Estimating Project Timeline

12 Replies

I am a beginner and attempting to set up some cost models for fix & flip properties. I am aware of the many costs, including holding costs. However, my roadblock is in determining the timeline. I am wondering if any experienced professionals have data (20+ datapoints) as to cost and time to sale on each of their properties. I know there will be a plethora of examples, opinions, exceptions and objections to the vagueness, but this is purely for a simplistic model and I am curious to see if there is some correlation. 

That way, if I walk through a house and estimate the cost of a rehab, I can also have the model return back this vague time-to-sale number and estimate my holding costs. 

Thanks! 

Dan

I would recommend not trying to tie the cost of the project to the schedule.  I can spend $10,000 in a day on certain tasks and $2,000 in a week on others.  

Instead, I would suggest creating an actual schedule for your project, with realistic timelines for each task.  This will also help you determine bottlenecks, dependancies and tasks that can overlap.

The BiggerPockets book on flipping houses has an entire chapter devoted to this topic, with a sample schedule for a typical large rehab.

@J Scott Thanks, I appreciate the feedback. I'll check out the sample you referenced. I understand the uniqueness of time and money for different activities. My goal is/was to come up with a quick calculator for a pre-screening type of tool as I'm sitting through leads. Creating a project timeline for every potential lead would take a lot of time.

Thanks again, I do appreciate it. Clearly not getting much feedback 😁 I assume most people who do have historical data use it for their own projections and estimating.

Dan

Originally posted by @Daniel Kramer :

@J Scott Thanks, I appreciate the feedback. I'll check out the sample you referenced. I understand the uniqueness of time and money for different activities. My goal is/was to come up with a quick calculator for a pre-screening type of tool as I'm sitting through leads. Creating a project timeline for every potential lead would take a lot of time.

Thanks again, I do appreciate it. Clearly not getting much feedback 😁 I assume most people who do have historical data use it for their own projections and estimating.

Dan

Are you trying to figure out how long a project will take in order to decide if that's a viable project or not?

In general, most rehabs can be done in under 8 weeks if you're good at doing rehabs -- even big projects should come in under this time for experienced rehabbers.  That said, if you're not good at scheduling, not good at managing contractors, have contractors who don't show up consistently, have contractors that don't work together on dependencies, etc., that 8 week rehab can easily turn into 12, 16 or 20 weeks.

Obviously, if you're doing additions, new construction or something very complex, that can add to the timeline.  As well as any time spent waiting for permits and other county approvals.  But, even a new construction project can be done in 20 weeks, so if you're good at rehab scheduling, the timelines should be a very small part of your decision on what projects to take on and which to not take on.

That said, maybe that's not what you're asking?

@J Scott I am 100% new, so I'm still emphatically reading forums, listening to podcasts, doing pretend calculations on properties in my area. So to say I'm good at managing contractors or not is still an imaginary concept.

I have been building some Excel models for fun even though I know BP has tools and calculators. I actually use them as models but I like understanding the equations behind them and writing them out on my own for fun.

That said, I stumbled upon a stat that the average flip, nationwide, was 182 days in 2017, which included selling time. That stat grabbed my attention. So maybe if you're running a well oiled machine, 8 weeks is normal, which is great. And that's obviously a variable, too... experience.

My goal was to create a simple (obviously imperfect) rule of thumb for quick pre-sale calculations. So we have the 70% rule, right? 0.7*ARV-rehab = max offer, which still has limitations but it's a tool. Similarly, if I walk through a house quickly and ballpark $60k off the cuff, can I plug that into a quick calculation that also spits out holding costs (time dependent) with only a few quick inputs.

Originally posted by @Daniel Kramer :
....if I walk through a house quickly and ballpark $60k off the cuff, can I plug that into a quick calculation that also spits out holding costs (time dependent) with only a few quick inputs.

Just my opinion, but not really...

In my experience, if you're anything but a very novice rehabber, the difference between a $20,000 rehab and $40,000 won't be more than a couple weeks.  And in the scheme of an entire project, that's a short period of time.  

The things that will have a much bigger contribution to the total timeframe of the project are (again, in my opinion/experience):

- How quickly you start the project after closing.  Many newer investors will start building their scope of work and finding contractors after they close on the purchase.  Then they start the work a few weeks later.  Good investors will have all the pre-construction work completed by the day of closing, and will start work that afternoon or the next morning.

- How well you manage your contractors.  Many investors won't manage their contractors closely, and contractors will work about 50% of days (less if they have their way).  Good rehabbers make sure that their contractors are on-site at least 5 days per week.  Not managing your contractors well can add 100% to your construction timeline.

- How well you schedule.  Many newer investors will not schedule optimally.  And if they figure out how to schedule things in the right order, they still likely aren't optimizing that schedule.  When you have some practice, you can have multiple trades working at the same time, as long as you know which trades tasks can be completed without interfering with one another.  When you get to the point you can do this, you can easily shave 25% off your schedule.

- How long it takes to finish the last 10% of the project.  The last 10% can take 50% of the schedule.  Seriously.  Punchlist and quality control tasks can be difficult to power through.  If you don't know how to get the last 10% of the rehab done, you can easily lose a few weeks during this part of the renovation.

- How long it takes to get the house staged, listed and ready for showings.  Good rehabbers have this done within 72 hours of construction being complete.  Many rehabbers will spend weeks getting the house ready for the first showing.

- How long it takes to find a buyer, get a contract and get to closing.  This is often the longest part of the process.  

All of those things above will have a MUCH bigger impact on the length of the schedule than the dollar amount of work being completed.

Here is a typical timeline for a rehab project and some time ranges of what you could expect:

Step #1 Purchase Closing/Take Possession (Day 1)

Stage #2 Planning, Permits, Bidding (1 week to 1 month+)

If possible, you will try to start the planning before the closing to gain a head start. The planning process can take as little as 1 week or as long as 2 months if you have large project that requires plans, plan review, & permitting.

Stage #3 Rehab/Construction (2 weeks to 4 months)

For a cosmetic rehab, the project may only take a few weeks, but for a larger 'gut job' it could take up to 2 to 4 months.  As JScott mentioned, it all depends on if your Contractors show-up, and how well you Schedule and Manage your Contractors.

Listing for Sale (1 week to 2 months) 

In a hot seller's market in a desirable area, you may have an offer the 1st day you put the property on the market.   In a buyer's market, your property could sit for 1 to 2 months before you get an offer.  Talking to a local agent or looking up recent comparable sales history and Average Days on Market should tell you how hot or cold the market is...

Closing (1 to 2 months)

Once you get an offer under contract, it generally takes around 30 to 60 days to process the closing and hand over the keys to the buyer.


In a best case scenario, with a cosmetic rehab that sells quickly, you are looking at a holding period of 2 to 3 months. Overall, I would say the average rehab will likely take around 4 to 5 months.

I wouldn't overthink or over analyze your project timelines.  Holding Costs (excluding financing) for utilities, taxes, & insurance are typically only $500 to $1000 per month.  If you under-estimate your timeline by 1 to 2 months, it will only cost you a few thousand bucks in Holding Costs...In the scheme of things you should be much more concerned about accurately estimating your big numbers such as your ARV and Rehab Costs.  

Just use 4 to 6 months for your holding period and move on to the big numbers.

@J Scott

I've been listening to podcasts non-stop and it recently occurred to me that THE J Scott, author of Estimating Rehab Costs, replied to my question. Thanks for taking the time to answer this as well as everything you do for the BP community. Looking back on this, it's a funny question, and you, having written a book on the subject, knew that but thoughtfully answered without mocking it. Thanks again.

Dan

Originally posted by @Christi Hawkins :

@Daniel Kramer   you will find @J Scott is always willing to that. Our questions must sound ridiculous to him but you would never know it. Read every thing he writes and listen to every Podcast he's done

Trust me, there are very few questions I get that I didn't have myself when I was starting out. So they are certainly not ridiculous!