How To Determine Rehab Cost

Question

Happy Friday BP!

I could use some guidance. I feel like I see a lot of distressed properties that I want to flip/ I think I just have hard time determining construction cost for two different reasons. The first one being I am not sur of what common things to inquire about the property construction wise. The second thing is actually figuring out how much each repair costs. I do plan on working with contractors I would still like to have a general idea of then interworking's. Any advice would be great. Thanks!

William Harvey · Answer

@Shaniqua Knight Take a look at the articles in my signature. The most recent one goes into detail about how to estimate rehab costs. Hope it helps!

Eliott Elias · Answer

Why are you having a hard time? How much time have you spent studying what it takes to analyze a construction rehab.

Shaniqua Knight · Answer

This is a great idea thank you! I have no problem paying for a walkthrough just so I can see while they explain things.

Scott E. · Answer

Great question Shaniqua. This is a really hard thing to determine when you're new.

What you need to do is walk a couple of properties with a general contractor. Just 2-3 properties total and you will have a really good idea of what needs fixed up and how much things cost.

You need to be respectful of these contractors time, but a good contractor will be willing to walk a few deals with you if they know that they will be getting your business for years to come. Be willing to pay them for their time if needed.

For reference, where I'm at it costs somewhere around $150,000 to do a gut renovation on an old 1,700 square foot 1950s ranch style block home. This assumes new cosmetic finishes throughout, new landscaping, moving a wall or two, and a couple bigger ticket items like HVAC, panel, roof, sewer, etc.

Michael Mannino II · Answer

Hi Shaniqua! You'll want to know on average how much $ per sq ft the house is going to cost to rehab for the cosmetic repairs (kitchens, bathrooms, paint, floor, etc. +labor), we estimate about $35/sq ft, however this can vary depending on your supplies and crew. You'll then also want to have an idea on cost for bigger things like roof, windows, foundation issues, electrical, mechanical, plumbing (well/septic?), etc. If you get a good system in place for yourself and your contractors from the start, this becomes a very quick process and you will be able to scale your flipping business much more easily. DM me if you'd like, I'd love to chat more about how we do this in our business!

Jose Jacob · Answer

Your best bet is to bring some contractors (if you have good network) and get estimates.  It will take three to four renovations for you to determine the repair cost in a nutshell. Its a very tricky area.  You may find some unexpected expenses when you open up the walls.  My suggestion is to partner up with an other flipper in your area and learn before you do it yourself. Fix and flip sounds very sexy in paper and in words but it not that easy. But you can do it with partnering with others.  Good Luck

Shaniqua Knight · Answer

I am having a hard time determining how to know if items actually need to be repaired. I have studied quite a bit I think just the construction portion I have a had time grasping.

How To Determine Rehab Cost

Most Popular Reply