Welcome to the new Question of the Week! It looks like estimating rehab is a big hurdle, so let’s get talking! Make sure to vote in our poll and mention your location and average in our post. If you can give ballparks for the ARV range, sqft, and maybe a few key things such as roof replacement, new hvac etc that will help people learn what they may be able to expect in their area. Got any tips or tricks to building a scope of work or finding affordable supplies? Add them here! Haven’t found your first property yet? Don’t forget about our fileplace for templates, forms and documents to help you out! It’s free for every user! https://www.biggerpockets.com/...

Great question - Renovation is where things frequently go bad. I will share how we determine what to renovate and some lessons from completing over 400 renovations. To clarify, I will only discuss renovations for rental properties, not renovations in general. Before you start, clarify your goals Why do you renovate a property? There are five reasons to renovate a property: • Attract the right tenant pool • Increased rent • Decreased time to rent • Increased tenant stay • Reduced maintenance cost Notice that I said “the right tenant pool.” Each tenant pool segment has different things they consider important. For example, one tenant segment may see bars on the first-floor windows as essential. Another may value granting kitchen counters. If you want to know more about tenant pools and their importance, please contact me. Only Renovate to Your Target Tenant Pool Assuming that you have identified your tenant pool, you need to transform their critical and desired housing characteristics into a physical property description, as illustrated below. Create your property description based on your target tenant pool segment. This means that the properties you buy will be the ones your target tenant pool is willing and able to rent. Again, feel free to contact me if you are not familiar with any of these concepts. Part of what attracts tenants to a specific property is meeting their "wants," which may be separate from their needs. As I mentioned, "wants" are unique to each tenant pool. So what you will renovate is defined by the tenant pool segment, not you. Your “style” or tastes do not matter; only what the target tenant pool cares about matters. The property partially meets tenant pool "wants" and others through renovation. Properties that meet your tenant pool's broadest range of wants will get the most traffic and rent the fastest and for the highest rent. The right renovation will increase your cash flow and reduce maintenance costs. What to Renovate? We determine what to renovate by comparing the current property condition vs. the "ideal condition" for our target tenant pool. The difference becomes our initial renovation list. We always do all health and safety-related items, plus items required to attract our tenant pool. Beyond that, every item (replace the carpets, the kitchen faucet, etc.) must be cost-justified. If the item doesn't pay for itself in an acceptable period, we do not do it. See the image below. If you follow the above method, there is not much subjectivity; your target tenant pool tells you what you need to renovate. It then becomes cost-justifying items beyond the minimum, which is straightforward. What does a typical renovation cost? There is no typical cost. In the last 15 years, our renovation costs ranged between $500 and $55,000. Every property is different. Renovation Considerations We’ve learned a lot of lessons completing over 400 renovations. Some of the takeaways are listed below. • Do not be trendy - For example, the current “in” color might be grey, but how will it look in ten years? We use a light tan for the walls and an off-white for trim, doors, and cabinets. We’ve used the same color scheme for the last 15 years. • Use durable materials - On a renovation several years ago, we purchased carpet from a big box store. The carpet looked good and seemed to wear well. After a couple of years, the carpet on the stairs was damaged and had to be replaced. We went to the same big box store and purchased the same part number. When the carpet was installed, there was a noticeable color difference between the new and existing carpet. We ended up replacing all the existing carpets. We now use commercial-grade nylon carpets. There is no color variance over time with the commercial carpet, so we can replace high-wear areas, which blends with the existing carpet. • Your tastes do not matter - This will not be your home; you're not going to live there. What you like or do not like is irrelevant. Make the house desirable to your target tenant pool. Listen to your investment team. • Contractors & handymen - Finding and managing contractors and handymen can be a nightmare. Some considerations: Price is no indication of quality or timeliness. Everything in writing - Start date, duration, paint brand & colors, materials included, permits as needed, etc. Every line item will have a separate cost. Verify that they are licensed and provide proof of insurance. Fixed price – No matter how low the hourly rate, you can not afford to pay hourly. It will never get done if you pay by the hour. There will be unexpected expenses. Always include a pad in all renovation estimates. For us (in Las Vegas), it is common to have $200 to $300 in unplanned expenses on a ~$20,000 job. It will take longer than expected. CRITICAL - Unless you have a local person with construction experience to walk the property at least every other day, the job will take longer, cost more, and have poorer quality. • Price is no indication of quality or timeliness. • Everything in writing - Start date, duration, paint brand & colors, materials included, permits as needed, etc. Every line item will have a separate cost. • Verify that they are licensed and provide proof of insurance. • Fixed price – No matter how low the hourly rate, you can not afford to pay hourly. It will never get done if you pay by the hour. • There will be unexpected expenses. Always include a pad in all renovation estimates. For us (in Las Vegas), it is common to have $200 to $300 in unplanned expenses on a ~$20,000 job. • It will take longer than expected. • CRITICAL - Unless you have a local person with construction experience to walk the property at least every other day, the job will take longer, cost more, and have poorer quality. • Price is no indication of quality or timeliness. • Everything in writing - Start date, duration, paint brand & colors, materials included, permits as needed, etc. Every line item will have a separate cost. • Verify that they are licensed and provide proof of insurance. • Fixed price – No matter how low the hourly rate, you can not afford to pay hourly. It will never get done if you pay by the hour. • There will be unexpected expenses. Always include a pad in all renovation estimates. For us (in Las Vegas), it is common to have $200 to $300 in unplanned expenses on a ~$20,000 job. • It will take longer than expected. • CRITICAL - Unless you have a local person with construction experience to walk the property at least every other day, the job will take longer, cost more, and have poorer quality. If you have questions, please post them, and I will try to answer them.

I would say as a rule: about $60 to $80 per sq ft. I think getting material costs for Low, Middle and Top tier finishes is fairly easy. The difficult part is knowing/ measuring the labor work. Unless you have a team that only works for you by the hour… People love to say ($50 to $80 ) per sq foot but don't have the actual people that can do a good job for that price. Prices fluctuate depending on how busy the contractor/workers are. The busier they are the more they will charge in that given time. Supply and demand Plus - will you have structural things to fix? Foundation? Plumbing, electrical, roof…. etc You have to know the prices (ball park) for each item. 1000 sq ft home Roof: about $6k to $8k AC : $8k to $10k Electrical : wiring : $5k to $7k (with recess light fixtures and installation of light fixtures inside and outside) Electrical panel: $3k to $5k Plumbing (full) 1 bathroom + kitchen : $6k to $8k Cabinets + counter tops: 10 by 10 kitchen (white or gray shaker): installation only: $6k to $8k ) total kitchen with material : $10k to $15k (custom will be more). Flooring : laminate : $2 to $3 installation p/ sq ft (material $2 to $4 per sq ft ) w/ baseboards Framing : $10 to $12 per sq ft Foundation : next time :) Drywall: about $5k to $6k (could be less if you have the people) Paint :inside : $4k to $6k paint outside : $5k to $7k Windows : this size home: 2 bedrooms : about $4k to $6k Doors: $200 per door (pre-hung) Insulation : put it with the drywall and pay for the material bathroom tile : shower and floor : Pinterest quality : about $4k to $5k for installation only Vanity : $300 to $1000 depending on what you choose (installation only) Toilet and bath tub : with plumbing These are rough numbers : and pretty on the low. So use these as your barometer if you are subbing the work out… If a contractor is managing - expect more. (These numbers are nice… but you have to find quality people that could actually work well with these).

@Jed De Los Santos It was $200 sqft in our area… Now it’s how much you got! Lol Key is to find a good contractor with integrity and keep feeding him jobs.

Under $100 but depends on your level of effort, materials, network, and skills keeping costs down. Basically your time, resources and experience will dictate this ppsf.

QOTW: what’s the average cost per sqft to rehab?

Brian Blosser

Real Estate Agent · Burbank, CA · Member since 2021 · 38 posts · 26 votes

4y

Looking forward to seeing what people actually spent in different cities, even if you're familiar with your own city, being able to quickly gauge costs for a new market or out of state investment would be very helpful.

4 Reply

Michael Smythies

Real Estate Broker · Seattle, WA · Member since 2022 · 62 posts · 68 votes

4y

Hi there,

This is a question I often have regarding average rehab costs as well. I am working on a full condo renovation in downtown Seattle right now. We are approximately 90% finished. I've been keep tracking of all my rehab expenses and dividing that by our total square footage. As of right now, we are sitting at about $75 sq. ft. This includes demolition, new kitchen, two new bathrooms, minimal plumbing work, full electrical work, flooring, paint, drywall work, new trim, shelving and appliances.

Curious to hear what others have to say.

10 Reply

Matthew McKee

Real Estate Coach · Boise, ID · Member since 2022 · 177 posts · 285 votes

4y

I think it hinges on if it's a LTR or STR my team has both property management companies have been project managers of both types of rentals. In my experience STR will be 25-33% more than a LTR in order to be more competitive. That's before furnishing costs, of course.

4 Reply

Sergey A. Petrov

Real Estate Consultant · Seattle, WA · Member since 2022 · 1k+ posts · 784 votes

4y

That sounds about right for an average downtown Seattle condo. Not talking about luxury high rises with high quality finishes - that will easily more than double or even triple that number. Kitchen itself could be an easy $40k+. Bathrooms not too far behind

2 Reply

Dave Van HornPro Member

Fund Manager · Wayne, PA · Member since 2009 · 1k+ posts · 1k+ votes

4y

Tough to give an answer on this imo with such a wide range for everything from materials to the type of property that's being rehabbed. I'd recommend newbies get 2-3 estimates for each product from different contractor (hopefully ones that come referred or at the very least highly rated on a platform like here or Angie's list).

Podcast Guest on Show #273

4 Reply

Julien J.

Investor · CO · Member since 2016 · 757 posts · 1k+ votes

4y

Well, it depends...

I'd love to see it broken down by types of rehabs:

- Rental: A, B, C, D market

- Flip: A, B, C, D market

8 Reply

Ezra Henderson

Wadsworth, OH · Member since 2021 · 110 posts · 91 votes

4y

It varies a ton based on what all needs rehabbed, the age of the house, whether you hire out the work or do it yourself, how many of the big items need replaced (roof, windows, HVAC, etc.) the the location, the ARV, etc.

I have tried using the price per square foot method, but honestly my numbers are always far more accurate when I actually look at the scope of work and estimate the cost based off of what needs done. But using price per square feet can be an easy way to get a quick rough estimate.

2 Reply

Larry Turowski

Flipper/Rehabber · Rochester, NY · Member since 2014 · 1k+ posts · 1k+ votes

4y

$20/sqft. There! How’s that for specific?

But here’s the thing. I’m serious. I stick to cosmetic rehabs. Oh sure, each one might be more or less, but not crazy different. I’m generally not doing rehabs that are $40/sqft.

2 Reply

Bruce WoodruffPro Member

Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes

4y

Is this a flip, rental, or personal home? High end or low?

Somewhere between $150 and $500.

0 Reply

Sarah HattonPro Member

Lender · San Diego · Member since 2021 · 80 posts · 56 votes

4y

As others have said the cost per square foot will vary depending on a few things... asset type, total square footage, state/city, and also the level of rehab you're aiming for. When i'm underwriting a fix and flip deal I typically use $50 per square foot as a rule of thumb, leaving room for that number to go up or down depending on the factors.

0 Reply

Bruce WoodruffPro Member

Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes

4y

Quote from @Sarah Hatton:

As others have said the cost per square foot will vary depending on a few things... asset type, total square footage, state/city, and also the level of rehab you're aiming for. When i'm underwriting a fix and flip deal I typically use $50 per square foot as a rule of thumb, leaving room for that number to go up or down depending on the factors.

Just curious...did you mean $150 SF ? If you can do any type of rehab for $50 SF, then I have a lot of work for you.....

0 Reply

Mark G.
Miami, FL · Member since 2024 · 20 posts · 12 votes
1y
Quote from @Bruce Woodruff:

Quote from @Sarah Hatton:

I just went through this post. When you're referring to $150 per square foot, you don't mean $150 per square foot for the entire home? For example, if the home is 1650 square feet, that would equal $247,500 of rehab which seems way off. You can easily get a full condo rehab in Miami, FL for $18 to $20 per square foot.

With your numbers, you're basically saying you would pay $525,000 to rehab a 3,500 squar foot place, which makes no sense at all.
As others have said the cost per square foot will vary depending on a few things... asset type, total square footage, state/city, and also the level of rehab you're aiming for. When i'm underwriting a fix and flip deal I typically use $50 per square foot as a rule of thumb, leaving room for that number to go up or down depending on the factors.

Just curious...did you mean $150 SF ? If you can do any type of rehab for $50 SF, then I have a lot of work for you.....

0 Reply

Kelvin Branson

Investor · Bay Area, CA · Member since 2022 · 9 posts · 3 votes

4y

Its going to vary widely on depth of rehab. If its a ground up tear down, it'll be significantly more expensive than a cosmetic rehab simply due to time and labor costs alone. I am curious however what the general average is across the board as a baseline for rehab estimation purposes...

0 Reply

Sarah HattonPro Member

Lender · San Diego · Member since 2021 · 80 posts · 56 votes

4y

Quote from @Bruce Woodruff:

Quote from @Sarah Hatton:

As others have said the cost per square foot will vary depending on a few things... asset type, total square footage, state/city, and also the level of rehab you're aiming for. When i'm underwriting a fix and flip deal I typically use $50 per square foot as a rule of thumb, leaving room for that number to go up or down depending on the factors.

Just curious...did you mean $150 SF ? If you can do any type of rehab for $50 SF, then I have a lot of work for you.....

Hey Bruce!

Certainly not in California (where i'm from), ha. I don't imagine you would get pricing like that in AZ either...However we have a lot of business in other states, Ohio, Virginia, Illinois, (to name a few) where cost of rehab on a basic cosmetic fix and flip is much cheaper. We just finished financing a flip in IL and the rehab was $65k on a 2,000 sq. ft. home.

1 Reply

Bruce WoodruffPro Member

Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes

4y

Quote from @Sarah Hatton:

Quote from @Bruce Woodruff:

Quote from @Sarah Hatton:

As others have said the cost per square foot will vary depending on a few things... asset type, total square footage, state/city, and also the level of rehab you're aiming for. When i'm underwriting a fix and flip deal I typically use $50 per square foot as a rule of thumb, leaving room for that number to go up or down depending on the factors.

Just curious...did you mean $150 SF ? If you can do any type of rehab for $50 SF, then I have a lot of work for you.....

Hey Bruce!

Certainly not in California (where i'm from), ha. I don't imagine you would get pricing like that in AZ either...However we have a lot of business in other states, Ohio, Virginia, Illinois, (to name a few) where cost of rehab on a basic cosmetic fix and flip is much cheaper. We just finished financing a flip in IL and the rehab was $65k on a 2,000 sq. ft. home.

Wow, ok....I have done homes for myself, providing all labor, and materials at cost, and I still never got that low.

(I'm originally from SD so I know how high prices are there, and not much lower now that I've moved to AZ, big building boom going on here....)

0 Reply

George SkidisPro Member

Rental Property Investor · Belleville, IL · Member since 2017 · 875 posts · 529 votes

4y

The cost depends on several factors. location: California or New York versus the Midwest is a huge difference. Current local market: This may justify more expenses or restrict how much you should spend. What needs done: Is it a total gut rehab down to the studs? Or is it getting a makeover? Question is too general and open ended for a serious response.

0 Reply

Bruce WoodruffPro Member

Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes

4y

Quote from @George Skidis:

The cost depends on several factors. location: California or New York versus the Midwest is a huge difference. Current local market: This may justify more expenses or restrict how much you should spend. What needs done: Is it a total gut rehab down to the studs? Or is it getting a makeover? Question is too general and open ended for a serious response.

Exactly....

0 Reply

Kurt Brauner

Real Estate Broker · Las Vegas, NV · Member since 2017 · 70 posts · 65 votes

4y

In Vegas, we are averaging about $27-30 a foot for a cosmetic rehab including RTA kitchen and vanities.

3 Reply

Jed De Los Santos

Montclair, NJ · Member since 2018 · 4 posts · 6 votes

4y

Good post Alicia. Interested what the avg per sqft to rehab in NJ but this is a good reference!

1 Reply

Nathan GesnerBusiness Member

Moderator

Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes

4y

This question is too general to be of use. Is it a full renovation (paint, flooring, cabinets, fixtures), or is it minor? Is it an A-class property, or a C-class? And are the DIY folks including the costs of their labor or are they only counting cost of materials? Are they using market rates for their labor, or are they only counting $20 an hour when a professional would charge $45?

So many questions!

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1 Reply

Melissa McGinnis

Rental Property Investor · Knoxville, TN · Member since 2018 · 24 posts · 28 votes

4y

I just finished up a complete renovation and it came in around $45 per square foot. I'd categorize it as a B flip. Full gut, total rewire and replumb, refinish hardwoods, completely new and relocated kitchen with nicer than average cabinets, appliances and tile and addition of 3rd bedroom and utility room(using existing space). New roof, gutters, fascia, some drywall and exterior/interior paint. I kept existing bathrooms and replaced all fixtures with higher end. There was some light demo and re-do due to previous owner beginning demo. I did a lot of smaller work myself and didn't fully gut bathrooms, so I'm sure that saved me a ton. It turned out really nice and went under contract in 8 hours.

0 Reply

Bruce WoodruffPro Member

Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes

4y

Quote from @Melissa McGinnis:

I just finished up a complete renovation and it came in around $45 per square foot. I'd categorize it as a B flip. Full gut, total rewire and replumb, refinish hardwoods, completely new and relocated kitchen with nicer than average cabinets, appliances and tile and addition of 3rd bedroom and utility room(using existing space). New roof, gutters, fascia, some drywall and exterior/interior paint. I kept existing bathrooms and replaced all fixtures with higher end. There was some light demo and re-do due to previous owner beginning demo. I did a lot of smaller work myself and didn't fully gut bathrooms, so I'm sure that saved me a ton. It turned out really nice and went under contract in 8 hours.

You say you did the smaller work yourself. How did you value that time -by the hour or by project?

0 Reply

Melissa McGinnis

Rental Property Investor · Knoxville, TN · Member since 2018 · 24 posts · 28 votes

4y

Quote from @Bruce Woodruff:

Quote from @Melissa McGinnis:

I just finished up a complete renovation and it came in around $45 per square foot. I'd categorize it as a B flip. Full gut, total rewire and replumb, refinish hardwoods, completely new and relocated kitchen with nicer than average cabinets, appliances and tile and addition of 3rd bedroom and utility room(using existing space). New roof, gutters, fascia, some drywall and exterior/interior paint. I kept existing bathrooms and replaced all fixtures with higher end. There was some light demo and re-do due to previous owner beginning demo. I did a lot of smaller work myself and didn't fully gut bathrooms, so I'm sure that saved me a ton. It turned out really nice and went under contract in 8 hours.

You say you did the smaller work yourself. How did you value that time -by the hour or by project?

0 Reply

Melissa McGinnis

Rental Property Investor · Knoxville, TN · Member since 2018 · 24 posts · 28 votes

4y

I paid myself $25 an hour, which is what my handyman charges(I know that's cheap). When getting more professional help, it came out to about $40 an hour

0 Reply

Luka Milicevic

Real Estate Agent · Nashville, TN · Member since 2015 · 2k+ posts · 2k+ votes

4y

This is so dependent on the type of rehab and the scope of work.

The last rehab I did that was near 100% cosmetic came out to $36/ft. Medium grade finishes and I was able to refinish the cabinets. Only non cosmetic item was the water heater replacement and tune up for the A/C. Both relatively small items.

Another rehab I completed for $64/ft. Higher end finishes. About 80% cosmetic.

It all depends on the scope of work and the level of finishes you are using.

What I have learned is if you take two houses that are in the exact same condition. If one house is 1500 sft and the other is 3000 sft. The reno cost per sft on the 3000sft home is going to be 3x higher. A larger home, typically means better neighborhood, higher end finishes. Higher ceilings (more paint, more drywall, longer gutters).

1 Reply

Caroline Gerardo

Lender · Washington DC · Member since 2015 · 2k+ posts · 2k+ votes

4y

I cannot check a box. Cost depends on location and goals. Low cost housing construction should be $130 but luxury can be $400

0 Reply

QOTW: what’s the average cost per sqft to rehab?

QOTW: what’s the average cost per sqft to rehab?

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