Estimating Rehab Costs????

12 Replies

Hey all

So I feel that I have a strong handle on how to determine what a property is worth in my area based on it's current individual condition; as well as what it will be worth once it is fixed (ARV)... but I am struggling determining how much reno costs will be.

My goal is to buy properties in need of repair to buy and hold as rentals.

I'm hoping that you experienced/successful Flippers might be able to inform me about how you estimate reno costs?

Thank you!

GB

If assessing repairs and the condition of a home is not something you're comfortable doing then walk through with your contractor prior to your offer.  I'm comfortable ball parking (yes that's a verb!) figures and then I always add a contingency so I know what I can offer. It also depends on the speed your market moves at. In Denver we try to lock up a contract then take the time to walk through prior to EM due date.  In other areas I get a basic rehab estimate along with the property info when my wholesalers/GC send me the deal.  Other people use $/sf like @Justin Williams  because they've done enough volume and tracked their info that they know how to estimate broadly.

Hi Greg!

When you are first getting started estimating reno costs can be very difficult, because you probably haven't established many relationships with local contractors.  As @Micki M.  said, walking through with your project manager is a good idea, but definitely start trying to form relationships with painters, roofers, flooring installers, etc ASAP!  If you use them frequently, they are more likely to work within your set budget and keep your labor costs down.  Also, connect with other rehabbers in your area to find out where they purchase their supplies for the lowest costs.  Develop relationships with these suppliers as well.  If you are loyal to them, they will reward you with lower costs!

Here is a quick approach - assume everything costs $4k per thing:

1. Kitchen - $4k

2. Roof - $4k

3. Bathroom - $4k

4. Paint - $4k

5. Flooring - $4k

6. Drywall and Trim Basement - $4k

7. Appliances (washer, dryer, fridge, stove, microwave, dishwasher) - $4k

You can argue any of these things, but all things being equal this assumption will work on a regular house for a first time estimate if you are hiring out the work.  As you gain more experience, you will have actual costs you can begin to use.

@Greg Baur

First of all that is a great question and a lot of people are looking for ways to figure out how much construction is going to cost when you are flipping a house or holding for a rental. 

And normally as always, time is very important, meaning that you have to come up with a quick but very good close estimate. 

We created a item called a Budget Cheat Sheet which is a simple 4 by 6 postcard. That has two sections Exterior and Interior. Then 3 columns across the top 1,000 sqft 2,000 sqft and 3,000 sqft. 

You simply pick your square footage then simply line up the items that you need and it will show you a close estimate as to how much it cost for labor and material. 

If you want one PM me and I can probably email it to you.

See Below:

Originally posted by @Andrew Cordle :

@Greg Baur

First of all that is a great question and a lot of people are looking for ways to figure out how much construction is going to cost when you are flipping a house or holding for a rental. 

And normally as always, time is very important, meaning that you have to come up with a quick but very good close estimate. 

We created a item called a Budget Cheat Sheet which is a simple 4 by 6 postcard. That has two sections Exterior and Interior. Then 3 columns across the top 1,000 sqft 2,000 sqft and 3,000 sqft. 

You simply pick your square footage then simply line up the items that you need and it will show you a close estimate as to how much it cost for labor and material. 

If you want one PM me and I can probably email it to you.

See Below:

 @Andrew Cordle The post card idea is pretty awesome! Do those numbers reflect labor + materials in your general market area?  How do you guys approach computing the costs for permits, inspections, variances, etc.?  ...Just curious

@Philip E.

Yes those numbers are for our Materials and Labor. It is not going to give us a direct to the penny quote but it a matter of minutes we can be pretty close. 

Where we are from to do houses like we do it is normally a 50.00 permit in one day. So it is not a big expense. 

AC

Hi, how are bathrooms calculated into your card?  thanks

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