10% for a rehab estimate contingency. I haven't completely covered my hiney yet using 20%.
Don



Rehabber · Santa Clarita, California


I answered this very same question in another thread. Here is a copy of my answer:

Get out to Home Depot/Lowes and start pricing out material costs for all items of possible repair on a rehab. You will need a list prepeared so that you can fill in the costs for your area. I uploaded to BP mine for all to use. Go here:
http://www.biggerpockets.com/files/user/BarnardINC/file/70-repair-cost-form
Simply fill in the costs after spending a great deal of time reseraching prices at the box stores. They also have install prices (although they are much higher than you can get by hiring outside of Lowes/HD). Then go to as many REO properties as you can and practice your skill set.

Here is some more info that should help you:
Break up the home into sections - Kitchen, baths, flooring, paint, stucco, landscaping, plumbing (including fixtures), electrical (including fixtures), HVAC, interior doors, door casings/baseboards, windows/sliders/front door, roof, foundation, misc., and garage.

Once you know what the common costs are for each area for a specific size home, you can see how easy it will become to walk in and walk out 15 minutes later with a rehab figure in your head.
For instance, I know that a full gut and remodel including new toilet, new vanity, mirror, sink, glass door enclosure, stone/tile on shower walls, etc will run me $2500 per bathroom. So if I walk into a REO deal with 2 baths, I simply add into my head $5k for the 2 bathrooms and move on to the next section. i also know it costs me around $5k to paint in and out a 1500 sq. ft home. I have these basic figures locked in my head so when I identify sections in each home needing repair, it is simply to calculate in my head.

Hope this helps.


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


Landlord · Seattle, Washington


I learned by doing. I've done nearly everything you can think of when it comes to a home. I'm at a stage that I don't want to do much of the work any more, but I now know what is involved. Many of the items you do quite a bit so you get quite familiar with how much material and time would be involved. Other items you might want a contractor to give you an estimate.

A handy book to consider is RS Means Residential construction cost data. The book can give you insight into how much labor might be involved. I generally prefer to do like Will and run to Home Depot or Lowes and figure out my material costs. In time you have a good idea of what the average kitchen or bath might cost to fully build out.



Real Estate Investor · Bristol, Tennessee


If you are rehabbing as a business and keeping multiple projects going, I've found it pays to have a good contractor you can count on. I've also learned the lowest bidder usually costs you money in the long run. So, I prefer to know my costs for each rehab task and have a quality contractor that can execute them within that budget. There's just no way I could meet with 3 different contractors for each project. You can purchase the Craftsman cost book, which provides the amount of time/labor any task should take. For example, it tells you how long it should take to hang a ceiling fan, install a bathtub, etc. This will give you a baseline labor rate to hold your contractor accountable. I used the Craftsman costs to determine typical labor rates for the 100 most common tasks we do on rehabs. I highly recommend the book "FLIP" as it identifies those tasks for you and also provides an excellent workflow chart to keep the process as efficient as possible. Of course, you have to add a contingency because no project is going to go perfectly as planned.



Real Estate Investor · California


Hey Matt-I just went on line to find the Craftman's Cost book you mentions and did not find it. Please give full title and author. Thanks in advance.



Real Estate Investor · Hartville, Ohio


Once you know what the common costs are for each area for a specific size home, you can see how easy it will become to walk in and walk out 15 minutes later with a rehab figure in your head.

This is actually the exact same process I use. My numbers are slightly different obviously because we live in different parts of the country but the process is the same. I segment the house into Kitchen/Bath(s)/Paint/Flooring/Mechanicals/Roof/Misc. etc.

My advice to the OP is to start getting comfortable estimating project costs by eating the elephant one area at a time. For example, spend a day doing nothing but pricing out costs to do a complete bathroom gut/rehab, then move on from there to maybe the kitchen or roofing or whatever. It takes a while but you will find you can get a fairly accurate estimate of rehab costs relatively quickly by attaching a specific dollar amount to the common things you do in a rehab.

Of course if you miss a problem during your initial inspection/estimate........then no magic system/software/process is going to help...so get good at paying attention to the details and leave no stone unturned.



Wholesaler · Altus, Oklahoma


Originally posted by F Foster:
Hey Matt-I just went on line to find the Craftman's Cost book you mentions and did not find it. Please give full title and author. Thanks in advance.

Look up 2012 National Repair & Remodeling Estimator on Amazon,Ebay,etc. I assume that's what he's talking about.



Real Estate Investor · Buffalo, New York


Great thread! @Will Barnard, great advice! As we are considering how to move forward with REI, I've been wondering how on earth we would be able to estimate repairs for flips if we go this route. Your suggestion on how to go about this makes complete sense and was like an "aha" moment after reading. Appreciate you showing how to keep it simple (by taking the time and learning your facts). Thanks also for the spreadsheet - I'm going to download it when I'm on my PC tomorrow.

@Matt Lavinder and @Charles Perkins, I had no idea these books existed, so thanks to you both for the info. Even if we don't flip, we will probably be multi-unit investors again and I think either of these would be very useful references.



Real Estate Investor · memphis, Tennessee


@Samantha M. - Great question and some excellent responses and I wanted to point out two in particular (no offense to all the great responses).

Bill G. beat me to a comment I wanted to make on here. There is nothing that can replace time and experience as it relates to properly evaluating the repair costs and I know many like @Charles Perkins and @Don Hines commented that doing things your self or 'getting your knuckles bloody" and I can only say they are 100% correct. Nothing beats experience.

@Will Barnard did an AWESOME job of providing a materials list and telling you to go to Lowes of Home Depot to track pricing. This is something that every investor should do if they do any work on investment properties. It is the only way to get inside of the costs of a renovation. You have to know what shingles costs, and toilets, light fixtures, faucets, flooring, paint, etc... all the way down to nails. From there, my company developed an I-Pad app. that our renovation managers use that has 300+ questions on it that goes room by room, item by item all the way down to small issues like the number of light plates that need to be replaced. Because we know the cost of everything, the program then tabulates the cost and prepares a list of materials for a contractor.

That kind of detail comes from doing hundreds of projects a year and keeping a detailed analysis of what everything costs including your labor. At some point, you will be able to walk through a house very quickly estimating the rehab (under 30 minutes) and be within $100 dollars of actual costs. Then you hand your list to a contractor with the SKU's of every item they are to use in the house and you will be spot on with your pricing.

Sorry this response was so long, but there was some great advice and I still think the best thing to remember is that it takes time and experience to get really good at anything worth doing.

best of luck Samantha -

Chris


Small_new_mi_logoChris Clothier, Memphis Invest, GP
Telephone: 901-212-9647
Website: http://www.memphisinvest.com
www.MemphisInvest.com 1(877)-773-9998 Chris D Clothier


Real Estate Investor · Savannah, Georgia


Does any one know of a good ipad app to estimate renovation costs as you walk through a house? I checked the iTunes app store and didn't see anything. If it doesn't exist who wants to pitch in a develop one for the BP community?





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