What's your process for creating a renovation plan and estimating rehab costs for your projects?
Investor · Charlotte, NC · Member since 2014 · 131 posts · 46 votes
Rehabbers/flippers, what's your process for creating a renovation plan and estimating rehab costs for your projects?
The Scope Of Work is determined based on what is needed to do to bring the house up the standard used to establish your ARV.
All items are broken down based on categories, and priced accordingly.
So we outline all major systems (plumbing, electric, hvac), roofing, siding, windows, flooring, ect. Total up all the columns, don't forget trash removal, as well as a 10% buffer on whatever the total amount is or $5k (whichever is greater)
We rehab a fair number of our own projects and I also own a construction co so pricing is a bit easier as I know what all my vendors charge and what things should cost. When starting out this may not be as easy but J-Scott wrote a great book on pricing. Also if you call in a few contractors to give itemized bids you will start to get an idea of what things cost and at least have ballparks for items like a kitchen, bathroom, a roof.
So first step is to create a very detailed scope of work, then itemize everything that needs to be done in that scope by trade or category, and tally it all up.
This becomes easier the more practice you have at it.
Here's how we do it - For larger renovations that involve floor plan changes/additions.
* Take as-is measurements of the house
* Draw as-proposed plans
* Now we can price things like framing, cladding, and mechanical installations.
* Design kitchen, bath, and trim
* List all fixtures, tile, etc.
* Now we can price the rest of the job
The Scope Of Work is determined based on what is needed to do to bring the house up the standard used to establish your ARV.
All items are broken down based on categories, and priced accordingly.
So we outline all major systems (plumbing, electric, hvac), roofing, siding, windows, flooring, ect. Total up all the columns, don't forget trash removal, as well as a 10% buffer on whatever the total amount is or $5k (whichever is greater)
We rehab a fair number of our own projects and I also own a construction co so pricing is a bit easier as I know what all my vendors charge and what things should cost. When starting out this may not be as easy but J-Scott wrote a great book on pricing. Also if you call in a few contractors to give itemized bids you will start to get an idea of what things cost and at least have ballparks for items like a kitchen, bathroom, a roof.
So first step is to create a very detailed scope of work, then itemize everything that needs to be done in that scope by trade or category, and tally it all up.
This becomes easier the more practice you have at it.
The Scope Of Work is determined based on what is needed to do to bring the house up the standard used to establish your ARV.
All items are broken down based on categories, and priced accordingly.
So we outline all major systems (plumbing, electric, hvac), roofing, siding, windows, flooring, ect. Total up all the columns, don't forget trash removal, as well as a 10% buffer on whatever the total amount is or $5k (whichever is greater)
We rehab a fair number of our own projects and I also own a construction co so pricing is a bit easier as I know what all my vendors charge and what things should cost. When starting out this may not be as easy but J-Scott wrote a great book on pricing. Also if you call in a few contractors to give itemized bids you will start to get an idea of what things cost and at least have ballparks for items like a kitchen, bathroom, a roof.
So first step is to create a very detailed scope of work, then itemize everything that needs to be done in that scope by trade or category, and tally it all up.
This becomes easier the more practice you have at it.
Sound advice and thanks for sharing Steve! Although the steps are fairly straightforward it appears as though it is fairly easy to miscalculate rehab costs if you don't know what to look for or what the industry standards are for materials and labor. I hope to learn this "by practicing" as an apprentice under an rehabber/flipper.
Did you create the document that you use in your business to evaluate properties of did you find it somewhere?
Here's how we do it - For larger renovations that involve floor plan changes/additions.
* Take as-is measurements of the house
* Draw as-proposed plans
* Now we can price things like framing, cladding, and mechanical installations.
* Design kitchen, bath, and trim
* List all fixtures, tile, etc.
* Now we can price the rest of the job
Aaron, looks like you have an efficient process outlined for your rehab assessments. Great feedback. Always a good thing to hear from an investor-buyer.
I did create a construction estimating document and I am always trying to improve upon it. I am working on actually having it turned into a program which would be useful for anyone buying distressed properties, and contractors.
If you can find an experienced rehabber who is looking for an intern and you have the ability to spend time working with that person that would be a tremendous experience for you, however that may be tough to find. When I started I looked but the guys I could find were not as interested in training the competition as I had hopped.
Rehabbing is a construction based business and I believe it is very difficult for someone with no construction knowledge to be successful. If you have no experience try to find a trusted contractor from your personal network and see if you could help him go on estimates to understand his pricing.
Also I highly recomend reading the book FLIP http://www.amazon.com/FLIP-Find-Sell-Houses-Profit/dp/0071486100 for anyone looking to rehab as well as @jscott books
I did create a construction estimating document and I am always trying to improve upon it. I am working on actually having it turned into a program which would be useful for anyone buying distressed properties, and contractors.
If you can find an experienced rehabber who is looking for an intern and you have the ability to spend time working with that person that would be a tremendous experience for you, however that may be tough to find. When I started I looked but the guys I could find were not as interested in training the competition as I had hopped.
Rehabbing is a construction based business and I believe it is very difficult for someone with no construction knowledge to be successful. If you have no experience try to find a trusted contractor from your personal network and see if you could help him go on estimates to understand his pricing.
Also I highly recomend reading the book FLIP http://www.amazon.com/FLIP-Find-Sell-Houses-Profit... for anyone looking to rehab as well as @jscott books
Everything that I've seen and heard relative to wholesalers has been about how the majority underestimate rehab costs and the ARV. Without understanding those two items, finding buyers and sellers as well as understanding the mechanics of the deal are essentially useless. To your point, I am actively looking for an opportunity to intern at a rehab company and have expressed my interest in detail in a few posts on here. I've heard great things about J Scott's books and will purchase them soon.
Thanks again for your feedback!