All Forum Posts by: Kuba F.

Hey Everyone,

This is Kuba Fietkiewicz, founder of online house flipping software REIkit.com, based in Los Angeles. Today I wanted to discuss common barriers to getting accurate property rehab cost estimates for your fix and flips.

If you've already flipped a few properties, you have some idea of how to approach getting construction cost estimates and maybe even have a solid process in place for doing so on future flips. The question is, if you're estimating your own rehab costs without a GC, how much time and effort did you spend in itemizing, quantifying, and estimating costs in a spreadsheet or on paper? Were you able to estimate reasonably accurate material and labor costs for all of those repair items?

When doing my own flips, I found that my rehab repair items were a pain to type up, sort, and price, and that's why I created the online Rehab Estimate tool.

In the Detailed Cost Estimate section of the tool, you'll find every item you need to price out repairs -- down to the quantity, size, and cost of the nails used for drywall. Simply browse for the item, enter the quantity, and the tool calculates a material and labor unit cost and adds it to your project list.

The best part is that all of the costs are pulled right out of the 2018 Construction Cost books by one of the most respected names in the industry. In addition, they are indexed to a zip code, meaning that the costs you find in the tool are the most up-to-date and accurate for your area.

If you'd like to see how the Rehab Estimate tool works for your business, click here to try it out: https://www.reikit.com

Any questions or feedback about the software, I'd love to hear it in the comments below.

Cheers!

Kuba

Hi @Riley Hoffman

Definitely educate yourself on the process of estimating and JScotts book among a few others are great in getting your first estimating legs.

You not only need to understand how to estimate, but what to estimate and everyone, including JScott has a strategy for that.  You can read how I plan what I do in this featured BiggerPockets blog post that I wrote a while ago on "How to order your house flip construction tasks":

https://www.biggerpockets.com/blogs/8814/63630-how...

Once you have a basic understanding of what goes into a flip then it's a lot easier to understand how to approach pricing one out, because ultimately you have to be the one that comes up with the scope of work.

I talk more about that responsibility in this BiggerPockets blog post on "How to get a rehab estimate pre-offer":

https://www.biggerpockets.com/blogs/8814/68805-how...

Cheers!

Kuba

A fascinating walk down memory lane.

It would be interesting to see how these quotes have gone up over time in those areas.

Currently in Los Angeles, if I'm putting in most of the sweat equity, then I've been able to go as low as $20/square foot, if I self manage it goes up to at least $50/square foot, and if I hire it all out, we very easily end up close to $100/square foot.

There's just so much competition for labor in this and many other markets, that it is a contractor's seller market right now.

Because of that, generally I analyze my deals at hire prices, and our rehab budgets are rarely below $120K. There's currently no way you can make money on a paint and floors house rehab unless you're doing it yourself, so you have to make bigger swings and add square footage, or add value in some other way.

Hi Everyone,

My name is Kuba and I'm the founder of REIkit.com, a house flipping software company in Los Angeles. I'm excited to be a part of Biggerpockets and wanted to let the community know about a free tool that I built out, called the Comps Adjustment Tool, that anyone can use.

If you've ever found yourself in a situation where you were looking for comps as part of your ARV calculations, but everything that was coming back was just not the same as your subject property, you need this tool. More bedrooms? Less Bathrooms? Pool? No pool? This all matters.

On my very first flip I did not account for the fact that all my comps had a garage, and my subject property did not. That was an expensive mistake that shaved $10,000 off the profitability of my flip. If I had just taken a few extra minutes to adjust my comps, I could have avoided it entirely, instead of finding out months later when it was time to sell. It's exactly why I built out the tool, so that others could avoid the same scenario. Wouldn't you like to know if you're going to lose money, before you make the deal?

I encourage you to try out the free comps adjustment tool:

https://tools.reikit.com/comps

If helpful, here is a video on how to adjust your comps:

https://tools.reikit.com/education/how-to-use-comps-get-an-accurate-arv

Feel free to reach out to me here in the comments or on the site chat if you have any questions or suggestions.

Cheers!

Kuba

Hi Everyone,

My name is Kuba Fietkiewicz and I run a house flipping software company, REIkit.com, in Los Angeles.

I wanted to take a minute to talk about one of the most important no-cost steps you can take, that you may not be doing now, in order to get your ARV valuations as accurate as possible.

You probably already know that in order to get to an After Repair Value, you need to find sold comps. It is very rare, however, to find recent comps that are exactly the same as the subject property. The solution is to use a comps adjustment process called a sales comparison analysis to account for differences in features, such as garages and pools.

Imagine that you had three comps with a garage, and your subject property doesn't have one. That's a $10,000 difference that will dramatically change the profitability of your deal. This is why it's crucial to take that extra half hour of your time to adjust your comps, and I encourage you to, with the free comps adjustment tool that I created on the site.

This extra step will help you get confidence that your ARV numbers are accurate for the property you are considering.

https://tools.reikit.com/comps

Check out the tool at the link above. Additionally, I created a video on how to adjust your comps to perform that sales comparison analysis and get your ARV using these sales comparison techniques that most appraisers use:

https://tools.reikit.com/education/how-to-use-comps-get-an-accurate-arv

Any questions or feedback, I'd love to hear from you in the comments below.

Cheers!

Kuba

Hi Everyone,

My name is Kuba and I run my real estate investment software company, REIkit.com, out of Los Angeles. REIkit was born when I made some serious mistakes while flipping houses and wanted to find THE magic formula for how to make sure it didn't happen again. Through building REIkit and doing more flips, I finally figured out that there is no magic formula to be found. The only thing we can do is educate ourselves as much as possible and try to account for every single risk and cost we can think of before jumping into a new project.

That's what I had in mind when I built out all the tools for REIkit. With each tool I build, I ask myself: "Does this tool help my customers prevent the mistakes I made back then? Does this tool help my customers succeed?"

The comps adjustment tool is particularly close to my heart, because I lost over $10,000 on my first flip by not accounting for features and amenities of my comps (such as garages and pools) when I did my initial deal analysis. This tool is free for everyone to use and will improve your estimated ARV in under an hour. Is an hour of your time worth $10,000?

I'll leave you with the link to the free comps adjustment tool if you want to try it out: https://tools.reikit.com/comps

Comment below if you have any questions or even to just let me know how it worked out for you.

Cheers!

Kuba

Myself and everyone I know uses REIGuard for Builder's Risk from NREIG.  

Ultimately you have to look at your annualized ROR to see if a flip is worth it.  10% on a flip that takes 1 year is a whole lot different than 10% on a flip that takes 1 month.  

After that it's worth looking at dollar amounts, as generally the construction risk is similar whether you flip a 100K house vs a 500K house of similar sizes, making the risk reward equation much more favorable in higher price points.

From my remote investing experience your 30% ROI is likely going to get eaten up pretty quickly with the extra team that you’ll need. My suggestion is that if you go the JV route, that you do so with a realtor that also flips so as to at least try to remove that cost. You should have sales in house as you scale anyway, so ideally you would start with that.

@Michael Menard

I wrote this BP blog post that addresses some of the purchase, sale, and holding costs that you may not be including in your analysis: 

https://www.biggerpockets.com/blogs/8814/70530-fix...

Furthermore, the cheaper the house the more you'll need to put into it, with your estimates being hugely under what they will actually be.

You should really read the BP/Jscott book on estimating rehab costs to get a better understanding of the costs involved in a renovation, and then input those costs into either your own spreadsheet, or the one I use when first going through a property:

https://www.biggerpockets.com/files/user/kubaf/fil...