Newbie to real estate, wondering the process of estimating rehab

[Angela Schroeder]

Hi! I am completely new to real estate investing and am looking to invest in a new property. Many in my area are really beat up, how do I go about finding out the estimated costs for budgeting purposes to see if it's a deal or what I can offer for it? Does anyone know of any hacks to rehab costs? 

Thanks!!!

[Michael Kevorkian]

@Angela Schroeder welcome and good luck! There is always going to be some unexpected obstacle between plan and execution so keep that in mind when you start out. Like Mike Tyson said, "Everyone has a plan until they get punched in the face". That being said, @Joe Aiola made some great points to consider and follow. Over the years I have been able to come to some pretty good price per square foot scenario depending on the level of work needed. These numbers change as time goes by but they still hold true for the most part in my business.

1. Interior only renovation = $45.00 per square foot

2. Interior & Exterior renovation = $65.00 per square foot

3. Gut rehab = $95.00 per square foot

4. New construction = $160 per square foot

These rough numbers all consider the finishes to my local market and builder-grade finishes. Nothing super fancy or custom as that would add to the cost. Ultimately you should talk with other investors if you can, get bids from multiple different subcontractors. If you call 5 plumbers, 5 electricians, 5 HVAC specialists, etc. you can expect 3-4 to actually show up and from them, 2-3 will actually give you a bid. From there you'll know what the job cost range should be within reason. 

I highly recommend you manage your own project or at the very least stay super involved. Where I have gotten in trouble in the past is having a general contractor that I blindly hired because they said they can do it all. The next thing I knew they were shorting all of the subs (I had to pay them eventually despite paying the GC for that portion the job already), juggling jobs and always ALWAYS behind on the project timeline and over budget on costs. 

I hope this helps and I'm looking forward to hearing how your first project goes.