Calculating Rehab cost

[Andre Walker]

Hey BP Family,

I am new to RE investing and one of my biggest concerns is Rehab cost. I know that only comes from a lack of knowledge, so I looking for advice, tips, tricks, or rule thumbs to calculating rehab cost.

I have heard on average about $25/sq ft in rehab if the home is livable and about $40/ sq ft if it is not livable. Is that about right?

Lastly, I am working with a contractor, should I send him to every house that fits my criteria and to get estimates? He is a good friend but funds are limited and I dnt want to take advantage of the friendship. Or do I should I wait until I have the property under contract and have a good sense of whether I will buy or not should I have him look at the property? I know if can get better at estimating those cost I won’t have to ask to go as frequently, any help is much appreciated.

[Evan Polaski]

@Andre Walker it definitely is.  It takes experience to really start refining your bids.  But with any rehab, even when you have done a lot, you need to build in a healthy buffer.  The house my wife and I just finished, we went in with an estimated budget of about $85k, and ending up around $110k in rehab.  Some of this was from deciding to hire out work versus me do it.  But there are always overruns.  

For us, we resided the whole house.  Originally we were planning on patching some siding and repainting the whole thing.  But our guess on matching the siding was off by about $1,000 (apparently the existing siding was very rare these days, so only one place sold it and it was really expensive).  When you took the patching cost + paint, it was only 1-2k more to completely reside the whole house, so we went for it.

We have rehabbed close to 20 homes, but there are still things we learn on each one.  I would like to say we get closer each time, but the scale of rehabs vary so much on each deal, so it is still a work in progress.