How do you estimate repair costs?

Question

Hi. I was curious how you go about estimating repair costs.

I have gotten pretty good at analyzing deals themselves and figuring out what purchase price/LTV will help optimize returns... but in such videos as Brandon Turners ( attached below video)

..

I tend to struggle to figure out where you exactly get the figures for a rough repair estimate without a contractor inspecting the property.

I understand it comes with experience, though is there any general rule you should follow?

Scott M. · Answer

Not a super helpful answer but experience.  Just like you have 'gotten pretty good' at analyzing deals, same thing will happen with rehabs.  It all comes with experience.  You were probably terrible at analyzing deals when you began but over time have gotten pretty good.

When I started I knew nothing.  Had a contractor that would go to each house, I paid him for his time and I walked the house with him and asked 100 questions in every house.  Online videos were not available then lol so had to do it old school and walk it with guys who had the knowledge.  I paid them for that knowledge and their time and over time learned.

Nathan Gesner · Answer

I agree with the other two. I'm not aware of a book of prices, particularly when there are many variables involved. Hire a contractor, ask questions, take notes, and build experience.

Jonathan Greene · Answer

I agree with @Scott M., there is no way to do it via formula or estimation, especially off-site because all you are doing is estimating cosmetic repairs. The downside of repair costs is in all the stuff you can't see online and all the stuff that novice investors miss on-site when they don't know what to look for - abandoned oil tanks, septic issues, foundation problems, asbestos, cracked sewer lines. None of these can be estimated on a screen.

Alecia Loveless · Answer

@Owen Thornton I’m fairly new at this. I’ve got 10 doors and an offer in on another property. The first thing I do when I like a property is analyze it. Then, I try to take my contractor with me when I first look at the property if the numbers work.  Together we decide if I should pursue the property or pass on it.

As I’ve done more properties I’ve gotten better at estimating costs. However as my contractor works on many other projects he has a better feel on what his subcontractors will be likely to charge. Sometimes they owe him a favor and he gets a discount that he passes on to me. He knows this ahead of time because he’s done some sort of a favor for that subcontractor.

If you can find a contractor you trust and like working with the best thing is to just pay them for their time to give you an estimate until you have a much better handle on renovations or you risk blowing your budget and having a project disaster.

Scott M. · Answer

As an aside, when I started I didn't just pay the contractor I treated him like a king to keep him interested in helping me.  I was the one asking for a favor.  I had lunch or a snack or coffee etc.  Whatever he liked I would have so it made it easier for him to stop over on a lunch hour and help me for a bit.  People spend money on classes and they won't learn 1/10th what I learned for way less then the price of a class.

How do you estimate repair costs?

Most Popular Reply