Estimating rehab cost

[Jordan Futch]

Hi folks and happy holidays to everyone. I'm running numbers on deals for the purchase of my first investment property and I have most everything down, but when it comes to the rehab budget, I feel like I'm shooting in the dark. For those of you that have experience with rehabs, how do you go about estimating the cost you'll putting into your rehab budget before you make the purchase. I'd like to be able to get general contractor bids on the scope of work before hand to run accurate numbers but I'm not sure if that's the correct process. Thanks in advance!

[Steven Lowe]

Originally posted by @Jordan Futch:

Hi folks and happy holidays to everyone. I'm running numbers on deals for the purchase of my first investment property and I have most everything down, but when it comes to the rehab budget, I feel like I'm shooting in the dark. For those of you that have experience with rehabs, how do you go about estimating the cost you'll putting into your rehab budget before you make the purchase. I'd like to be able to get general contractor bids on the scope of work before hand to run accurate numbers but I'm not sure if that's the correct process. Thanks in advance!

 It takes a while to get the general feel for rehab costs down because it's dependent on a few factors, including, time of year, type of property, how the rehab is being financed, and the scope of work.  Most GC's won't do full estimates on spec unless you at least have the deal under contract because it's a lot of work for extremely low probability.  

I recommend you talk to a couple of local contractors and get a rough price per SF for rehabs for the type of properties you're looking at purchasing.  You can use it as a measuring stick when evaluating deals.  It will help you weed out the ones that don't make sense.