As a newbie, how should I estimate renovation costs?

Question

What are some good/efficient methods (other than just knowing from experience) to calculate what a property might cost me in renovations? Also, what percentage do you typically factor into your initial budget for those unexpected costs? How does the age/state of the property get factored into this number?

I am currently looking at homes and trying to analyze deals but I am unsure of how to best calculate possible renovations such as kitchens, bathrooms, fences, floors, central air, paint, windows, etc. Currently, my only method is to browse Home Depot/Lowes and write down prices of what I would potentially want in the home (but there has to be a better way, right?!). I plan to do a lot of the work myself hence the HD/Lowes reference and I am looking in the Fresno, CA market. :)

Thanks everyone, I look forward to your insights!

Bob Okenwa · Answer

@Rosy Bruno

You should read the Book on Estimating Rehab Costs by J Scott. Great read. Gives you all the points you need to get started on learning how to estimate the costs on your own. Make sure you take good notes as there's a lot of info. That or read the book a few times to get it all down. Or both lol. That's what I did.

A 10-20% contingency should be sufficient for those unexpected costs.

Learning what costs what at Home Depot and Lowes definitely helps, but you need to understand what contractors are charging to make sure you're not getting ripped off.

Will Barnard · Answer

In addition to that book, here is some more great info for you I already posted on BP along with a handy form for estimating rehab costs (and filling in some of them from Home Depot/Lowes as you mentioned).

Form found here to help: http://www.biggerpockets.com/files/user/BarnardINC...

Read my comments in this thread about estimating rehab costs: https://www.biggerpockets.com/forums/67/topics/731...

Bob Okenwa · Answer

@Rosy Bruno

It's all covered in the book. It is a general range of what to expect and J Scott mentions that the numbers he uses are based on his own area so your bids may vary slightly or greatly. Overall, it's a good primer for someone who is unfamiliar with renovations and their costs. Once you start walking properties with contractors and getting bids, you'll be able to eyeball things on your own after a while.

Ritch Bonisa · Answer

@Rosy Bruno We oversee alot of rehab projects in Indianapolis, Cincinnati, and Charlotte.  We inspect a good number of properties every day.  One of the things we focus alot on is providing scopes before acquisition.  We work with alot of remote investors who need  "boots on the ground" in these markets.  We're actually not the GC, we provide oversight on the project.  We check backgrounds and financials on the contractors we work with.  The contractors we use work directly on our clients' projects.  We inspect properties, contractors work, distribute funds, and document everything that happens on projects.  We don't operate in your area, but we have alot of experience with contractors, deals, investors, and of course we do some of our own deals from time to time as well.  We handle many of these types of issues on a daily basis, so I try to pass along what we know and what we've learned over the years.  PM me if you have deeper questions.  I'd be happy to help.

Ritch Bonisa · Answer

@Rosy Bruno if you are fairly new to estimating costs.  Make sure you get with a GC that can give you a second opinion.  I always tell people to make VERY SURE you understand your rehab costs before you acquire the property.  Once you buy it - it's your problem and no one else's.  I think understanding your rehab costs is probably the most important part of the deal.  You just can't make good decisions without knowing the costs.  The bottom line is:  You can't make your deal work through rehab costs.  You can only buy a good deal if you know what your costs will be.

Rosy Bruno · Answer

@Ritch Bonisa I couldn't agree more! I'll have to make sure to research some good GC in the area and maybe send over preliminary drafts and see if they can look my numbers over. Or hopefully I can find one to partner with for the long term :) Do you use GCs? What do you use them for?

Thanks!

Bob Okenwa · Answer

@Rosy Bruno

Way to go :-) I really liked the book and have read it twice. Hope you enjoy it as much as I did.

Rosy Bruno · Answer

@Bob Okenwa

Awesomeness!! Thanks so much Bob! I just added it to my amazon cart :D

Rosy Bruno · Answer

@Bob Okenwa I guess I should have expected that answer haha. Thank you for the info though! I do need to start gathering some books so I'll be sure to have that one on my list.

As far as understanding what contractors charge... is this covered in the Rehab Costs book or is it something that I need to call around locally to find out? Thanks again!

As a newbie, how should I estimate renovation costs?

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