All Forum Posts by: David Robertson

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.

If you can ballpark your estimates within $5k then I'd say you are pretty good at estimating.

I think the real problem is, if you are finding "deals" where $5k "makes or breaks the deal", then that is not a deal!

Your flips should have much more profit margin in them, so if you are $5k off on your rehab estimate you will still make money.

Hey BP!  

I'm excited to share we just launched our new Material Catalog tool which is the central location where you can manage your list of all of your commonly-used material SKUs for your projects.

Most house flippers and real estate investors use the same list of materials on all of their projects. They have specific paint colors, vanities, doors, knobs, appliances, etc that they use on every flip or rental property.

Your new Material Catalog tool is where you can save all of your commonly used materials, and then you can easily pull those material selections into your project estimates and budgets to seamlessly create project shopping lists for your projects to save you countless trips to the hardware store!

So let’s show you how it works!

Easily Pick Select Your Materials on the Estimator

One of the biggest benefits of the Material Catalog is the ability to easily make your material selections directly in the Repair Estimator tool as you are building your budget.

Generate a Material Shopping List Report

You can also generate a comprehensive material shopping list report which is an interactive, shareable and printer friendly report that lists every material item you need to purchase for your project so you can easily submit a bulk purchase order, saving you countless trips and hours visiting the hardware store!

Here's the problem with estimating tools that "estimate for you"....if you are using this 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 some 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.

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

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.

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

Hi Vince,

Thanks for considering FlipperForce for your flipping business.  FlipperForce doesn't currently have a Comps tool, but we just launched nationwide property data & owner data and one of our engineers is starting to build our Comps tool which should be available next month.

It looks like the Deal Automator software you mentioned is just a white-labeled version of Realeflow.

The primary difference between FlipperForce and Realeflow is they focus primarily on leads and finding deals.

FlipperForce is primarily focused on the stage after you find a lead for managing the flip/rehab, which includes the process of analyzing the deal, estimating the rehab, creating a SOW, tracking construction schedules, photos, docs, expenses, etc.

There are other apps available like Privvy, Propelio, FlipComp, Propstream that specifically focus on Comps and data that could work as well, but Redfin should have similar data for free.

There are 2 formulas you can use to determine the Maximum Purchase Price you should offer for a flip:  

- The 70% Rule Formula

- Maximum Purchase Price Formula

The one you are using is the 70% Rule formula which should really only be used as quick rule of thumb to quickly evaluate a deal.

In the 70% rule you are discounting the ARV by 30%. The 30% discount roughly includes 15% for profit, and an additional 15% for "Fixed Costs" like buying, holding, selling & financing costs.

Once a property looks like it's going to be a good deal using the 70% rule, you should use the Maximum Purchase Price Formula to refine your numbers and calculate an exact offer price.

Maximum Purchase Price = After Repair Value - Repair Costs - Buying Costs - Holding Costs - Selling Costs - Financing Costs - Desired Profit

The Maximum Purchase Price formula is the most accurate calculation, because it requires you to think about, consider & calculate every single project cost on the project.

Hi Craig,

We do keep our eyes on pricing and update our cost database and templates to adjust for market changes.  We made some adjustments to our pricing earlier this Summer 2022 to reflect some material pricing changes that we have seen.

With that said, construction pricing can vary substantially based upon many factors including the project location, property type, specific SOW, material selections, contractors used, season of the year, etc.

In fact, pricing can vary substantially from investor-to-investor and every investor will have different prices they use.  An experienced investor that has flipped hundreds of houses in a market, will likely get better pricing than a new investor and have completely different labor prices/SKUs they use.

So really it's best to use our estimate templates as a starting point to help you get started.  We have already spent hundreds of hours of our time building these templates with lists of repairs and price ranges to save you time.  

Once you load in a template, you should review our pricing, talk to your local contractors and and pick out the specific materials you are going to be using.

For example, our templates list a "vanity" as a line item and include $150 for labor, and $500 for material.  You can certainly find a a builder grade vanity for cheaper than $500 at Home Depot, but you can also spend $2k+ on vanity if you are buying a ultra luxury/custom vanity.

Our $500 "allowance" for the vanity is meant to be a starting point of what we think is reasonable for an average grade vanity on a typical mid-grade house flip.  If you are doing a luxury house flip in Beverly Hills, you will want to adjust the pricing to fit your specific market and materials you are using.

Save Your Own Custom Estimate Templates

Once you review all of the pricing and adjust the pricing to fit your specific market and the level of finishes you will be installing, you can save the estimate as a template so you can re-use your own pricing sheet going forward (instead of FlipperForce's).