How do you estimate Rehab/Repair Estimates?

Question

Hey BP, curious to know how investors calculate the rehab or repair estimates on properties. I know it's dependent on a lot of different factors, whether it's distressed, things like remediation, full foundation or light foundation, conversions, cosmetics. But when you're calculating a spread , What is the biggest factor you play in to see that it's worth the investment play?

Jules Aton · Answer

Agree with @Caleb Brown when doing rehabs in a certain area after a couple you should be able to expand that and have a gut feeling for the next property. My napkin estimate has been fairly accurate in a couple of different states.  The first time out of state I had a contractor walk through to ensure I wasn't way off. The second one, different state, with a solid investor RE agent I just eyeballed it to make a quick offer and it was fine.

Caleb Brown · Answer

Best play is paying a GC and review scopes of work. You can see line by line what items cost based on SQ FT. Then you can use that as you walk properties yourself. As you walk and review you'll quickly get a grasp

Ravi Kaku · Answer

One thing I've noticed from working with a lot of Texas investors is that the experienced ones usually don't miss because of the purchase price—they miss because they underestimate the rehab budget and holding costs.

The biggest factor I see is having a realistic scope of work before making an offer. Cosmetic rehabs are fairly predictable, but once you start getting into foundation, plumbing, electrical, roof, or structural issues, your contingency becomes just as important as your estimate.

The investors who seem to do the best usually:

• Get contractor input early (or have reliable pricing from past projects).
• Build in a contingency for unknowns.
• Include carrying costs, insurance, taxes, utilities, and financing costs—not just construction.
• Leave enough profit margin that the deal still works if the rehab runs 10–15% over budget.

I'd rather see someone pass on a marginal deal than force the numbers to work. Curious what everyone else uses—do you estimate rehab by price per square foot, detailed line-item budgets, contractor bids, or something else?

How do you estimate Rehab/Repair Estimates?

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