Rehab Costs, where do I start?

4 Replies

I know this topic is widely discussed, but I've finally found myself in a position where I need to know how to estimate rehab costs.

We are under contract for a home that will become our personal property.  It also has a detached garage that has plumbing and electricity that would turn into a casita to rent out. The problem is, I'm stuck on rehab costs. I have no idea where to start. The house is 1500 square feet and will need new flooring,popcorn ceiling removed, new kitchen (and the kitchen needs to be moved), and a few walls blown out. The casita would need to be completely built out (frame a bathroom, add a kitchenette, etc) 

Where do I even start?!

Hi Daniel,

A good place to start is to go through a room by room inventory of what needs to be repaired, replaced or added to get each space to the place you think it should be. Do the same thing with the external premises.

Next, create a scope of services for each sub-trade that is needed to do the work you have identified. Find at least 2 (3 or 4 is better) subcontractors in the market area of your project. Walk each one of them through the premises with the scoping sheet you prepared for them to show and discuss the work you are asking each of them to do. Ask each sub for each trade to provide you with a written bid for each line item of work you need them to do.

Gather the bids you receive and arrange them by sub trade and compare their pricing, schedule and qualifications. Evaluate each bid and select the sub that you feel is the best fit for you and the job you are asking them to do. Note: The low bid is NOT always the one to go with, price alone should not be the defining criteria as the basis or your decision to hire any one of them.

Reputation, bonding, experience, schedule, timely responsiveness and the way you can or can't communicate with a sub are all elements that should be included and weighed in making your selection to hire each sub.


Since you appear to be new to this game, ask each sub to provide you with their version of a contract to accompany the bid they give you. If you read it and can't understand it or don't agree with it then amend theirs or draft your own agreement. You may need 3rd party help with doing your own contract, but you do need your agreement in writing and have it in a form that leaves as little room for ambiguity as possible.

Have a clear understanding of the key elements to the contract: scope of services, materials, insurance, price and schedules. When and if possible, include language that addresses remedies, penalties, right to terminate and a prevailing party clause in the contract.

Finding skilled labor that is available and willing to work with you as noted above can prove challenging. The market I live in has a very active construction profile, which can be problematic in getting qualified subs to respond and or to offer competitive (and sometimes sane) pricing and along with other key terms and conditions to deliver their services.

Good luck with your journey into the world of construction.

A few questions:

How much did you pay for the building?

How much will it be after your rehab?

Are you doing the rehab yourself?

What's the going rate for a similar building after the rehab?

What is your budget?

@Calvin T. @Calvin T. We purchased the property at 285k. The comps have an updated house without a casita coming in at 470k. We would most likely be using a contractor for everything. Our max budget would be 90k.

Originally posted by @Daniel Pitner :

@Calvin T. @Calvin T. We purchased the property at 285k. The comps have an updated house without a casita coming in at 470k. We would most likely be using a contractor for everything. Our max budget would be 90k.

Just remember, things happen and contractors usually underestimate the cost of the renovation, so make sure you have ample funds to cover the short fall.  If your budget is 90k, you need to have estimates around 50k.  Also, make sure YOU purchase the supplies, not the GC.  Reason being, they will often inflate the costs of the material; which in turn, increases your costs.  Just request a list of the materials the GC needs and you will either pick them up or have them delivered by Ace, Lowes, Home Depot, etc.  You need to watch that budget diligently.  If the GC says no, find another one.  They usually bump up costs anywhere from 30% + just on supplies.