Anxiety Over Rehab Costs

[Account Closed]

I’m looking for someone to help ease my thoughts… California Bay Area

I have everything ready to go for my first flip… financing, financial spreadsheets, acquisition and disposition playbook, design criteria, etc. I have title and appraisal experience, so comps, etc don’t worry me  

The one thing that is giving me heartburn is estimating rehab costs… good deals move quickly. I have no time to schedule a contractor to walk through and provide a comprehensive bid. I see investors selling for $100k-$125k above purchase with full kitchen, baths, flooring, paint, etc rehabs. I’m presuming profiting as well. I don’t see how those numbers make sense…

I’m considering paying some contractors to walk an on market house with me (that I don’t intend on buying as the numbers would never work) just to get an idea of their costs. I can then take those figures and estimate for future deals based on size, room and bathroom count, etc. 

Is this the best play here? I’m anxious to jump in and start making deals, but these rehab costs can make or break a deal. I’m fully prepared that there may be unforeseen costs, but I can’t even estimate properly for your standard cosmetic rehab… 

[Peter Mckernan]

This comes with time! This is something that will be hard to judge at first but once you start getting the hang of walking a property, and doing the flips you will be able to estimate off the top of your head when you walk into a place. I would pull up outdated properties on the market, and walk the properties with the contractor to get bids on what to do.. That would give you the base for how to start estimating rehabs. If it is not a contractor that you will be using I would pay this person for their time. I would repeat this with properties and contractors you want to use in that area to know PPSF of the flip and know the numbers through and through. This will boost your confidence