how do I estimate rehab costs? newbie house flipper

Question

Can someone tell me if I'm on the right path?

From what i understand,

I find a house that looks pretty dumpy, I pull 3 comps to figure out what would be the after repair value

I do a walk through of the house develop my scope of work (floors need to be replaced, countertops, paint) etc.

I would replace like floors with like floors from comps (i.e. if comp house has vinyl floors, i replace with vinyl floors, if they have marble countertop, i replace with same)

Here's where I get stuck: at this point do I take my scope of work and get quotes from a contractor or sub contractor?

Also, would I get a house inspector before buying? do most house flippers get a house inspection done? why would or why would i not?

if so, when would that happen? after i make an offer and before closing?

Thank you for the support bigger pockets

Ben Fernandez · Answer

It's not a typical real estate transaction.

Typically, the investor is also the inspector.

If you don't have an eye to identify 95% of what you'll encounter, you're not ready to walk properties alone and you'll need a contractor-partner to help you assess repair estimates.

However, most of your competition isn't going to have a need for a second opinion on repair costs. This can cause you to lose credibility and deals. Too many steps/contingencies/uncertainty. While the next guy is providing an offer with no contingencies - ready to go.

A general inspection may help you, but it's generally code compliancy, safety call-outs and higher level repair call-outs you should have already accounted for. For example, an old roof that needs repair/replacement or and old furnace that near its life end.

All else you mentioned is on track regarding proper assessments.

Just remember, the two most important assessments are ARV and repair costs. Mistakes on either of these two can greatly affect your ability to perform successfully.

Feel free to message me if you need tools to help you assess repair costs. I've been there. Now I walk properties in 10 minutes and assess accurately.

Peter Mckernan · Answer

Most house flippers do not get an inspection done, and some even do it sight unseen. That is a lot of them, or ones that have been doing it for a long time. The sign that someone is newer or not as confident with the purchase is someone that is doing a full inspection etc. These really pertains to the off market deals, 95% of wholesalers, or off market transactions will not have any option to do an inspection. These transactions or usually for people that really do not want to have anyone in their house, know that they are selling for a lot less then other people (these people also have access to Zillow), or they just know it will take a lot of work and they want/need cash within the next 30 days or less.

The game changes if this is on market, and there is an inspection period. This gives the buyer more options to back out, or renegotiate the price (the off market sellers do not want this to happen that is why they sell off market and with a large discount). This is when you do all the inspections, sewer scope, termite, full inspection, and more. Ask for the world and see what you get, and if not back out and move onto the next property.

The estimating rehab is a different situation. This takes more than just getting a contractor on one property. You typically are estimating yourself, or someone you know (partner on the deal) to get you general numbers by looking at photos and then when in contract you can get a contractor in there to really dig in. Overall, you need to either work with someone that is good on estimating rehab costs when you are doing off market deals, and you will slowly get the hang of estimating yourself, or just look for on market deals.

Melissa Gambrell · Answer

You’re on the right track—you just need to tighten the sequence a bit.

Start with your ARV using solid comps. From there, walk the property and build a scope of work, but aim to match the standard of the neighborhood—not necessarily the nicest comp.

Before bringing in contractors, you should be able to ballpark your rehab cost yourself (price per sq ft based on level of rehab). That helps you quickly decide if the deal is even worth pursuing.

If the numbers look close, then bring in 1–3 contractors to validate your estimate—not to build the deal for you.

Once you have ARV and a reasonable rehab estimate, you can make your offer (many people use something like the 70% rule as a baseline).

On inspections—yes, most investors still do them, especially early on. That typically happens after your offer is accepted during the inspection period. It gives you a chance to uncover major issues, renegotiate, or walk away. Some experienced flippers skip this, but it’s smart to include it while you’re learning.

Big picture: run your numbers first, then confirm with contractors—not the other way around.

Alan F. · Answer

All specialty contractors (c series license) in California can write a "prime" contract to a residential customer. A "sub" i.e. a specialty contractor can write a contract to the prime contractor, the prime is typically a GC (B1, B2) i.e. a c-10 can write aa subcontract to a c-20.

Pursuant with B&P code 7159 ALL residential remodeling and service contractors must write a flat bid contract. This contract must include a 3 "working day" (5 for customers over 65) right of cancellation. Material specs, scope et all may be itemized BUT if line items have individual prices that are assigned, that constitutes a violation of 7159. Cost plus contracts are also a violation. The only carve out is a "service & repair contract (7159.10) which is very typical for HVAC, plumbing & electrical "emergency repairs" When we do these same day repairs we're violating the right of cancelation & could be disciplined by the CSLB.

If the registrar gets paperwork reflecting theses violation I can all but guarantee the contractor will be disciplined which could result in fine, suspension or revocation of license. Perfectly written contracts are what the CSLB uses for judgments.

The CSLB defines residential properties as a location were people reside, commercial customers engage in commerce. The distinctions are very important.

Time & materials contracts for commercial contracts are legal.

The CSLB implemented theses policies to prevent residential contractors from camping out at a residential house and dragging out the work with no clear timeline for completion, vague SOW & milking the job.

A residential customer will never get in trouble for accepting a T&M contract, in fact they're now the victim of an unscrupulous contractor.

Obviously everyone is free to do as they wish, that being said any contractor engaging in such is, bluntly, a fool.

Before anyone flies off & shoots the messenger Id highly suggest you do your DD as the CSLB website. I dont make these rules, I merely abide by them. That's how ive bee able to keep the doors open.

Richard Golding · Answer

For a first pass, do not try to become a contractor overnight. Build a repeatable checklist and learn which items can kill a deal. I would walk the property by system: roof, foundation, exterior, windows, HVAC, electrical, plumbing, kitchen, baths, flooring, drywall/paint, layout changes, landscaping, permits, and cleanup.

Then separate cosmetic work from system work. Cosmetic work is easier to estimate and control. System work is where new flippers usually get hurt: old panels, cast iron sewer lines, foundation movement, roof replacement, HVAC, mold, water damage, and code issues.

For each line, use a conservative local range until you have real contractor numbers. Then add contingency. If you are new, the contingency should be higher because you do not yet know what you tend to miss.

Before offering, have a contractor or inspector walk the property if the deal is serious. But do not rely only on a contractor’s quick verbal number. Write down the scope you think is needed, compare it to their comments, and update your own estimate. After the project, compare estimated versus actual by category. That feedback loop is how your numbers improve.

The goal is not a perfect estimate. The goal is to know whether the deal still works when the repair number is realistic, not optimistic.

Richard Golding · Answer

Hey Cameron, welcome to the game. You’ve got the basic skeleton down, but as a GC operating across Los Angeles and Orange County, I see a lot of first-time flippers lose their margins in the "gap" between their walkthrough and the actual contract.

Here’s how to tighten up your process:

1. The Walkthrough: Don't just look at "Like-for-Like" Matching comps (vinyl for vinyl) is good for the ARV, but you need to look for Value Engineering. Sometimes, spending $2k more on a specific finish can bump your ARV by $15k. Conversely, don't over-improve. If the neighborhood standard is quartz, don't put in marble just because one "outlier" comp had it.

2. When to bring in the GC? You should have a "First Pass" estimate before you ever call a contractor. Use a local cost-per-square-foot benchmark to see if the deal even breathes.

• The Pro Move: Once your math says "Yes," bring in a General Contractor (not subs) to validate your Scope of Work (SOW) during your inspection contingency. A GC looks at the system integration (e.g., "If we move this wall for the open concept, the HVAC stack has to move too"). Subs will only see their specific slice, and you’ll miss the "hidden" costs.

3. The Inspection Question Most seasoned flippers act as their own "structural" inspectors, but for your first few deals: Get the inspection. * The Strategy: Do it after your offer is accepted. Use the inspection report as a renegotiation tool. If the inspector finds a cracked heat exchanger or a lateral sewer line issue, that’s a "math-based" reason to ask for a price reduction.

4. The "Math Verification" Step The biggest mistake I see is "The Plug." A contractor gives you a lump sum for a kitchen ($30k) without a breakdown. Always insist on an itemized bid. If the math doesn't sum up to the total, or if they have a vague "overhead" fee that isn't tied to a task, walk away.

I actually built a system called CostCheckGPT specifically to pressure-test bids for these kinds of errors. If you get a quote back and your gut says the numbers feel "off," feel free to reach out. I’m happy to help a local investor calibrate their numbers.

Good luck on the hunt!

Bruce Woodruff · Answer

You realize that you're going to have to pay the GC's to walk the property, right? Probably $200 or so each.....

And since you are new to this, I would do it like this:

1) Run your own SOW and from that your own estimate of Budget.

2) Figure out the rough ARV

3) Is this deal even worth considering, or is it already a bust?

4) If there is $$ room for you to make a decent profit, then at this point you would hire a GC to walk the property and see if the major systems are ok, and give you their estimate of repair budget. If there are no major surprises.....

5) NOW you would make an offer and enter into Escrow.

6) NOW do your contingencies which would include hiring a Home Inspector - Hi's and GC's do not do the same inspections nor do they have the same skillsets or training.

7) NOW redo your budget and establish a time schedule. The time schedule is as important as the budget because if you hold too long or hit the market at the wrong time, you can still have the deal go south.

8) NOW evaluate the deal again....do the numbers still work? If so.....

9) THEN release contingencies and buy the house.

Cameron Jones · Answer

Thank you melissa, this is helpful

This might be a silly question, but, In the part you said: bring in 1-3 contractors

Do I just call up a contractor and ask if they can walk a property with me for a rehab estimate?

how do I estimate rehab costs? newbie house flipper

how do I estimate rehab costs? newbie house flipper

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