All Forum Posts by: David Robertson

I did try out the new BP "Rehab Estimator tool" and it looks like you have zero control over the cost of anything. All of the prices are provided by "Kukun" with no ability to customize the pricing or use your own prices.

The problem with estimating tools that "estimate for you" like Kukun is you have no idea how any of these prices are being calculated and most of the calculations are likely wrong for your specific project needs.

Every project is different and every investor is different, which is why every investor across the nation should have their OWN pricing sheet that they use that uses their specific materials and labor prices from their local contractors. You should not be using someone else's prices (or Kukun's algorithm), you should be using your own prices from your local contractors and using the specific material selections you picked for your project.

Here's an example of how bad some of the data is in Kukun and why it's not practical for investors that are wanting to create accurate estimates for their projects:

I added "Exterior Doors" to my project, and I was told that 4 single doors and 1 double door is $59,352 in Kansas City, MO which is 20x what I would actually pay as an investor.

I believe the above was a bug, but nonetheless there was no way for me to fix this issue or understand why or how it was calculating this value.

In summary, you don't need a fancy algorithm to tell you what something costs, you just need to know basic math and have a general understanding of how much materials cost and what contractors charge for specific repairs.

For example, if I have 5 exterior doors I need replaced (4 single entry doors, 1 french patio) this is how I would estimate the costs:

- Single exterior door labor 4 x $250/each = $1,000

- Single door material 4 x $300/each = $1,200

- French patio door labor 1 x $400/each = $400

- French patio door material 1 x $750/each = $750

Total = $3,350

Add 25% profit for your contractor and the quote should be around $5k for 5 doors.

Finding material costs is as simple as exploring Home Depot's or Lowes' websites and researching material costs.  The hard part is finding out what your contractors charge, after that it's just basic math that you can do in a spreadsheet.

I have a few downloads in my file place here on BP which might come in handy.  

https://www.biggerpockets.com/... 

https://www.biggerpockets.com/...

If you are going to build your own spreadsheet, I would setup your spreadsheet with a Category column, Vendor Column and accounts column.

Categories - this will allow you to track all of your expenses to a specific category so you know "what" you spent money on and compare it to your initial budget.

Vendors - this will allow you to track your expenses by each vendor so you know "who" you paid (contractors, home depot, etc).  You'll need to know how much you paid to each vendor for 1099s

Accounts - this will allow you to track how much you paid out of specific bank accounts, credit card accounts for reconciling expenses.

Here's the problem with estimating tools that "estimate for you"....if you are using the new BP Rehab Estimator tool you have no idea how any of these prices are being calculated and most of the calculations are wrong.

I tried out the new BP "Rehab Estimator Tool" and it looks like you have zero control over the cost of anything. All of the prices are provided by "Kukun" with no ability to customize the pricing or use your own prices.

Every investor across the nation should have their own pricing sheet that they use that uses their specific materials and labor prices from their local contractors. You should not be using someone else's prices (or Kukun's algorithm), you should be using your own prices from your local contractors and using the specific material selections you picked for your project.

Here's an example of how bad some of the data is in Kukun and why it's not practical for investors that are wanting to create accurate estimates for their projects:

I just added "Exterior Doors" to my project, and I was told that 4 single doors and 1 double door is $59,352 in Kansas City, MO which is 20x what I would actually pay as an investor.

I believe the above was a bug, but nonetheless there was no way for me to fix this issue or understand why or how it was calculating this value.

In summary, you don't need a fancy algorithm to tell you what something costs, you just need to know basic math and have a general understanding of how much materials cost and what contractors charge for specific repairs.

For example, if I have 5 exterior doors I need replaced (4 single entry doors, 1 french patio door) this is how I would estimate the costs:

- Single exterior doors labor 4 x $250/each = $1,000

- Single door material 4 x $300/each = $1,200

- French patio door labor 1 x $400/each = $400

- French patio door material 1 x $750/each = $750

Total = $3,350

Add 25% profit for your contractor and the quote should be around $5k for 5 doors.

The hard part is finding out what your contractors charge, after that it's just basic math that you can do in a spreadsheet.

I'm going to break my response down into 2 recommendations, because there are 2 phases of estimating costs that require different "apps".

- Quick Estimates/Rough Calculations 

- Detailed Estimates

Quick Estimates/Rough Calculations using the Human Brain/Calculator/Notepad

When you are first evaluating a deal you need to be able to roughly estimate costs as quickly as possible to determine if the property is a good deal and if you should make an offer.

As other's have suggested, the human brain is great at quickly making rough calculations.  Experienced investors can walkthrough a property and quickly tabulate rough costs of the major renovations in their head.

Example:

Roof $5k, kitchen $15k, bathroom $5k x 2, flooring x $3/sf, etc, etc.  

This rough math can all be done using the human brain, a calculator or notepad to help you quickly evaluate a deal without fumbling around with a spreadsheet or an "app".

Detailed Estimates using Spreadsheets/Software

The problem with the human brain (mine at least), is my brain tends to forget things, so after I walkthrough a property I like to go through a checklist to make sure I didn't forget anything.

I also like to put my estimate information in spreadsheet/software to document all of the repairs for future reference.  

Eventually, once I get the property under contract I will need to give this detailed estimate and SOW information to my business partners, lenders, Contractors, etc.  

I will also use my detailed estimate as a reference for managing my budget during construction.  

A good spreadsheet or software can help streamline this process so you aren't losing all of this data in your brain/calculator/notepad.

Spreadsheets

To start, you should really create your own custom spreadsheet with all of your typical repair items and prices that you can use as a checklist.  

Your spreadsheet should have a list of all of your labor prices that you pay your contractors in your local market, and it should also include material prices for your specific materials you use in your projects.

Estimating Software/App

There are estimating apps/software that streamline the estimating process that have additional benefits like:

- Ability to save your own custom estimate templates with your own pricing, SKUs, etc

- Ability to make material selections and include exact material SKUs in your estimates

- Ability to create shopping lists for your project materials

- Ability to create estimate reports/SOW detailing your estimated costs in a professional report

- Ability to create SOW documents for your Contractors telling them exactly what they need to include

- Ability to track and compare your actual costs against your estimates

These are all things the human brain can't do, which is why I tend to do the detailed estimates in a spreadsheet/software.

To answer your specific question, is $63k accurate for a 212sf average grade kitchen renovation?

Here's how I would estimate a 212sf kitchen renovation in Kansas City assuming an average grade materials from a big box store like Home Depot or Lowes.

Overall my price is around $10k for materials, and $7k for direct labor/installation costs + $8k for GC's OH and profit for a total of $26k. 

You could certainly save money by eliminating some scope of work, buying cheaper materials, and managing the subcontractors yourself (instead of hiring a GC) which could bring the cost down to $15k ish.  

I'm sure you could also pay substantially more if you are relocating walls/relocating plumbing locations/electrical locations, buying luxury grade appliances/materials, and hiring an expensive retail GC, but I personally would expect to pay anywhere from $15k to $25k for an average grade renovation. 

Here's the problem with estimating tools that "estimate for you"....if you are using the new BP Rehab Estimator tool you have no idea how any of these prices are being calculated and most of the calculations are wrong.

I tried out the new BP "Rehab Estimator tool" and it looks like you have zero control over the cost of anything. All of the prices are provided by "Kukun" with no ability to customize the pricing or use your own prices.

Every investor across the nation should have their own pricing sheet that they use that uses their specific materials and labor prices from their local contractors. You should not be using someone else's prices (or Kukun's algorithm), you should be using your own prices from your local contractors and using the specific material selections you picked for your project.

Here's an example of how bad some of the data is in Kukun and why it's not practical for investors that are wanting to create accurate estimates for their projects:

I just added "Exterior Doors" to my project, and I was told that 4 single doors and 1 double door is $59,352 in Kansas City, MO which is 20x what I would actually pay as an investor.

I believe the above was a bug, but nonetheless there was no way for me to fix this issue or understand why or how it was calculating this value.

In summary, you don't need a fancy algorithm to tell you what something costs, you just need to know basic math and have a general understanding of how much materials cost and what contractors charge for specific repairs.

For example, I have 5 exterior doors I need replaced (4 single entry doors, 1 french patio) this is how I would estimate the costs:

- Single exterior door labor 4 x $250/each = $1,000

- Single door material 4 x $300/each = $1,200

- French patio door labor 1 x $400/each = $400

- French patio door material 1 x $750/each = $750

Total = $3,350

Add 25% profit for your contractor and the quote should be around $5k for 5 doors.

The hard part is finding out what your contractors charge, after that it's just basic math that you can do in a spreadsheet.

You can likely find this information in the local public county records.  

If not, there is software out there like Propstream, REIPRO, FlipperForce, etc that automatically download mortgage info like mortgage original balances, estimated balances, estimated payments/rates, etc.

We just launched Nationwide Property and Owner data for over 150mm properties and 99% of property owners across the country!

Now whenever you add a new project, FlipperForce automatically downloads hundreds of datapoints about your property and insider information about the Owner, so you can have all of the data you need to negotiate the best deal with the seller!

But to answer your specific question about estimating faster and more accurately.  You need to standardize/templatize the estimating process and put together a list of all of your typical repair items and the prices you receive from your contractors.

You can populate your pricing information in a spreadsheet/software and when you have a new deal come through your pipeline you will be have a standardized process for estimating the costs.

I can generally create a very detailed estimate for a property in less than 15 minutes with my templates.

Remember, "Estimating" isn't "exactimating", your numbers don't have to be perfect.  You are trying to develop a reasonable budget that is workable for the project.  

If you are generally able to ballpark within $5k, then include $5k as a contingency in your budget to cover unforeseen costs.