All Forum Posts by: David Robertson

I like Homestyler.  It's pretty straight forward and easy to design basic floor plans and it's free!

Hi Justin,

I have a spreadsheet uploaded to my BP Fileplace which can be used for analyzing flips and estimating the rehab costs, see the link below:

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

A down payment is not a cost to the project.  A down payment is equity that you are investing into the deal to pay for the costs so it should not be used in the profit calculation. 

In the most simple terms, the profit is income minus expenses

The detailed profit calculation on a flip is as follows:

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

Profit = $189,000 - $95,000 - $40,000 - $3,800 - $6,000 - ($11,340 + $2,891.70 + $3,000 + $3,000) - $4,745

Profit = $19,223.3

So it looks like you are calculating the profit correctly, but the process you are using to calculate it is pretty confusing in my opinion.

One other comment, I don't see lender interest payments in your calculation?  It looks like there is $4,745 in points/fees upfront, but I don't see the actual interest paid to the lender...

Otherwise, to add to my post above, this is my boilerplate response to people for learning how to estimate rehab costs.  

Learning to estimate rehab costs is a process that takes time and experience.  

#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

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.

#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!

If you aren't comfortable estimating costs on your own or aren't willing to put in the work to learn how to estimate rehab costs then you need to Team-Up, Partner, Or Hire Someone Who Can Help You Estimate Rehab Costs.

Yes, you are on the right track.  Every investor will have their own custom pricing sheet tailored to their specific market, materials and finishes.  

I have a couple of spreadsheets in my fileplace that are pre-built with common categories, repairs and prices that can help you get started, but you really need to review all labor & material pricing and customize it to fit your specific project needs.

Simple Estimate Spreadsheet

Detailed Estimating Spreadsheet

If the siding on the back & sides of the house are in good shape I would consider just painting the existing siding and then spend your savings replacing the siding on the front elevation & adding curb appeal.

To add on to my post above, this is my boilerplate response to people for learning how to estimate rehab costs:

#1 Read 'The Book on Estimating Rehab Costs'

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

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.

#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!

If you aren't comfortable estimating costs on your own or aren't willing to put in the work to learn how to estimate rehab costs then you need to Team-Up, Partner, Or Hire Someone Who Can Help You Estimate Rehab Costs.

Pay A GC For A Consultation And Property Walk Through

You can hire a General Contractor to provide a consultation to walk the property for you and provide an detailed estimate breakdown of what they would charge for the repairs to the property. Expect to pay between $100 to $300 to have a contractor provide a consultation.

Partner With Someone That Has Construction Experience

To get your feet wet, you could partner with another house flipper, contractor or construction professional that could help with Estimating Costs.

Hi Rob,

#4 Ideally, you need to be able to inspect the property, create a list of everything that needs to be repaired/replaced and put together an estimate yourself.

The problem with options 1, 2, & 3 is that they just take way too much time.  Real estate is fast paced, and you will likely be competing against other investors to get the property.  You need to be able to act quickly on a potential deal and you can't afford to be wasting time waiting on a Contractor/Inspector to show up to the property and put together an estimate.  

Contractors are also extremely busy right now, so if you don't have the property under contract you shouldn't expect any contractor to waste their time giving you a free quote for a project that has a very slim chance of actually happening.

So ideally, you should be able to inspect the property, create a SOW and create a preliminary estimate upfront for the property so you can make an accurate assessment of what the property is worth and what you should offer for the property.

Once you get the property under contract, you will generally have a 10 to 14 day window to perform inspections/due diligence where you could have an Inspector or Contractors out to give you quotes...but again Contractors are extremely busy, so it could take a week+ to get Contractors coordinate and get a quote back.

Once you get your Contractor quotes back you can re-evaluate the deal and make a 'go/no-go' decision or renegotiate a price reduction.

With that said, you could wasting a lot of peoples time by not knowing your numbers up front and making bad offers that you can't stand behind.  

Hey William,

Here's a general timeline and order of operations for a cosmetic rehab project for a 3 bed, 2 bathroom property that involves minor exterior work and mostly cosmetic interior finishes including new kitchen cabinets, bathrooms, interior paint, floor finishes throughout.

Cosmetic Rehab Timeline (Exterior & Interior Simultaneous Crews) 

Other Considerations:

Simultaneous Exterior & Interior Work

This schedule assumes 2 crews on-site to start the project, one crew starting the exterior work, while another crew is working on the interior finishes for a total of 32 Calendar days (crews working weekends).  If you you can't have 2 crews working simultaneously on the Exterior or Interior that will automatically add a week to your schedule.

Working Weekends

If your crews don't work weekends that could also add 10-ish days over the course of a month.

Planning Stage (Inspections, SOW, Contractor Bidding & Project Prep)

The schedule assumes you will be starting the renovation on day 1 of property ownership, which means during the closing period you are performing inspections, creating a SOW for the project and getting bids from contractors so you can hit the ground running.  

If you wait to start planning, receiving bids until after you close on the property, you could waste 30 days planning the project & awarding contracts. 

Permitting
Local building departments have different rules and procedures for permitting and some take a notoriously long-time to get permits approved which could add several weeks to your schedule.  

Project Management, Schedule Slippage & the Critical Path
This schedule also assumes you are running a tight-ship and have all of your crews scheduled and showing up on time.  Any delay on the critical path could delay the entire project completion!

Overall, if you hit the ground running, have multiple crews on the project you should be able to complete a cosmetic rehab in about 30 to 50 calendar days.  If you aren't prepared upfront, run into permitting issues or mismanage your contractors that schedule could very easily slip to 60 to 90 days+.

I think the numbers speak for themselves! An 85k profit (20% of ARV) is a great profit, especially for a 2 month cosmetic rehab!

Your finishes look stylish and modern.  Did you virtually stage the property photos?