Rental Property Investor · Pottstown, PA · Member since 2017 · 119 posts · 38 votes
Good Afternoon Investors,
When quick screening potential BRRRR deals, many variables can be found online such as after repair value, market rent and property taxes. The rehab cost is more elusive. Is there a way to quickly estimate rehab costs without having to visit potentially hundreds of properties? I am wondering how seasoned investors obtain the rehab cost number in an efficient way so they can quick screen, and either dig deeper or move on to the next potential deal. Is there a rehab rule of thumb to use when quick screening BRRRR deals?
There is no rule to use for estimating Rehab costs for the BRRRR strategy. Some experienced Rehabbers have used an amount per square foot to come up with a general number. Such as $30 per sq ft. But this has obvious limitations. Finish quality, Large system replacement (eg. roof or electrical) can all muddy the numbers. I have used this a few times for properties I could not go see. You need to have some decent current photos to at least have a chance. I go strictly be numbers for my initial analysis to weed out most properties. Anything meeting my minimum criteria justify a look. Either myself, my Realtor, or sometimes my GC will go by to look at it. Even though I have walked through roughly 30 properties I do not consider myself experienced enough to do it sight unseen. If you cannot do it yourself at least have your Realtor go by and take lots of pictures and give their opinion of the condition. I strongly recommend you get J Scott's "The Book on Estimating Rehab Costs" available here on BP. It breaks down the process step by step and provides you a good foundation.