What did you study to learn Rehab Costs?

What did you study to learn Rehab Costs?

Member since 2021 · 2 posts · 1 vote

How have you learned more about construction costs / rehab costs, and the best materials to use to make "renter proof", along with the 'what to look for' hidden expenses. 

I am preparing to start investing with the BRRR method. I am a commercial real estate broker so I understand the general market, comping out pricing, rents, structuring leases, finding deals, networking, etc. I have zero experience as a developer or general contractor.

What I really need to understand, and feel like the final piece that is holding me back, is the costs of rehabbing; how much does it cost to redo a kitchen- counters, cabinets, flooring, etc. What are the best materials that are quality, but keep a budget in mind, and "renter proof". 

I understand hands-on experience is the best teacher. I also understand it is all about simple math. The more accurate the math, and more predictable the returns and underwriting will be. I don't want to jump into something if I can't get an idea on these costs first.

I'd like to read a few books, and/or take an online class to help me understand the various costs of renovations, surprises/hidden costs to look out for, know the best materials to use for an ideal combination of quality but affordability, etc.

With some baseline understanding of these costs, I can start to underwrite light-to-mild fixer-uppers and get started with my first investment. Any recommendations are much appreciated. 

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  • Realtor · WV · Member since 2018 · 454 posts · 310 votes
    5y

    There are many ways to learn your rehab pricing, and most of it will happen over time but here are a few ideas. 

    Find a contractor that will walk a few homes for you, and write up estimates. Even if you have to pay them to do this, with the understanding this is for info purposes it would be worth it. 


    Walk through home depot/lowes and make a list of the pricing they have posted for labor costs. They will have pricing on changing out hot water heaters, doors, etc... This will help you compile a list of general items. 


    Meet with distributors/contract sales reps for pricing. For example you could meet with a flooring company estimator and they could give you some basic sq ft pricing for different types and levels of flooring. 


    Attend real estate investor meet ups and speak with other investors that are doing rehabs and they will give you some good numbers on their costs. 


    These are just a few ideas, hope it helps! Aaron

  • Member since 2021 · 2 posts · 1 vote
    5y

    Thank you Aaron, this is very helpful and I will implement these tactics. I welcome more feedback if anyone else sees this and has more to add!

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