Learning to Estimate Repair Costs Accurately

20 Replies

To find a great property it requires two things: accurate ARV and precise ERC. When learning to estimate ERC correctly I was thinking the best way to go about it is to find active rehabbers at REI clubs, see if you can tag along to a few of their properties if you get to know them.

Or call around and find general contractors/ contractors familiar with working with investors. See if they would allow you to visit properties they are working on, perhaps in exchange for future business if your wholesaling or even just offering them lunch.

Curious what others here would suggest.

to be exact on repair cost is an art form. I actually wrote a book on estimating repairs on a house, but never put it out to the public. The best thing to do is to get 3 estimates on every deal and compare. You need to keep the neighborhood in mind when figuring the cost. You will not figure the same level of rehab of something in the burbs as you would something in the ghetto. There is a program out there that is 100 bucks per month called exactimate that is used in insurance restoration. You can use that, but cut the cost in half. good luck!!

Samantha, how's the appraisal porcess going....?

Rehabbers, I know J Scott like these deals and for awhile I did them and realized it was not worth my time, I even had the construction company to proft from.

My dad and I use to spend time at the lumber yards like kids in a candy store. If you are going to rehab residential (or commercial) properties and you don't know the cost of pre-hung doors, vasement windows, cove molding, sheet rock and screws and can't use a tape measure you have no business rehabbing!

Estimating costs seems such a crock as "investors" think they are going to go in a house, and get estimates from someone else. That means you are paying a contractor instead of knowing what the heck you business is all about. If you can;t be the general on any rehab, my advice is not to rehab.

I can sit at a desk and "estimate" to get true costs you need to know what the plan is and know what material and labor costs will be. It's not rocket science, it takes effort and time.

Any Harry homeowner can call a contractor and get estimates.....

I am learning from bloody knuckles. I know what my last rehab cost. So, I am applying numbers from it to my next project. I am getting estimates from a contractor on exterior work even before I make my offer. Don't listen to Gurus when they tell you to use 10% for a rehab estimate contingency. I haven't completely covered my hiney yet using 20%.

I answered this very same question in another thread. Here is a copy of my answer:

Get out to Home Depot/Lowes and start pricing out material costs for all items of possible repair on a rehab. You will need a list prepeared so that you can fill in the costs for your area. I uploaded to BP mine for all to use. Go here:
Simply fill in the costs after spending a great deal of time reseraching prices at the box stores. They also have install prices (although they are much higher than you can get by hiring outside of Lowes/HD). Then go to as many REO properties as you can and practice your skill set.

Here is some more info that should help you:
Break up the home into sections - Kitchen, baths, flooring, paint, stucco, landscaping, plumbing (including fixtures), electrical (including fixtures), HVAC, interior doors, door casings/baseboards, windows/sliders/front door, roof, foundation, misc., and garage.

Once you know what the common costs are for each area for a specific size home, you can see how easy it will become to walk in and walk out 15 minutes later with a rehab figure in your head.
For instance, I know that a full gut and remodel including new toilet, new vanity, mirror, sink, glass door enclosure, stone/tile on shower walls, etc will run me $2500 per bathroom. So if I walk into a REO deal with 2 baths, I simply add into my head $5k for the 2 bathrooms and move on to the next section. i also know it costs me around $5k to paint in and out a 1500 sq. ft home. I have these basic figures locked in my head so when I identify sections in each home needing repair, it is simply to calculate in my head.

Hope this helps.

I learned by doing. I've done nearly everything you can think of when it comes to a home. I'm at a stage that I don't want to do much of the work any more, but I now know what is involved. Many of the items you do quite a bit so you get quite familiar with how much material and time would be involved. Other items you might want a contractor to give you an estimate.

A handy book to consider is RS Means Residential construction cost data. The book can give you insight into how much labor might be involved. I generally prefer to do like Will and run to Home Depot or Lowes and figure out my material costs. In time you have a good idea of what the average kitchen or bath might cost to fully build out.

If you are rehabbing as a business and keeping multiple projects going, I've found it pays to have a good contractor you can count on. I've also learned the lowest bidder usually costs you money in the long run. So, I prefer to know my costs for each rehab task and have a quality contractor that can execute them within that budget. There's just no way I could meet with 3 different contractors for each project. You can purchase the Craftsman cost book, which provides the amount of time/labor any task should take. For example, it tells you how long it should take to hang a ceiling fan, install a bathtub, etc. This will give you a baseline labor rate to hold your contractor accountable. I used the Craftsman costs to determine typical labor rates for the 100 most common tasks we do on rehabs. I highly recommend the book "FLIP" as it identifies those tasks for you and also provides an excellent workflow chart to keep the process as efficient as possible. Of course, you have to add a contingency because no project is going to go perfectly as planned.

Hey Matt-I just went on line to find the Craftman's Cost book you mentions and did not find it. Please give full title and author. Thanks in advance.

Once you know what the common costs are for each area for a specific size home, you can see how easy it will become to walk in and walk out 15 minutes later with a rehab figure in your head.

This is actually the exact same process I use. My numbers are slightly different obviously because we live in different parts of the country but the process is the same. I segment the house into Kitchen/Bath(s)/Paint/Flooring/Mechanicals/Roof/Misc. etc.

My advice to the OP is to start getting comfortable estimating project costs by eating the elephant one area at a time. For example, spend a day doing nothing but pricing out costs to do a complete bathroom gut/rehab, then move on from there to maybe the kitchen or roofing or whatever. It takes a while but you will find you can get a fairly accurate estimate of rehab costs relatively quickly by attaching a specific dollar amount to the common things you do in a rehab.

Of course if you miss a problem during your initial inspection/estimate........then no magic system/software/process is going to help...so get good at paying attention to the details and leave no stone unturned.

Originally posted by F Foster:
Hey Matt-I just went on line to find the Craftman's Cost book you mentions and did not find it. Please give full title and author. Thanks in advance.

Look up 2012 National Repair & Remodeling Estimator on Amazon,Ebay,etc. I assume that's what he's talking about.

Great thread! @Will Barnard, great advice! As we are considering how to move forward with REI, I've been wondering how on earth we would be able to estimate repairs for flips if we go this route. Your suggestion on how to go about this makes complete sense and was like an "aha" moment after reading. Appreciate you showing how to keep it simple (by taking the time and learning your facts). Thanks also for the spreadsheet - I'm going to download it when I'm on my PC tomorrow.

@Matt Lavinder and @Charles Perkins, I had no idea these books existed, so thanks to you both for the info. Even if we don't flip, we will probably be multi-unit investors again and I think either of these would be very useful references.


@Samantha M. - Great question and some excellent responses and I wanted to point out two in particular (no offense to all the great responses).

Bill G. beat me to a comment I wanted to make on here. There is nothing that can replace time and experience as it relates to properly evaluating the repair costs and I know many like Charles Perkins and @Don Hines commented that doing things your self or 'getting your knuckles bloody" and I can only say they are 100% correct. Nothing beats experience.

@Will Barnard did an AWESOME job of providing a materials list and telling you to go to Lowes of Home Depot to track pricing. This is something that every investor should do if they do any work on investment properties. It is the only way to get inside of the costs of a renovation. You have to know what shingles costs, and toilets, light fixtures, faucets, flooring, paint, etc... all the way down to nails. From there, my company developed an I-Pad app. that our renovation managers use that has 300+ questions on it that goes room by room, item by item all the way down to small issues like the number of light plates that need to be replaced. Because we know the cost of everything, the program then tabulates the cost and prepares a list of materials for a contractor.

That kind of detail comes from doing hundreds of projects a year and keeping a detailed analysis of what everything costs including your labor. At some point, you will be able to walk through a house very quickly estimating the rehab (under 30 minutes) and be within $100 dollars of actual costs. Then you hand your list to a contractor with the SKU's of every item they are to use in the house and you will be spot on with your pricing.

Sorry this response was so long, but there was some great advice and I still think the best thing to remember is that it takes time and experience to get really good at anything worth doing.

best of luck Samantha -


Does any one know of a good ipad app to estimate renovation costs as you walk through a house? I checked the iTunes app store and didn't see anything. If it doesn't exist who wants to pitch in a develop one for the BP community?

Another great time saving and organizational thing to do if you are rehabbing similar homes of similar size, value, etc. is to form a list of typical items you buy at Lowes or HD, and along with the price, you place the item number on your form. Then, when it is time to shop, you simply email your contact at the contractor's desk your item number list of want you need. This really saves time and if you start buying in quantity, can save you money too.

I agree with most of the comments.  Doing the work + Knowing the material prices + Over a period of time = Ability to estimate accurately

UNLESS...you are like me and somehow think you can do the work faster/better than you really can - lol - or your superman vision just wasn't working up to par that day (my excuse).  Seems when I was doing construction on a daily basis, no matter how much contingency I added into the estimate, I always just made wages.  What I should have learned way back then was to toss the optimism aside when it came to estimating time.

So the formula should be: Know what is needed + Know how long it will take + Know material Prices = an estimate.  Over time it will equal A Quick Estimate

Getting educated is the best way possible the more education the better [Website Removed]

I notice that on wholesaling calculator on this BP, there are section for "estimated repair cost" and under that section, it has 

Exterior Repairs: Roof, Concrete, Gutters/Soffit/Fascia, Garage, Siding, Landscaping, Exterior Painting, Septic, Decks/Porches, Foundation

Interior Repairs: Demo, Sheetrock, Plumbing, Carpentry, Electrical, Interior Painting, HVAC, Cabinets/Countertops, Framing, Flooring, Insulation

General Components: Permits, Termites, Mold, Miscellaneous

Would this be good enough (complete) list in which I can represent this list with (columns of labor and material costs) to the general contractor and be assured that I would be able to get a good ballpark precise range of estimated repair value that would be valuable to the end buyer/flipper? 

What if end buyer happens to use different contractor and the two estimates (mine and the end buyer's estimates) are way off. Does that mean I have to recalculate accordingly to fit the end buyer's general contractor's estimate and work my way from there? 

@Samantha M.

Your approach seems fair-minded and sound for getting familiar with the work.  You aren't really encroaching on those people's time, taking them away from pay-time activities.  

Asking three contractors (or even one) to give you free estimates as some suggest isn't going to work very long.  Contractors don't get paid for quoting.  It takes them time and money to quote.  You may get quotes out of them once or twice, but the third time, they will stop taking your calls. 

Moreover, asking them to quote with the promise of future business is disingenuous, and unless they fell off the turnip truck yesterday, have heard before.  They aren't going to greet that one with enthusiasm.  Not only that, you sound like a real amateur even saying it and erode your credibility.  Furthermore, if you think about it, you are stealing from them.  Time they spend doing free quoting of a job is stealing time from them that they could use doing a job and making money.

However, you really don't need to take up a contractor's time at all to get a rehab estimate. Figuring rehab costs is something you can do on your own and is very formulamatic. Your REIA should have spreadsheets available for the asking. You pick the work that needs to be done on the spreadsheet, plug in the square footage of the area that needs the work, and chug out a number. If you know how to use a tape to measure a building and a room and how to put numbers in a spreadsheet, you can do this.

If for some strange reason your REIA doesn't have such a sheet, there are plenty available elsewhere. I haven't looked, but I bet there is one available here on BP.

Finally, the AIA (American Institute of Architects) publishes guides you can purchase that give you all kinds of figures for calculating costs.  

It all boils down to a cost per square foot.  Costs per square foot are known.  You know the square footage; you can calculate the rehab costs yourself pretty reliably and pdq.

Alternatively, you can do what I did.  Find a contractor who will generate a quote for you for a fee.  Mine does it for $75 a property.  It depends on how you value your time.  Totally up all the time for the steps involved, it takes me a couple of hours.  I consider my time worth more than $37.50 an hour, but everyone is different.

there are some insurance ones that are downloadable - the data is what they often charge for - it varies by area - labor and materials - so you need to get a feel of prices for materials then for your area's labor charges and the time needed - then you can calc it out or write your own spreadsheet - using a computer mostly, I am not sure a phone app would be able to store the data needed - but you could just memorize things like the cost to gut renovate a kitchen or bath as was suggested and how much a roof or flooring costs psf

@Will Barnard thanks so much for this info!! It's very exciting to think of walking into a home and knowing so I need to sit down and really focus on the numbers so I can get to that point!

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