Estimating Rehab Costs

Rehabbing & House Flipping
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Estimating Rehab Costs

Sara Malka
Member since 2020 · 23 posts · 4 votes

Hello frinds.. im a foregin investor, looking for my first one in the Orlando/Tampa areas..

I want the groups wisdom on what will be best way to figur out my rehabe costs, when analyzig a deal.. (befor a contractor is being involed)

Do you have any app/web/softwer you recomend, or any other tip for quick estimation?

Does prices differ dramaticlly between states?

Thank you

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J ScottPro Member
Moderator
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
3y
Quote from @Sara Malka:
Quote from @J Scott:

Start here:  https://store.biggerpockets.co...


 Thanks J.. i have read your book, "By the num." and it's been realy usfull.. 

Question about the rehab book (couldnt understand from the previwe): does it includes kind of check list with prices on items?


 The estimating rehab book will not give you exact numbers for each piece of the renovation. Nothing can, simply because every area is going to be different, every contractor is going to be different, pricing changes seasonally, material prices change monthly, there are different levels of contractors and quality, there are different levels of material and quality, etc.

What the estimating book will give you:

* A step-by-step methodology to learning how to walk a property and assess its condition and the repairs that are needed.

* A step-by-step methodology to creating a scope of work for the renovation.

* A step-by-step methodology for how to inspect various systems of the property to determine what is working and what is not.

* A set of templates for the line items that will end up on your scope of work.

* A ballpark range of pricing for each of those line items. Though keep in mind that this edition of the book was written just before COVID, and much of those price ranges are on the low end these days thanks to inflation and supply side constraints.

* Tips for getting each of the line items on the scope of work priced out, both from a labor and materials perspective.

Basically, the book will teach you how to estimate a rehab. But it won't do the work for you. Unfortunately, nothing can.

Podcast Guest on Show The Truth About Real Estate Investing in 2024 (What Investors NEED to Know)
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  • Justin Hammerle
    Realtor · Providence, RI · Member since 2022 · 404 posts · 262 votes
    3y

    labor costs vary by region; for example the southeast is going to be much less expensive than the northeast; material costs are less variable and more consistent through the country.

    0Reply
  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
    3y

    Start here:  https://store.biggerpockets.co...

    Podcast Guest on Show The Truth About Real Estate Investing in 2024 (What Investors NEED to Know)
    1Reply
  • Steven Foster Wilson
    Rental Property Investor · Columbus, OH · Member since 2017 · 3k+ posts · 3k+ votes
    3y
    Quote from @Sara Malka:

    Hello frinds.. im a foregin investor, looking for my first one in the Orlando/Tampa areas..

    I want the groups wisdom on what will be best way to figur out my rehabe costs, when analyzig a deal.. (befor a contractor is being involed)

    Do you have any app/web/softwer you recomend, or any other tip for quick estimation?

    Does prices differ dramaticlly between states?

    Thank you


     If I were you I would reach out to contractors and investors and ask for their before/after pictures, initial quote/end price, time frame, and material costs. The more you hear back from them the better idea you will have. 

    1Reply
  • Doug Smith
    Lender · Tampa, FL · Member since 2013 · 2k+ posts · 2k+ votes
    3y

    Not only do we finance tons of flips, but we've personally rehabbed scores of properties. I've yet to see a substitute for an experienced rehabber/contractor going through the property and carefully considering what actually needs to be done. I would be very apprehensive to trust a software without having a pro you trust giving you numbers. 

    3Reply
  • Sojourner Drye
    Wholesaler · NY · Member since 2023 · 19 posts · 3 votes
    3y

    You can find 3-6 comparable properties (nearby) sold no more than 90 days prior.

    70% of After Repair Value - Repair cost = max offer price 

    Livable - $25x sqft 

    Not livable - $40xsqft 

    The above formula is usually how I calculate rehab costs and after repair values! If there are any other techniques PLEASE!!! let me know 

    0Reply
  • Alon A.
    Investor · Member since 2023 · 135 posts · 47 votes
    3y
    Quote from @Sojourner Drye:

    You can find 3-6 comparable properties (nearby) sold no more than 90 days prior.

    70% of After Repair Value - Repair cost = max offer price 

    Livable - $25x sqft 

    Not livable - $40xsqft 

    The above formula is usually how I calculate rehab costs and after repair values! If there are any other techniques PLEASE!!! let me know 


     Can you explain this again i have hard time to understand

    let say I see comps of 150K in area, how do i calculate what is remodel price i need for my property 

    0Reply
  • Eliott Elias
    Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes
    3y

    There is no way this can be estimated and automated, you have to have walked at least 100 properties to understand what things cost. Right now I look at electric service for every property to see if it needs to be upgraded, something I didn't consider my first 5 properties. 

    3Reply
  • Sara Malka
    OP
    Member since 2020 · 23 posts · 4 votes
    3y

    Thank you all.. i appreciate your advise, and ofcourse nothing can replace a profesional contractor estimation. and yet, i need a tool that can give me a range of this costs, especialy when need to move fast with my offers

    Did any one tryed to use the BP Rehab Estimator, or the Rehab Estimator Pro?

    0Reply
  • Sara Malka
    OP
    Member since 2020 · 23 posts · 4 votes
    3y
    Quote from @J Scott:

    Start here:  https://store.biggerpockets.co...


     Thanks J.. i have read your book, "By the num." and it's been realy usfull.. 

    Question about the rehab book (couldnt understand from the previwe): does it includes kind of check list with prices on items?

    0Reply
  • Drew SygitBusiness Member
    Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
    3y

    Try HomeAdvisor. Part of their site will give you estimated based on zip code.

    [email protected]248-209-6824
    Logical Property Management4.9458 Reviews
    WebsiteView Page
    1Reply
  • William Harvey
    Investor · Ashburn, VA · Member since 2020 · 140 posts · 145 votes
    3y

    @Sara Malka check out link in my signature for some helpful articles, including estimating rehab costs. My partner @Dan White has a remodeling background and wrote a very in-depth article on this and how to approach it. We've flipped 14 homes in the last few years in a competitive market, so we are writing from an investor's standpoint.  

    Also, I'd highly recommend not using the 70% rule as it is inaccurate and will lead to your offers not being competitive. I'd take the time to learn how to evaluate a potential rehab and you'll be in a way better position than most wholesalers and flippers who use this lazy approach. Best of luck!

    2Reply
  • Sara Malka
    OP
    Member since 2020 · 23 posts · 4 votes
    3y
    Quote from @William Harvey:

    @Sara Malka check out link in my signature for some helpful articles, including estimating rehab costs. My partner @Dan White has a remodeling background and wrote a very in-depth article on this and how to approach it. We've flipped 14 homes in the last few years in a competitive market, so we are writing from an investor's standpoint.  

    Also, I'd highly recommend not using the 70% rule as it is inaccurate and will lead to your offers not being competitive. I'd take the time to learn how to evaluate a potential rehab and you'll be in a way better position than most wholesalers and flippers who use this lazy approach. Best of luck!


    Thanks William

    0Reply
  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
    3y
    Quote from @Sara Malka:
    Quote from @J Scott:

    Start here:  https://store.biggerpockets.co...


     Thanks J.. i have read your book, "By the num." and it's been realy usfull.. 

    Question about the rehab book (couldnt understand from the previwe): does it includes kind of check list with prices on items?


     The estimating rehab book will not give you exact numbers for each piece of the renovation. Nothing can, simply because every area is going to be different, every contractor is going to be different, pricing changes seasonally, material prices change monthly, there are different levels of contractors and quality, there are different levels of material and quality, etc.

    What the estimating book will give you:

    * A step-by-step methodology to learning how to walk a property and assess its condition and the repairs that are needed.

    * A step-by-step methodology to creating a scope of work for the renovation.

    * A step-by-step methodology for how to inspect various systems of the property to determine what is working and what is not.

    * A set of templates for the line items that will end up on your scope of work.

    * A ballpark range of pricing for each of those line items. Though keep in mind that this edition of the book was written just before COVID, and much of those price ranges are on the low end these days thanks to inflation and supply side constraints.

    * Tips for getting each of the line items on the scope of work priced out, both from a labor and materials perspective.

    Basically, the book will teach you how to estimate a rehab. But it won't do the work for you. Unfortunately, nothing can.

    Podcast Guest on Show The Truth About Real Estate Investing in 2024 (What Investors NEED to Know)
    3Reply
  • Sara Malka
    OP
    Member since 2020 · 23 posts · 4 votes
    3y

    Thanks, its sound great!!

    0Reply
  • Matthew Irish-JonesBusiness Member
    Real Estate Agent · Buffalo, NY · Member since 2017 · 2k+ posts · 2k+ votes
    3y

    @Sara Malka you need a Realtor who can get you close on a walk through.

    We use Sq ft comps that we pull from our construction division. Our reports get our clients close enough to know if we want to try and get the property under contract.

    Basically our agents can provide a soft quote after a detailed walk through.

    Irish Jones Realty4.947 Reviews
    View Page
    0Reply
  • Sara Malka
    OP
    Member since 2020 · 23 posts · 4 votes
    3y

    Its all about the right pepole! Thanks for the insight

    0Reply
  • Carlos Ptriawan
    Member since 2019 · 7k+ posts · 4k+ votes
    3y
    Quote from @Sara Malka:

    Hello frinds.. im a foregin investor, looking for my first one in the Orlando/Tampa areas..

    I want the groups wisdom on what will be best way to figur out my rehabe costs, when analyzig a deal.. (befor a contractor is being involed)

    Do you have any app/web/softwer you recomend, or any other tip for quick estimation?

    Does prices differ dramaticlly between states?

    Thank you


     start by reading property inspection, and run general quotes on how much is to fix things.

    Have a habit of reading property inspection daily. I read report almost daily and know how much to fix before even visiting the property.

    0Reply
  • Sara Malka
    OP
    Member since 2020 · 23 posts · 4 votes
    3y

    Good idea! Thanks

    0Reply
  • Richard F.
    Honolulu, HI · Member since 2008 · 3k+ posts · 2k+ votes
    3y
    Aloha,

    I used to utilize these estimating manuals with very good results:
    https://hometechonline.com/

    Of course, you need to be quite familiar with construction terms and systems in order to put the info to good use.
    0Reply
  • Nate Marshall
    Real Estate Consultant · Evergreen, CO · Member since 2018 · 1k+ posts · 735 votes
    3y

    I do have a form fillable scope of work spreadsheet I use. There is a draw schedule form that accompanies it. I provide it to my students and members. 

    0Reply
  • Michael Mannino II
    Michigan / South Carolina · Member since 2021 · 53 posts · 32 votes
    3y

    Hey Sara! I've actually built my own spreadsheet that shows a breakdown for our contractors by each task what we will pay for it including labor and cost of materials, everything down to change a light fixture, flooring per sq ft, etc. That way instead of asking for bids and getting multiple different prices, I have a set amount we've agreed on and it's the same for every flip. It motivates them to work faster too, because whether they take a day or an hour to change a light switch, they make the same amount of money. I'd love to chat with you more about it if you want to send me a DM!

    0Reply
  • Mario Morales
    Member since 2020 · 239 posts · 104 votes
    3y

    @J Scott 100% that book really helps a lot!

    1Reply
  • Sara Malka
    OP
    Member since 2020 · 23 posts · 4 votes
    3y
    Quote from @William Harvey:

    @Sara Malka check out link in my signature for some helpful articles, including estimating rehab costs. My partner @Dan White has a remodeling background and wrote a very in-depth article on this and how to approach it. We've flipped 14 homes in the last few years in a competitive market, so we are writing from an investor's standpoint.  

    Also, I'd highly recommend not using the 70% rule as it is inaccurate and will lead to your offers not being competitive. I'd take the time to learn how to evaluate a potential rehab and you'll be in a way better position than most wholesalers and flippers who use this lazy approach. Best of luck!


    What a great resource! thanks @William Harvey @Dan White



    1Reply
  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    3y
    Quote from @Doug Smith:

    I've yet to see a substitute for an experienced rehabber/contractor going through the property and carefully considering what actually needs to be done. I would be very apprehensive to trust a software without having a pro you trust giving you numbers. 

    Bingo. Your software could be (probably will be) off by tens of thousands. Do you have that kind of room in your deal. Of course not.

    So get a real person (GC) who has done this a bunch to give you real numbers....
    1Reply
  • James Hamling
    Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
    3y
    Quote from @Sara Malka:

    Thank you all.. i appreciate your advise, and ofcourse nothing can replace a profesional contractor estimation. and yet, i need a tool that can give me a range of this costs, especialy when need to move fast with my offers


     It does not exist, not with any accuracy that is. 

    You need a GC Partner, that is very literally the only way. With time you can build you own personal estimation tool based of experienced costs. 

    Thing is there is not a singular universal price per item/scope. It's like saying how much to get an automobile painted, well what kind of automobile, what finish level, what prep work, it will vary case by case and shop by shop. 

    If you looking for a way to do things hands off from a million miles away virtually, it's via GC partnership, that's it. OR get ready to accept a lot of variance from projected and realized, it will simply never be accurate. 

    0Reply
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