New to estimating renovation numbers

[Eric Braxton]

First time running numbers for BRRRR. I've read J Scott's estimating book and a couple of others. Do the numbers in this book hold up with today's pricing?

Any alternate/more reliable methods?

[Michael Zane]

@Eric Braxton, J Scott's book lays out a nice framework for estimating rehab costs, but I wouldn't place heavy reliance on the numbers listed in the book.  When thinking about rehab costs, I like to take a few different approaches (see below).  BUT, Before you even start thinking about costs, it's critical to get on the ground with an investor-friendly real estate agent to see the property.  It's simply impossible to know what the property needs in the way of rehab without seeing it in person (or at least Facetime, etc. if it's far away).

1. Direct experience is the best way. If you've ever done work on your own house, then you likely have some data points already.  If not, ask friends and family who have done work on their properties.  To the extent that people are willing to disclose costs, it can be a huge help as you estimate rehab costs for the first time.  It can also help corroborate estimates from contractors as they come in.

2. Work with an investor-friendly real estate agent in the market you're interested in.  These types of agents typically have experience with rehabs (many are also investors).  Even if they don't have direct experience, they almost certainly work with other investors regularly.  Investors like to discuss rehab costs with their agent as part of the offer and negotiating process.

3. Befriend a contractor.  This can be a great way to pick a contractor's brain.  This becomes an especially viable strategy if you give the contractor work on your primary residence as a means of kickstarting a relationship. Once you've established a relationship and built credibility, I find that contractors are usually willing to help you think through costs.