Offer Timing and Rehab Estimates

[Andy Tomaswick]

Hi All,

I'm attempting to understand how to do the rehab estimate for the upfront deal screening process.

It seems like when you're pre-screening deals, you have to have some idea of how to estimate rehab costs even just looking at pictures on a computer.  For example, in his videos on flipping, Brandon just seems to "know" how much to estimate for rehab, but he doesn't really explain how he knows that.

I've read somewhere that something like $15 or $20 / sq ft. is a reasonable amount.   Is that what people normally use while they're seeking out deals?

In a more concrete example, I found a house with a list price of $60K, which was about 1100 sq ft and I think could be sold for around $100K ARV. Can I just say the repair costs would be:

1100 * $20 = $22000

and use that as a baseline for further analyzing the deal?

Thanks in advance for the feedback - these forums are proving really helpful.

[Account Closed]

That's accurate if you're using contractors.

It's also accurate if you're not doing a full gut.

It's also accurate if you're not replacing the roof, or HVAC, or going with a high-end kitchen or bathroom rehab.

I recommend J Scott's book, 'The Book on Estimating Rehab Costs'.  

Overwhelming initially if you don't have a construction or rehab background, but very comprehensive.  

I then also purchased the 2016 National Repair & Remodeling Estimator, which gives extremely accurate contracting prices for OTHER than full rehabs.  But, it can give you a baseline of what to expect.

If you use a rule of thumb like the one above ($20/sq. feet) on every rehab you price, be expecting wild swings in the outcome.