Scope Creep in the BRRRR Method

Jake BakerBusiness Member

Flipper/Rehabber · San Diego, CA · Member since 2020 · 1k+ posts · 696 votes

What tools or processes have you implemented to estimate rehab costs more accurately and avoid scope creep in BRRRR projects?

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Andrew SyriosPro Member
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Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
1y
I would definitely recommend reading J. Scott's book on estimating rehab costs, it's a must read in this area: https://store.biggerpockets.com/products/the-book-on-estimat...
In addition to that, I would check out my article on due diligence. Scope creep is a huge problem and the more you learn up about the project up front, the easier it is to figure out what actually needs to be done and avoid surprises (or pass on deals that need more than you initially think): https://www.biggerpockets.com/blog/due-diligence-ultimate-gu...
I highly recommend building a contingency (I do 20%) into your rehab budgets for unexpected issues. Something almost always comes up and that helps you be realistic when evaluating deals, securing financing, etc.
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Jake BakerBusiness Member
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Flipper/Rehabber · San Diego, CA · Member since 2020 · 1k+ posts · 696 votes
1y
@Andrew Syrios I looked at my last five flips to calculate the rehab cost overrun; the average was 15%. One project went sideways, two went as planned, and two were slightly over budget. I concluded that 20% was a good number going forward.
Great article by the way.
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Andrew SyriosPro Member
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Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
1y
Quote from @Jake Baker:

@Andrew Syrios I looked at my last five flips to calculate the rehab cost overrun; the average was 15%. One project went sideways, two went as planned, and two were slightly over budget. I concluded that 20% was a good number going forward.
Great article by the way.

Thank you Jake, I appreciate it! And yeah, 15-20% was what I was normally seeing as far as an overrun which is where the contingency came from.
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