Learning how to estimate rehab costs

Rental Property Investor · Sacramento, CA · Member since 2015 · 1k+ posts · 893 votes

Hi all,

I'm trying to dive into real estate wholesaling and would like to learn how to develop the instrumental skill of estimating rehab costs. I need to get this down so I can analyze any wholesale, flip, or buy and hold deals I come across.

What approach do I take? So far I've been on the project with other investors to watch (but not enough), looked at numbers from other peoples deals, and studied up on the forums/podcasts/reading.

Anything else? What should I focus my efforts on to most efficiently learn how to get my numbers right??

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Jamie S.

Investor · Durham, NC · Member since 2016 · 23 posts · 27 votes

10y

It's highly dependent on who you hire I have discovered, I have rehabbed with 'side-job' workers for a fraction of the price. Accurate prices are hard to come by because it depends on time of year and local factors. Give your investors a range depending on these factors and you'll be more believable.

I've had an entire house rewired for $1500 on a good day and $5000 on a bad day. You can make a spreadsheet with 'rule of thumb' costs for most things and use it to ballpark the figures. Contractors have these in their head already so you can find a local general contractor/builder to give you these numbers. Most contractors when they look at your job already know the ballpark per amount of material or room or whatever and are just deciding how much to tack on for degree of difficulty and how fancy your house looks. They know they'll lose money if they go below that so that is your 'bottom end'. If you need a permit that will be extra. if they have to fetch materials that is extra.

For example this is kind of my 'max I'll pay' for various things based on past experience. (and yes I'm sure others have gotten better deals).

Concrete: $75 a yard installed

Brick: $.50 per brick installed

painting: $100-150 a room with trim

exterior painting: $1800-$2500

new hvac : $2300

new window: $100-$150 for standard sizes x 2 for install

drywall : $12-$18 a sheet finished (depends on finish level and size of sheets)

tile: $5 a square foot installed (add material cost of between $2 and $10)

basic stainless appliance package : $2500

hardwood $2 a sq. foot installed $1 a sq foot to refinish (add material cost of $2 to $10)

plumbing: $100 per fixture to install and $100 per fixture rough-in

electrical: priced per outlet and per fixture for both rough-in and install

Total rewire of house: $3K-$6K

upgrade electrical service: $800

Total replumb of house with pex (no slab): $2K - $5K

10x10 set of cabinets no frills: $2500, about 1 day for a capenter to install

countertops: $1500-2000

new roof: $5K (metal including materials)

deck: $2K-$5K

bulldozer/bocat: $80 an hour

dumptruck: $1.50 per mile

Carpenter: $35 an hour low end + $10-$15 an hour for helpers. 2 carpenters can frame an entire house in less than a week. Trim 1-2 rooms per day.

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J ScottPro Member
Moderator
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
10y
Lots of threads on this topic...here's another one from earlier today:
https://www.biggerpockets.com/forums/55/topics/280...
Podcast Guest on Show The Truth About Real Estate Investing in 2024 (What Investors NEED to Know)
2 Reply
Chadd Naugle
Carlisle, PA · Member since 2015 · 60 posts · 31 votes
10y
@Account ClosedI guess @J Scottwas too modest to suggest, So I will....I bought both his books, and would recommend the same. As a wholesaler accurate repair costs are what is going to give you credibility when you present the deal to your end buyer. You don't want to estimate repairs at 20k when they are really 30k.
7 Reply
Jamie S.
Investor · Durham, NC · Member since 2016 · 23 posts · 27 votes
10y
It's highly dependent on who you hire I have discovered, I have rehabbed with 'side-job' workers for a fraction of the price. Accurate prices are hard to come by because it depends on time of year and local factors. Give your investors a range depending on these factors and you'll be more believable.
I've had an entire house rewired for $1500 on a good day and $5000 on a bad day. You can make a spreadsheet with 'rule of thumb' costs for most things and use it to ballpark the figures. Contractors have these in their head already so you can find a local general contractor/builder to give you these numbers. Most contractors when they look at your job already know the ballpark per amount of material or room or whatever and are just deciding how much to tack on for degree of difficulty and how fancy your house looks. They know they'll lose money if they go below that so that is your 'bottom end'. If you need a permit that will be extra. if they have to fetch materials that is extra.
For example this is kind of my 'max I'll pay' for various things based on past experience. (and yes I'm sure others have gotten better deals).
Concrete: $75 a yard installed
Brick: $.50 per brick installed
painting: $100-150 a room with trim
exterior painting: $1800-$2500
new hvac : $2300
new window: $100-$150 for standard sizes x 2 for install
drywall : $12-$18 a sheet finished (depends on finish level and size of sheets)
tile: $5 a square foot installed (add material cost of between $2 and $10)
basic stainless appliance package : $2500
hardwood $2 a sq. foot installed $1 a sq foot to refinish (add material cost of $2 to $10)
plumbing: $100 per fixture to install and $100 per fixture rough-in
electrical: priced per outlet and per fixture for both rough-in and install
Total rewire of house: $3K-$6K
upgrade electrical service: $800
Total replumb of house with pex (no slab): $2K - $5K
10x10 set of cabinets no frills: $2500, about 1 day for a capenter to install
countertops: $1500-2000
new roof: $5K (metal including materials)
deck: $2K-$5K
bulldozer/bocat: $80 an hour
dumptruck: $1.50 per mile
Carpenter: $35 an hour low end + $10-$15 an hour for helpers. 2 carpenters can frame an entire house in less than a week. Trim 1-2 rooms per day.
16 Reply
Amy Johnson
Real Estate Investor · Evergreen Park, IL · Member since 2016 · 16 posts · 1 vote
10y
This post was very helpful! Thank you.
0 Reply
Komal Patel
Fort Lauderdale, FL · Member since 2016 · 35 posts · 1 vote
10y
Nice tip on this post
0 Reply
Mindy JensenPro Member
BiggerPockets Money Podcast Host · Longmont, CO · Member since 2014 · 7k+ posts · 10k+ votes
10y
@Account Closed has been rehabbing forever, and does (J, fill in the blanks here) many rehabs a year.
He KNOWS how to estimate rehab costs, and he shares all his tips with you in his book. There's a lot more to consider than just the surface costs.
[email protected]Podcast Guest on Show #261
2 Reply
Melissa Gittens
Real Estate Broker · Windsor, CT · Member since 2015 · 1k+ posts · 268 votes
10y
Great tips!
0 Reply
Account Closed
OP
Rental Property Investor · Sacramento, CA · Member since 2015 · 1k+ posts · 893 votes
10y
Wow, I post this up and go away for a day and I come back to all of this.
Thanks for the great advice everyone.
@J ScottThank you for the link. I figured my own thread might get me some well needed face time as well. I should probably dig through the forums first next time.
@Chadd Naugle and @Mindy Jensen I'm going to have to pick up J's book and get after it tonight. I have the tendency to read read read so I just need have to build some human interaction.
Chad, thank you for the really thorough answer. I really appreciate you taking the time to itemize all of those different expenses. The variability in pricing is a really good point that I have not yet considered. Are you noticing higher labor costs with an elevated market right now? Is that how it generally works?
1 Reply
Sterling WhitePro Member
Rental Property Investor · Indianapolis, IN · Member since 2014 · 554 posts · 153 votes
10y
As others have stated J Scott has a good book on this subject. I believe doing walk throughs with others like you have been doing @Account Closedis the most effective method in learning this. Fully immersing yourself by additionally reading books will increase the learning process.
Podcast Guest on Show #308
2 Reply
Jiana Bickham
Perris, CA · Member since 2013 · 40 posts · 13 votes
10y
These are some great tips. I'm currently reading @J Scott's book on estimating rehabs and it is really good. As stated earlier his book on flipping houses provides a lot of great tips too. You seem to be on the right track. Good luck!
1 Reply
Arlanzie Combs
Belleville, IL · Member since 2016 · 1 post · 0 votes
10y
where did you get the book from
0 Reply
J ScottPro Member
Moderator
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
10y
Originally posted by @Arlanzie Combs:
where did you get the book from

If you buy both books on BiggerPockets, you get some bonus material as well:
http://www.biggerpockets.com/flippingbook
Or you can buy either one on Amazon:
The Book on Flipping Houses
and
The Book on Estimating Rehab Costs
Podcast Guest on Show The Truth About Real Estate Investing in 2024 (What Investors NEED to Know)
0 Reply
John Davis
Investor · Raleigh, NC · Member since 2015 · 61 posts · 39 votes
10y
Im a B/H guy but flipping seems like the way of the future...Love the ideas and feedback!
1 Reply
Patrick LiskaPro Member
Investor · Verona, NJ · Member since 2014 · 1k+ posts · 832 votes
10y
Elliot, If you have a contractor on your team that you work with, sit down with him and ask him what he would charge for specific things. @Jamie S.has a good list, but, and no offense Jamie, every place is different on pricing, he lives in North Carolina, where you are in California, i can guarantee that costs are different in those two states. make a list like Jamie's and invite your contractor to Lunch ( we like free meals ) and get some rough prices by the square foot, by the square, per cabinet. then you will have something to go by when you walk into a house.
3 Reply
Jo-Ann LapinPro Member
Loan Officer · Tustin, CA · Member since 2015 · 3k+ posts · 713 votes
10y
There are many flip calculators out there.
[email protected]
0 Reply
Elizabeth Moore
Real Estate Investor · Chapel Hill, NC · Member since 2015 · 78 posts · 10 votes
10y
Great information - thanks everyone for sharing!
0 Reply
Account Closed
OP
Rental Property Investor · Sacramento, CA · Member since 2015 · 1k+ posts · 893 votes
10y
Originally posted by @Patrick Liska:

Elliot, If you have a contractor on your team that you work with, sit down with him and ask him what he would charge for specific things. @Jamie S.has a good list, but, and no offense Jamie, every place is different on pricing, he lives in North Carolina, where you are in California, i can guarantee that costs are different in those two states. make a list like Jamie's and invite your contractor to Lunch ( we like free meals ) and get some rough prices by the square foot, by the square, per cabinet. then you will have something to go by when you walk into a house.
Great advice Patrick. Any suggestions on how to account for contractor to contractor pricing variation? Perhaps I need to take several different people to lunch before u have a clear idea.
0 Reply
Manolo D.
Contractor · Los Angeles, CA · Member since 2015 · 4k+ posts · 1k+ votes
10y
Be careful how you use the numbers, always look for your local rates, and "side job" usually means they are unlicensed at all. Example, a concrete yard for CA is 95/cubic yard, that's only concrete, plus you have environmental fees, pumper fee (if applicable), labor installation, another is, you can't hire someone below 15/hr here who knows what they're doing, unskilled labor, maybe 15/hr but all they do is carry materials, with work comp and taxes, if you pay at 15, you'll end up at 23-28/hr on carpenter trade.
1 Reply
Patrick LiskaPro Member
Investor · Verona, NJ · Member since 2014 · 1k+ posts · 832 votes
10y
most contractors should be in the same price range, it wouldn't hurt to talk to a couple of contractors and then average out prices. any pricing you get will give you an idea. at the time you are looking at the property, this will give you a ballpark, you will not know the exact number until you actually get pricing from contractors, but you should be real close then.
0 Reply
Jamie S.
Investor · Durham, NC · Member since 2016 · 23 posts · 27 votes
10y
I should perhaps clarify... these prices are just to convey a point. This method can be used for 'cosmetic' types of projects (not building a skyscraper) which I assumed the poster was asking about. There is software that the professionals use for pricing big jobs, I like chief architect for material take-offs and renderings. Elliott was asking about how to write better business plans. I write alot of business proposals and engineering cost estimates as part of my job. You absolutely don't need a degree in accounting or an MBA to write a great one. What I was trying to convey was:
-The goal is to quantify "RISK" and how your plan mitigates that risk. The person reading your plan primarily wants to know what is the best and worst case. It's important to have enough data to convey this.
-There are some items that are commodities and priced by unit of material (drywall, bricks, roofs) and some that aren't (foundations, design, landscaping, excavators, carpentry)
-Prices vary considerably across regions, times of year, skill level, local demand, unionization, licensing restrictions, independent contractor, etc. You aren't going to find a reference with these numbers.
It made construction much less mysterious once I understood how people were pricing their work.... also kind of eye opening. It doesn't matter what tile I pick, install cost is about the same. If I buy the materials I can comparison shop the labor on price/skill. I learned that the building supply stores have two sets of prices for contractors and homeowners and I have to negotiate.
The professionals in your area know these ranges and by talking with a builder or GC you can probably get the right numbers for your area.
2 Reply
Account Closed
OP
Rental Property Investor · Sacramento, CA · Member since 2015 · 1k+ posts · 893 votes
10y
@Jamie S.Thank you for pointing that out. I am not looking to learn how to estimate rehab costs from this posts... I was looking for the most effective approach to be taken so that I may learn how to estimate rehab costs. Building supply stores negotiating huh? Tell me more.
I've negotiated at Home Depot quite a bit, but it is always on items that are on discount for being bought and returned to the store. I was surprised to find that they negotiate pretty loosely... A 180$ saw was discounted to $169 and I grabbed it for $100 after a few words with the manager. What are some other ways to get supplies at a discounted rate?
0 Reply
Robin Khan
Irving, TX · Member since 2016 · 4 posts · 2 votes
10y
Thank you, very helpful and to the point.
0 Reply
Ryland Taniguchi
San Francisco, CA · Member since 2015 · 786 posts · 717 votes
10y
Estimating varies so much from state to state that any national guides won't help. Prices vary by supply and demand in each local market. It may cost $3000 for plumbing in one area and $16,000 in another area for the same scope of work. There is really no substitute to having experience with construction but the best I found for a newbie is homewyse.com. Many things on homewyse.com are way off but I don't know where else you would start.
2 Reply
Jamie S.
Investor · Durham, NC · Member since 2016 · 23 posts · 27 votes
10y
Elliott,
I'm not really the expert on this since since construction it is not my day job. Builders negotiate for shipping containers full of flooring, etc. which is hard to beat.  There is quite a bit of negotiating that can be done on supplies but your best deals won't come from the big-box. I guarantee your hvac guy doesn't shop at lowes. You can ask for the 'contractor discount' pretty much everywhere though. The Tile Shop took 10% the other day without batting an eye
Lowes has a contracting desk, these folks are actually pretty helpful and sometimes knowledgeable about construction (depends on who you get). Most things in lowes are marked up for homeowners ($5 bag of screws).   Take your list in and have them run it through their "quote support system" QSP. Not as much discount on lumber but other stuff can be a decent deal. I ask them to beat other stores on certain things (for example a 6x6 is almost half as much at Home Depot). The order is supposed to be over $2500 but the hint here is that you don't have to actually buy everything in the quote... you can reserve 10 spools of wire but only pick one up. You can then have them deliver batches of stuff (to limit theft) to the jobsite. If you have the business credit card you get $20 delivery which is a great deal. I ask for free delivery though and usually get it.   Why pay the carpenter $80 an hour to drive to the store... sometimes I have to make them haul back the split/wet boards if they aren't careful choosing though.
Some of the other smaller hardware suppliers (Talbert is an example) give you a rebate at the end of the year or other prizes like airplane tickets, etc. So when your GC gives you your material bill ask if he is passing on his contractor rebate :-)
Often you can get better deals by going to the source... and cut out the middle man. You can actually go to a mill here and request oak flooring with any dimension you want. There are lumber suppliers (that supply lowes) where you can call in an order of lumber. An example here is Tarheel Wood Treating, a local company that gets wood from the local mills and treats it. My cabinet guy told me a place called Bullock lumber (no website of course) where the cabinet company buys their supplies.    There is a siding factory that will sell you siding out the side bay door. I go to the brick making plant here and the sod farm.   Just start asking your contractors where they get your stuff. Don't be afraid to drive up to some random warehouse that says HVAC supply on it. Clues are words like 'wholesale', 'warehouse', 'supply', 'distributor', 'importer'. These places also sometimes have scratch and dent or mistake items they don't know what to do with sometimes.
Good luck!
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OP
Rental Property Investor · Sacramento, CA · Member since 2015 · 1k+ posts · 893 votes
10y
@Jamie S. That last post was gold. Awesome tips from the trenches there.
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