J Scott's book on rehabbing - how outdated?

Question

Hey all, I know there have been a lot of changes in the market in the last 4 years since J Scott revised his book Estimating Rehab Costs. I'm jumping back into real estate looking to secure my first deal - my weakest point right now is estimating costs. I just read J's book and while I understand that the ultimate answer is to call contractors myself just like he says, is there a rule of thumb of any sort that can be used to convert his ballpark 2019 numbers to ballpark 2023 numbers?

Russell Brazil · Answer

The prices in the book were never applicable to my market at all from the start. But the book can be about learning HOW to price things, and HOW to come up with a scope of work.

For instance. How much does a roof cost?

Well roofs arent just priced at I pay X for a roof. They are priced on a per square basis. 10 feet by 10 feet. Is it 3 tab shingles or architectural. So while his $250 per square price didnt ever apply to my $350-400 per square price I pay in DC (Its more now) it is the concept of how to price it that is important.

(and btw, I already knew how to price everything, I usually just read the books to find all the mistakes/flaws....but Jasons book are amongst the least I have issues with, so kudos to him)

Tim Jacob · Answer

I would echo the book is a nice starting point sentiment.  I would break your costs in to 2 sectors.  Are you flipping or are you in for buy and hold.  If you are buy and hold you really want to limit your deferred maintenance.  It can really crush you later on.

Every place is a case by case basis.  I would look at things during your walk through then get a good home inspection.  After that getting someone like myself to review it with would be best to get better ballpark numbers so you can line item expense things and not just simply say a bathroom is 15k or whatever.

That being the case when working on old homes especially its important to factor in whether infrastructure has been replaced.  I have a lot of remodel and maintenance experience from doing property management and project management remodel work including full replacement of infrastructure for a while. Because of my extensive experience I recommend looking for something with new infrastructure to void excessive costs.  Ive bought and helped others buy old buildings with newer infrastructure which halved if not more the budgets of the renovations.  Cosmetic renovations are substantially cheaper.

The way to save money is to project manage yourself and maybe do some of the work.  Project managing is no fun but unless you have a substantial buffer is necessary.  If you don't want to do that  pay the project manager appropriately as J Scott talks of that.

People who skimp on project management because they want to brrr have a tough couple first few years until the deffered maintenance stabilizes.  Brrr is great but their are limits.

Chris Farinella · Answer

I asked this same question before reading and the answers were pretty spot on. Even before costs went up there were too many variables to rely on the books numbers entirely, but the book is great for identifying scope of work and key issues to look for when evaluating the condition of each component of the house.

Eliott Elias · Answer

I wouldn't use that book to estimate costs even if it was made today. My labor costs change when I drive an hour north to a different market. It's impossible to streamline what labor costs, most that i've seen from the book are retail prices not investor.

Bob Stevens · Answer

You will 100% NOT get an idea of rehab cost reading books, each city is different. Connect with someone doing deals, they will show you how to find them. They will walk the property with you and not have GC with them, You will learn about pricing. Stop reading books and get hands on experience. Any property in my market we can walk it and know the est in under 15 minutes, you will get to that point as well, IF you take my suggestion.

All the best

Bob Stevens · Answer

Crazy right, its the same material!!! But they get it down here. \So just about 10k in material and about 18k in labor for two days!! But have no choice.  came out nice though.

Bob Stevens · Answer

I JUST PAID 500 a sq in SC, x 55 sq OUCH, vs the 240 I pay for my investment props in Cleveland, SAME material crazy!!!

Drew Sygit · Answer

You can use HomeAdvisor to get a better ESTIMATE of local prices

Russell Brazil · Answer

Thats more than I pay here in DC. Though there are places that charge that high or more here. Im paying about $450-465 a square here right now.

Marcus Auerbach · Answer

You have to add a little for both labor and material, we have had a couple years of inflation. Labor rates went up last year alone 5.1%. But the book is still great. Construction cost is messy and tends to fluctuate anyway, even when you always rehab the same type of house like we do.

Your location matters probably more than the year. By location I mean your State, but there are also differences within. I can tell you that in the Milwaukee metro area prices are higher than an hour into rural Wisconsin. And within Milwaukee it depends if you are in an affluent neighborhood or just the hood.

Ultimately contractors and landlords have one thing in common: both will charge as much as they can! Construction is expensive, but the book arms you with the knowledge to at least know what's reasonable.

J Scott's book on rehabbing - how outdated?

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