Rehab Cost Estimate
Real Estate Agent · Oakland/ Gennesse County, MI · Member since 2023 · 8 posts · 3 votes
Hi everyone! I currently have 2 rentals in Flint, MI and I'm ready to start flipping/ BRRR as another pillar to my portfolio. When analyzing deals, how do you calculate for repair cost without having to get bids? I know the cost isn't going to be exact but just looking for a range.
@Jacob Phillips, I don't agree with any of the above responders. You CAN estimate yourself without quotes from contractors IF you can identify the work you want/need to do.
The basic premise for how I estimate is to create a spreadsheet listing all the work items at a fairly high level and then I give my best estimate. Sounds simple and it is! However, the next part is KEY. Next you need to gauge how sure you are of your estimate. So, you need to know yourself, but who knows yourself better than YOU!
You assign a confidence value to each work item and use that to calculate a LOW and HIGH value.
For example: You need to replace a roof that is 12 square in size. You estimate $7,000 because because 3 years ago you replaced a similar sized roof and you know costs have gone up. So, you feel 80% sure of your estimate.
With an 80% confidence value your LOW value will be 20% below and HIGH value 20% above your estimate aka $5,600 and $8400 respectively.
When you are done and you total your Estimate, Low, and High Values up you have 3 estimates! If you are happy with your "Estimate" and still OK with the "High" estimate then its probably a good deal because likely everything won't go to a worst case scenario and also if you apply project management principles you can adjust the time or scope of work to try to compensate for many unexpected things that could come up.
So, your Estimate is the goal and High estimate is the worst case scenario knowing that with good project management you will probably end up between those numbers and with good project management hopefully closer to the estimate number.
In addition, if your High number is too high, you can go back and look at items where your confidence value is low and research those items more or get an estimate if needed to bring the confidence value UP thereby working to get that High estimate nailed down more and potentially bring it to where it looks like a good deal. So, you can see where you need to put effort into your estimate as well.
The only way you can estimate rehab costs without getting bids is with experience. If you have no experience, you’re going to need to get bids.
Hi everyone! I currently have 2 rentals in Flint, MI and I'm ready to start flipping/ BRRR as another pillar to my portfolio. When analyzing deals, how do you calculate for repair cost without having to get bids? I know the cost isn't going to be exact but just looking for a range.
You need to have your GC walk it, If you are doing this without a team in place, bad idea, it will not end well. I have done 100s and 100s of deals in the Cleveland markets while living out of state. TEAM is the key Now I can do a live walk through and get a very good idea, as I have done 1ks of renovations/ repairs. So I know the costs. But I still have my team walk it.
Good luck
Hi everyone! I currently have 2 rentals in Flint, MI and I'm ready to start flipping/ BRRR as another pillar to my portfolio. When analyzing deals, how do you calculate for repair cost without having to get bids? I know the cost isn't going to be exact but just looking for a range.
Get as many GCs in and have them give you quotes. You have no other way of doing it since you don't know the cost of labor or cost of materials or have any experience. No one can tell you simply by saying your remodel will cost you $50/sq ft for example and if they do, they don't know what they are talking about unfortunately.
@Jacob Phillips, I don't agree with any of the above responders. You CAN estimate yourself without quotes from contractors IF you can identify the work you want/need to do.
The basic premise for how I estimate is to create a spreadsheet listing all the work items at a fairly high level and then I give my best estimate. Sounds simple and it is! However, the next part is KEY. Next you need to gauge how sure you are of your estimate. So, you need to know yourself, but who knows yourself better than YOU!
You assign a confidence value to each work item and use that to calculate a LOW and HIGH value.
For example: You need to replace a roof that is 12 square in size. You estimate $7,000 because because 3 years ago you replaced a similar sized roof and you know costs have gone up. So, you feel 80% sure of your estimate.
With an 80% confidence value your LOW value will be 20% below and HIGH value 20% above your estimate aka $5,600 and $8400 respectively.
When you are done and you total your Estimate, Low, and High Values up you have 3 estimates! If you are happy with your "Estimate" and still OK with the "High" estimate then its probably a good deal because likely everything won't go to a worst case scenario and also if you apply project management principles you can adjust the time or scope of work to try to compensate for many unexpected things that could come up.
So, your Estimate is the goal and High estimate is the worst case scenario knowing that with good project management you will probably end up between those numbers and with good project management hopefully closer to the estimate number.
In addition, if your High number is too high, you can go back and look at items where your confidence value is low and research those items more or get an estimate if needed to bring the confidence value UP thereby working to get that High estimate nailed down more and potentially bring it to where it looks like a good deal. So, you can see where you need to put effort into your estimate as well.
@Jacob Phillips, I don't agree with any of the above responders. You CAN estimate yourself without quotes from contractors IF you can identify the work you want/need to do.
The basic premise for how I estimate is to create a spreadsheet listing all the work items at a fairly high level and then I give my best estimate. Sounds simple and it is! However, the next part is KEY. Next you need to gauge how sure you are of your estimate. So, you need to know yourself, but who knows yourself better than YOU!
You assign a confidence value to each work item and use that to calculate a LOW and HIGH value.
For example: You need to replace a roof that is 12 square in size. You estimate $7,000 because because 3 years ago you replaced a similar sized roof and you know costs have gone up. So, you feel 80% sure of your estimate.
With an 80% confidence value your LOW value will be 20% below and HIGH value 20% above your estimate aka $5,600 and $8400 respectively.
When you are done and you total your Estimate, Low, and High Values up you have 3 estimates! If you are happy with your "Estimate" and still OK with the "High" estimate then its probably a good deal because likely everything won't go to a worst case scenario and also if you apply project management principles you can adjust the time or scope of work to try to compensate for many unexpected things that could come up.
So, your Estimate is the goal and High estimate is the worst case scenario knowing that with good project management you will probably end up between those numbers and with good project management hopefully closer to the estimate number.
In addition, if your High number is too high, you can go back and look at items where your confidence value is low and research those items more or get an estimate if needed to bring the confidence value UP thereby working to get that High estimate nailed down more and potentially bring it to where it looks like a good deal. So, you can see where you need to put effort into your estimate as well.
Experience is the best teacher. I went with a contractor to buy materials for the first three to four properties I flipped in the beginning. No I can walk into a property and get an estimate pretty quick. May areas you can save money by doing just painting, But there are some online tools there to help you to get an average. You can just type the square footage of the bathroom and get an estimate for reno. I will call couple of GC and get three estimate in your case rather than going through all these hassle. Its easy to loose money on a fix&Flip if you don't estimate the Reno cost properly. BRRRR is an entirely different case.
Good Luck
@Jacob Phillips, I don't agree with any of the above responders. You CAN estimate yourself without quotes from contractors IF you can identify the work you want/need to do.
The basic premise for how I estimate is to create a spreadsheet listing all the work items at a fairly high level and then I give my best estimate. Sounds simple and it is! However, the next part is KEY. Next you need to gauge how sure you are of your estimate. So, you need to know yourself, but who knows yourself better than YOU!
You assign a confidence value to each work item and use that to calculate a LOW and HIGH value.
For example: You need to replace a roof that is 12 square in size. You estimate $7,000 because because 3 years ago you replaced a similar sized roof and you know costs have gone up. So, you feel 80% sure of your estimate.
With an 80% confidence value your LOW value will be 20% below and HIGH value 20% above your estimate aka $5,600 and $8400 respectively.
When you are done and you total your Estimate, Low, and High Values up you have 3 estimates! If you are happy with your "Estimate" and still OK with the "High" estimate then its probably a good deal because likely everything won't go to a worst case scenario and also if you apply project management principles you can adjust the time or scope of work to try to compensate for many unexpected things that could come up.
So, your Estimate is the goal and High estimate is the worst case scenario knowing that with good project management you will probably end up between those numbers and with good project management hopefully closer to the estimate number.
In addition, if your High number is too high, you can go back and look at items where your confidence value is low and research those items more or get an estimate if needed to bring the confidence value UP thereby working to get that High estimate nailed down more and potentially bring it to where it looks like a good deal. So, you can see where you need to put effort into your estimate as well.
Start an excel sheet. Put on one side material and other header as labor. You can figure out the material on your own by going to Home depot. Just measure the spaces (ie bathroom floor and tub wall need to be tiled). Google materials used for tile. Keep plugging in stuff.
then, you can go to your contractor and tell him you want a price for labor only. This will simplify things for you.
Good luck.
@Jacob Phillips, I don't agree with any of the above responders. You CAN estimate yourself without quotes from contractors IF you can identify the work you want/need to do.
The basic premise for how I estimate is to create a spreadsheet listing all the work items at a fairly high level and then I give my best estimate. Sounds simple and it is! However, the next part is KEY. Next you need to gauge how sure you are of your estimate. So, you need to know yourself, but who knows yourself better than YOU!
You assign a confidence value to each work item and use that to calculate a LOW and HIGH value.
For example: You need to replace a roof that is 12 square in size. You estimate $7,000 because because 3 years ago you replaced a similar sized roof and you know costs have gone up. So, you feel 80% sure of your estimate.
With an 80% confidence value your LOW value will be 20% below and HIGH value 20% above your estimate aka $5,600 and $8400 respectively.
When you are done and you total your Estimate, Low, and High Values up you have 3 estimates! If you are happy with your "Estimate" and still OK with the "High" estimate then its probably a good deal because likely everything won't go to a worst case scenario and also if you apply project management principles you can adjust the time or scope of work to try to compensate for many unexpected things that could come up.
So, your Estimate is the goal and High estimate is the worst case scenario knowing that with good project management you will probably end up between those numbers and with good project management hopefully closer to the estimate number.
In addition, if your High number is too high, you can go back and look at items where your confidence value is low and research those items more or get an estimate if needed to bring the confidence value UP thereby working to get that High estimate nailed down more and potentially bring it to where it looks like a good deal. So, you can see where you need to put effort into your estimate as well.
I agree. I think you can waste a lot of time and money engaging GC's especially on these kind of deals. Flint/Detroit/Saginaw is some of the least expensive housing in the nation. Be careful not to eat up your profit margin by over spending on your flip. If you can highlight the 7-8 major projects, then you could probably call the contractor's yourself and get a ballpark answer from them. Contractor's prefer working with owners to GC's on small projects like this anyways.