All Forum Posts by: David Robertson

Hi Robert,

It looks like you've done extensive research on the current estimating software offerings available.  Here's my thoughts and feedback on your needs and lists.

a.) has a regional pricing database that can be updated with local prices,

Yes, the estimating tool should provide you with estimate templates that include price ranges to help get you started, but ultimately you should be creating your own pricing database with your own prices that fit your specific market and materials you will be using on your projects.  Now that you have a couple of flips under you belt, you should have a good understanding of what stuff costs and be creating your own database.

b.) is technically sophisticated, customizable, and flexible,

The great thing about spreadsheets is that they are completely customizable and flexible, so that is why many investors recommend spreadsheets to handle the estimating process.  The estimating software should be as customizable as a spreadsheet.  You should be able to customize EVERTYTHING (categories, repair items, prices, descriptions) add/delete rows, easily drag-and-drop rows to re-order to tailor your estimate exactly how you need it.

c.) is affordable for a 2-person operation (around the $100./mo. price range or less),

That's a reasonable budget, but can certainly find options for cheaper

d.) is scalable, for when my business grows, and

If you want to scale your business and grow your team, the estimating software should allow you to add multiple team members to your software account so your entire team can create estimates and collaborate on projects.

e.) OPTIONAL - has a suite of related features (such as soft money lenders, list of foreclosures and vacant properties, a CRM, automated marketing, etc.).

Some of the companies you listed like BuilderTrend, Xactimate, Houzz, Clear Estimates, Simsol, Autodesk are softwares for contractors/remodeling companies and not built specifically for the house flipping/rehabbing niche, so they will not have all or any of the related lead management, deal analysis, functionality you are looking for.

Other Considerations

(f) Ability to Save Templates for Future Projects
Once you get done customizing your estimate you should be able to save your estimate as a template that you can re-use on future projects.

(h) Ability to Create Estimate Reports

All of the data that you enter into your estimate should be used to generate a professional, printer friendly shareable estimate report that you can use to share the SOW and budget with your business partners and lenders.

(i) Ability to create a Scope of Work document for your Contractors

All of your estimate data can also be used to generate a Scope of Work document telling your contractors exactly what scope they need to include in their bid proposal.

(j) Ability to select project materials and create Material List Report

You should be able to assign material SKUs directly to your estimate items which will be used to generate a project material list that you can use to shop for materials.

(k) Ability to Track Contractor Bids

Once you receive bids from your Contractors you should be able to track your Contractor bids directly in the estimating tool so you can evaluate the best bid and use their number in your estimate. 

(l) Ability to Track Your Actual Expenses Against Your Budget

Once you get the property under contract you should be able to compare your actual expenses to your initial estimate so you can manage your budget and forecast profitability before it's too late.

Tool Feedback

Here's some feedback on the tools you researched.

1. Rehab Estimator Calculator (Bigger Pockets tool) - FREE

- Doesn't provide pricing, not detailed enough, not flexible enough, can't save templates, can't assign materials, can't create SOW...not really a software platform that is scalable.

2. Houzz Pro Estimating Software - $99,/mo.

- Built for contractors and remodelers, so won't have the niche flip/rehabbing tools.  

3. Buildertrend - $99./mo.

- Built for contractors and remodelers, so won't have the niche flip/rehabbing tools or template.  Also, it's way more expensive than $99/month, its probably more like $250 to $500/month

4. Xactimate Remodel (Verisk) - $50./mo. for Studio version (first year only)

- Built for insurance companies/contractors and remodelers, so won't have the niche flip/rehabbing tools or templates.

5. FlipSter System - $97./mo.

- Built for flipping niche, but not flexible enough, can't save templates, can't assign materials, can't create SOW.  I also generally don't like their marketing tactics upselling you on guru real estate programs.

6. REI/kit - $ 64./mo. for Marketing Starter; $104./mo. for Markting Success (includes more/better leads)

- Built for flipping niche and could be a good option, but I'm not sure how flexible it is or whether you can assign materials, create SOW, etc.  Also doesn't have project management tools for managing or tracking on-going projects.

7. Simsol Estimating Software - $100./mo.

- Never heard of this, website is currently down so can't research.

8. Clear Estimates - $59./mo.

- Built for insurance companies/contractors and remodelers, so won't have the niche flip/rehabbing tools or templates.

9. Autodesk Takeoff - $104./mo. to $155./mo.

- Appears to be built for large commercial general contractors that utilizes CAD drawings and 3D CAD files to perform takeoffs.  This type of software would not be useful for a flip project that won't have 3D CAD drawings.

They do have a compact view which will hide the "ghost of a post" text I believe you are referring to:

Otherwise there is an on-going thread discussing the "new look" here where people have been leaving feedback and suggestions:

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

It appears you are breaking down everything in 5% to 10% chunks.  Why not just use the actual amounts for the work that is being completed?

For example, you have 10% for demolition work for a total of $45,000.  Is demolition really $45,000?  If the demolition work is actually only $10k, your contractor will be overpaid by $35,000 on the first payment milestone.

I would breakdown your budget by specific scopes of work and pay your contractor based upon the actual dollar values being performed instead of arbitrary percentages.

As Matt mentioned your biggest carrying costs will be your interest expense if you are using a lender: 

Here's a list of typical Financing Costs and average amounts that you will likely have on your rehab projects.

• Interest Payments (8 to 12% Interest during Holding Period) - Your interest rate will vary widely depending on the type of financing, (hard money, private, conventional), and your individual financial situation. 
  
• Points (2 to 3% of the Loan Amount) - Again, depends on the lender, but you should expect to pay a few % points upfront.
  
• Other Closing Costs ($750 to $2,000) - The Lender will also likely charge other fees for miscellaneous items.
  
• Loan Origination Fee
  
• Appraisal Fees
  
• Underwriting Fees
  
• Credit Report Fees
  
• Processing Fees
  
• Rehab Draw Inspections ($175 to $250 per inspection) - Your rehab loan will be divvied up into a 'loan draws'. When you request a loan draw payment, the Lender sends a 3rd-Party Inspector to inspect the property to ensure the project is ready to receive the next loan draw payment.

Financing Costs Example

In this example, a rehabber purchased a property for $100,000, that needs $50,000 in repairs and is planning on reselling the property for $200,000. The rehab is scheduled to take 5 months to complete, but the lender requires a minimum of 6 months of payments.

The Hard Money Lender will lend up to 70% of the ARV with a 12% interest rate, 2% points upfront, with $1000 in origination fees, plus 4 rehab draw inspections of $150 each.

Loan Amount = ARV x % of ARV
Loan Amount = $200,000 x 70%
Loan Amount = $140,000

Monthly Interest Payment = (Loan Amount x Annual Interest Rate) / 12 Months per Year
Monthly Interest Payment = ($140,000 x .12) / 12
Monthly Interest Payment = $1,400

Total Interest Payments = Monthly Interest Payment x Loan Term
Total Interest Payments = $1,400 x 6 months
Total Interest Payments = $8,400

Loan Points = Loan Amount x Points %
Loan Points = $140,000 x .02
Loan Points = $2,800

Rehab Draw Inspections = Draw Inspection Amount x # of Inspections
Rehab Draw Inspections = $150 x 4
Rehab Draw Inspections = $600

Holding Costs are calculated by multiplying your Monthly Holding Costs x Flip Holding Period

Typical Monthly Holding Costs

Here's a list of typical Holding Costs and average amounts that you will likely have on your rehab projects.

• ​Property Taxes - Property taxes will vary depending on your local property tax rates. To find the property tax amount for a property you can search your local county assessor's website.
  
• Property Insurance ($100 to $150/month) - You will need to get a Vacant Property Insurance which will cover loss of the property and provide liability insurance for a few hundred $ per month.
  
• Utilities ($200 to $350/month) - For utilities, think about how much you pay for your own personal residence in utilities. Generally, in the Kansas City area you will have around $200 to $350/month in utilities depending on the season.
  
• Maintenance ($50 to $100/month) - Maintenance costs include any kind of on-going property maintenance such as lawn mowing or snow removal.
  
• HOA Dues - If your property has a Home Owner's Association, you will likely have Annual HOA dues for the property. Generally, you can find HOA information on the property listing or the neighborhood's website.

Typical Flip Holding Period

A typical rehab project timeline is as follows:

• Purchase Closing (take possession)
  
• Planning, Permits, Bidding (1 week to 1 month+) - If possible, you will try to start the planning before the closing to gain a head start. The planning process can take as little as 1 week or as long as 2 months if you have large project that requires plans, plan review, & permitting.
  
• Rehab/Construction (2 weeks to 4 months) - For a cosmetic rehab, the project may only take a few weeks, but for a larger 'gut job' it could take up to 4 months.
  
• Listing for Sale (1 week to 2 months) - In a hot seller's market in a desirable area, you may have an offer the 1st day you put the property on the market. In a buyer's market, your property could sit for 1 to 2 months before you get an offer.
  
• Closing (1 to 2 months) - Once you get an offer under contract, it generally takes around 30 to 60 days to process the closing.
  

In a best case scenario, with a cosmetic rehab that sells quickly, you are looking at a holding period of 2 to 3 months. Overall, the average rehab will likely take around 4 to 6 months.

Holding Costs Example

Let's run through a quick example of how to calculate your Holding Costs for an average rehab that takes about 5 months to complete from taking possession to final sales closing.

In the table below, the monthly holding cost amount is being multiplied by the holding period to calculate the Total Holding Costs.
‍

In this example, we are spending $605 a month on holding costs during the 5 months of ownership which amounts to $3,025 in Total Holding Costs.

Note, if you are financing the purchase you will also be paying monthly interest to your lender which I usually calculate separately from holding costs.

There was a recent discussion on this here:

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

A down payment isn't a project cost or an expense, it is equity that you are investing into the deal to fund a portion of the overall project costs.

Your project costs are funded by either a loan or cash (equity) that you invest into the deal.

The formula for analyzing flip profitability is to subtract your project costs from the After Repair Value.

Profit = ARV - Project Costs
Profit = ARV - Purchase Price - Repair Costs - Buying Costs - Holding Costs - Selling Costs - Financing Costs

I'd checkout Homestyler or Floorplanner.  Both are fairly cheap and easy to learn and setup.  They both have 2D and 3D options.

Here's my visual feedback.  As @Mike S. stated I think showing all of the poster stats with the poster description, post count and vote count is very distracting and also confusing.  When I see the User post count & vote count, I keep thinking that is the # of posts on this Forum post.  That information seems unnecessary.

Otherwise, by just making some small visual changes I think the overall forum posts would look a more compact and easier to scroll through.  In the screenshot below the overall height of each forum post has been reduced by 50%. 

Generally speaking, I also think the font-sizes are too big.

Just my .02 cents.

Hi Jesenia,

Learning how to estimate rehab costs is a process that takes time and experience.  Here is the process I recommend to new house flippers to learn how to estimate rehab costs:

#1 Read 'The Book on Estimating Rehab Costs'

First, you need to build a foundational knowledge of construction, inspecting properties and putting together a detailed SOW.

JScott's 'The Book on Estimating Rehab Costs' is a great resource for new rehabbers to learn how to Estimate Repair Costs on 25 common rehab repairs.

https://www.biggerpockets.com/store/the-complete-g...

#2 Explore Lowes and Home Depot to Learn About Material Pricing

Take a tour through Lowes and Home Depot (or their websites) and look at finishes materials and fixtures that you will consider using in your rehab projects. This will help you get a better idea of what tile, hardwood, carpet, plumbing fixtures and light fixtures costs for your rehabs.

#3 Contact Local Contractors for Labor Pricing / Hire a GC to Consult

Call local Subcontractors and get budget pricing for common repairs on your typical rehab project.

For example, call a roofer and ask what their average cost per Square of Architectural Asphalt Shingle Roofing would be on a 1,500 sf house, with a 6/12 pitch.

Note: Some contractors will be reluctant to share pricing without seeing the property, but tell them you are just looking for a rough budget number you can use on future projects.

You can also pay a General Contractor a consulting fee of a couple of hundred dollars (per house) to walkthrough a few properties with you and provide a detailed estimate of prices that you can use as your 'menu for future projects.

#4 Compile Your Prices into a Spreadsheet or Estimating Software

Once you start to get a better understanding of Labor and Material costs you will want to store this data into a spreadsheet or software that you can use to help you streamline the estimating process.

The Book on Estimating Rehab Costs comes with a spreadsheet that you can use to help you populate your own database of labor pricing and material pricing. Or you can download my estimating templates I have in my Biggerpockets fileplace:

Simple Estimate Spreadsheet

Detailed Estimating Spreadsheet

There are other Estimating Softwares available as well which can help you manage the Estimating process as well...

#5 Practice, Practice, Practice

Walkthrough potential rehab properties (or find properties virtually online) and practice creating detailed scopes of work, quantifying repairs and estimating rehab costs for the projects.

#6 Get Your First Rehab Project

You can practice all you want, but ultimately you will learn the most about estimating rehab costs by actually rehabbing a house. Getting your first rehab project will require you to create a SOW, talk to contractors, compare and review bid proposals, review budgets, & make countless trips to Home Depot.

​You will inevitably make mistakes and underestimate things, but you will learn 90% of what you know by just doing your first rehab!