Completely gutted house and estimating rehab costs

[Jonathan McClintock]

I met with a guy yesterday who is selling a house in St Louis. He has completely gutted the house, roof is only 1 year old, inside is just studs. There is a "newer" electrical panal, but that is basically it. Will need all systems . . . will basically need everything. House is only approx 900 sq ft (2b/1b) with rough in for another bathroom in basement. How do I begin even determining cost for that or is that the kind of rehab a beginner like me should just avoid in the first place?

[David Robertson]

Unless you can find a reputable contractor that can provide a quote to rehab the property, I would avoid this type of project if you don't know how to estimate repair costs...

Here's what I would do:

1. As recommended by Paul, buy JScotts book on Estimating Rehab Costs to get educated on estimating costs...

2. Take some notes and populate those costs into a spreadsheet.

3. Talk to local contractors in your market and tailor the costs in the spreadsheet to meet your local market and specific project needs.  

4. Practice Estimating and Analyzing Deals...Analyze as many deals as possible, until you start to get comfortable with the #s and the math...

5. Find a property that you are comfortable with estimating and managing...To help minimize risk, partner with a mentor or contractor that you trust that has experience flipping houses...

6. Buy the property, rehab the property, and learn from your mistakes...

7. Modify your spreadsheet costs and estimating techniques to account for lessons learned...

8. Buy another property...learn from those mistakes...rinse and repeat :)