Estimating Advanced Rehab/Flip Costs in a Competitive Market

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Estimating Advanced Rehab/Flip Costs in a Competitive Market

Erica Post
Bothell, WA · Member since 2016 · 4 posts · 2 votes
Does anyone have any tips for working to quickly estimate advanced repair costs in a competitive market? - How to work/partner with contractors to do a walk-through estimate prior to getting a house under contract (and how do you structure this deal/partnership) - Estimates/templates for residential property rehab/flip/update costs based on decade of construction and maybe based on duration of vacancy or deferred maintenance if known (I've found some general guides online of things to look for but nothing that gives an estimate by square foot that could be used for a quick estimate) - Others? I'm currently looking to purchase my first deal, which I plan to do as a live-in flip. While I have a good amount of comfort estimating "basic" repair/rehab costs at first glance (as comfortable as someone new to RE can ever be) - such as redo kitchen, bathroom, floors, paint, roof, etc. - there are a couple homes (found via the MLS) that I have passed on that were likely good deals but required repairs that I wasn't comfortable estimating in the short time I had to decide, or was uncertain enough that I didn't want to take the chance. As this would be my first deal, I want to be very careful to not bite off more than I can chew. Examples of issues include visible mold, exterior structural issues (crack in exterior brick that made it look like the house may have been settling unevenly), crack in foundation, etc. I am hoping that the BP community has some recommendations that would help me make an educated decision without having to bring in a specialist to evaluate each potential major issue prior to getting a house under contract. I'm currently reading J Scott's book on estimating rehab costs, and would love any other reading recommendations as well. I'm targeting the greater Seattle area, and specifically South King County (White Center, Burien, Tukwila, SeaTac, Rainier Beach, Renton) Also, if you're currently evaluating a deal in the greater Seattle area (King, Snohomish, or Pierce Co.) and are willing to allow me to shadow, please contact me. Thanks!
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Ryland Taniguchi
San Francisco, CA · Member since 2015 · 786 posts · 717 votes
10y

There is no book or website like homewyse that will reflect accurate prices in the Seattle market. Best to ask all the experienced investors what they are paying. Prices even changed dramatically from last year. Since I am always asking the top rehabbers, I have an answer good for September 2016.

$75 per sq ft here in the Seattle area for full gut-out rehab for flips that includes hvac, electrical, plumbing, siding, roofing, window, drywall, etc.

$60 per sq ft for gut-out rehabs for BRRRR.

$35 per sq ft here in the Seattle area for a cosmetic rehab including tile, countertops, carpet, paint, light fixtures, etc. The cheapest I heard from one of the experienced people was $20 per sq ft.

I would not listen to people who aren't experienced, agents, not the groups that sell your properties at the auction or their own deals.

A lot of rehabbers including myself have tried to go cheaper but keep finding not only can it cost you more but you waste valuable time.

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  • Alex Chin
    Seattle, WA · Member since 2015 · 500 posts · 243 votes
    10y

    @Erica Post - I would recommend getting ahold of J. Scott's book on flipping, he does a good job of breaking down many of the steps and processes that an investor needs to go through in order to finish out a successful flip.

    For estimating materials, homewyse dot com has been a good resource for me for the Puget Sound area.

    0Reply
  • Erica Post
    OP
    Bothell, WA · Member since 2016 · 4 posts · 2 votes
    10y
    Thanks Alex Chin ! Yes, I'm already reading J Scott's book. I'll look into Homewyse as well.
    0Reply
  • Sarah Lorenz
    Specialist · Ann Arbor, MI · Member since 2016 · 355 posts · 191 votes
    10y
    Make lots of investor and contractor friends so you can walk through their projects and ask them about costs?
    0Reply
  • Ryland Taniguchi
    San Francisco, CA · Member since 2015 · 786 posts · 717 votes
    10y

    There is no book or website like homewyse that will reflect accurate prices in the Seattle market. Best to ask all the experienced investors what they are paying. Prices even changed dramatically from last year. Since I am always asking the top rehabbers, I have an answer good for September 2016.

    $75 per sq ft here in the Seattle area for full gut-out rehab for flips that includes hvac, electrical, plumbing, siding, roofing, window, drywall, etc.

    $60 per sq ft for gut-out rehabs for BRRRR.

    $35 per sq ft here in the Seattle area for a cosmetic rehab including tile, countertops, carpet, paint, light fixtures, etc. The cheapest I heard from one of the experienced people was $20 per sq ft.

    I would not listen to people who aren't experienced, agents, not the groups that sell your properties at the auction or their own deals.

    A lot of rehabbers including myself have tried to go cheaper but keep finding not only can it cost you more but you waste valuable time.

    4Reply
  • Alex Chin
    Seattle, WA · Member since 2015 · 500 posts · 243 votes
    10y

    @Erica Post - I would definitely listen to what @Ryland Taniguchi has to say on this subject, he is a lot more plugged into the market than I am, although he also operates at a scale that gets him better pricing/contractor responsiveness than others.

    0Reply
  • Erica Post
    OP
    Bothell, WA · Member since 2016 · 4 posts · 2 votes
    10y

    @Ryland Taniguchi - That's incredibly helpful. Thank you. I am in agreement that I'd rather do it "right" than "cheap"- it seems that in just about any circumstance, cutting corners only hurts you in the end when you find that you've stepped over dollars to pick up dimes.

    0Reply
  • Ryland Taniguchi
    San Francisco, CA · Member since 2015 · 786 posts · 717 votes
    10y

    The cheap route usually ends up more expensive because it costs you time. And the holding costs are more than the savings if you use hard money. I have tried hiring my own supervisors and labor as the GC and it doesn't save money on rehabs. I can get lower bids from GC than doing it myself. 

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