Rehab Cost Estimate

[Jacob Phillips]

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.

[Eliott Elias]

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.

[Bob Stevens]

Quote from @Jacob Phillips:

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 

[Andy Sabisch]

The good thing is that you are in the area and can walk the properties but the bad thing is without experience, teh walk through will simply be a tour and not tell you what you need to know to see if the numbers work.  

There are several REIGs in the Detroit / Flint area (we lived there for several years and did projects in select areas.  I would join a few and see if there is someone that can walk the property and show you how to estimate repairs if you can't get a GC to do it.  All too often here people complain about GCs not being willing to do walk throughs and give estimates but remember, they are in it to make a living and doing estimate after estimate only to find out you missed on the deal and they got no work will come to an end quickly.  You need to be able to walk it through , get a ballpark number and use a GC to lock it down if you think the deal will work .  Asking for freebies on a hope to get the property will not work.  You might try offering to pay a GC for an hour or two of their time and get some things to look for (big ticket items) and the costs to use as a local gauge.  Then if you think it will work and you get a contract, get the GC to look at it within the inspection period you set forth.  

Good luck . . . just watch the areas you are looking as there are some great deals a few blocks from some really bad deals.

[Vadim F.]

Quote from @Jacob Phillips:

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.

[Kevin Sobilo]

@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. 

[Vadim F.]

Quote from @Kevin Sobilo:

@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. 

This is assuming the OP has done that in the past. 

[Jose Jacob]

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

[Kevin Sobilo]

Quote from @Vadim F.:

Quote from @Kevin Sobilo:

@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. 

This is assuming the OP has done that in the past. 

NOPE! NOT AT ALL! This is SPECIFICALLY to compensate for a LACK OF KNOWLEDGE AND EXPERIENCE! No matter what your experience if you are honest with yourself about your level of confidence then this will give you workable estimates.

You can look up the price of a new gas boiler and see its $2500, realize that there will be other parts needed plus labor come up with an estimate of $6k then since you have never done a replacement like this assign a conservative confidence of 75% allowing for some variance.

My example, used some knowledge as a basis for the estimate but most people can come up with an estimate on their own that is within 10-40% of the actual and as long as they are honest about their confidence it will work out ok.

Keep in mind these are estimates! They don't need to be precise! With any project of size, it can be managed by adjusting the scope of the project or the time it takes to complete and bring the costs more in line as long as you start with something reasonable.

[Ronald Ty]

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.

[John Gardner]

Quote from @Kevin Sobilo:

@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.