Estimating Rehab Costs

[Dylan Robinson]

Hey everyone,

I'm new to REI and I'm wondering if you guys have any advice to share on coming up with rehab estimates when you're just starting out, and don't have a long track record to go off of? Obviously you need something within reason (if not exact numbers) to plug in and figure out if a deal pencils or not. Is it just a matter of reaching out to GCs and asking for a list of generalized estimates for common rehab work? Is that something they'll do prior to looking at any potential deals under contract? Any insight would be greatly appreciated!

[Jonathan Greene]

You can not do it if you don't know the numbers yourself. It takes a very long time to even get in the ballpark. This is why most wholesalers are terrible because their numbers are never even close on the repair costs. You can read The Book on Estimating Rehab Costs by @J Scott as a guide, but the current numbers for your area will be different.

Don't let someone tell you that you can just do per square foot. That does not work and is only for experienced renovators who know their buy box and know they will always go to the studs and redo everything.

Just get out in the field, see every dump on the market, take sneak photos to show to a contractor, and get some investor and contractor friends who will be in the ballpark on the costs.

[Dylan Robinson]

Quote from @Jonathan Greene:

You can not do it if you don't know the numbers yourself. It takes a very long time to even get in the ballpark. This is why most wholesalers are terrible because their numbers are never even close on the repair costs. You can read The Book on Estimating Rehab Costs by @J Scott as a guide, but the current numbers for your area will be different.

Don't let someone tell you that you can just do per square foot. That does not work and is only for experienced renovators who know their buy box and know they will always go to the studs and redo everything.

Just get out in the field, see every dump on the market, take sneak photos to show to a contractor, and get some investor and contractor friends who will be in the ballpark on the costs.

Understood, Thank you very much! His book is next on my list; just looking for ways to actively do something (and to your point, relevant to the market I’m looking at). How have you gone about this process for markets outside of your own? Asking your agent (or other on-the-ground person) to look at the property and take pictures in your place?

[Jonathan Greene]

Quote from @Dylan Robinson:

Quote from @Jonathan Greene:

You can not do it if you don't know the numbers yourself. It takes a very long time to even get in the ballpark. This is why most wholesalers are terrible because their numbers are never even close on the repair costs. You can read The Book on Estimating Rehab Costs by @J Scott as a guide, but the current numbers for your area will be different.

Don't let someone tell you that you can just do per square foot. That does not work and is only for experienced renovators who know their buy box and know they will always go to the studs and redo everything.

Just get out in the field, see every dump on the market, take sneak photos to show to a contractor, and get some investor and contractor friends who will be in the ballpark on the costs.

Understood, Thank you very much! His book is next on my list; just looking for ways to actively do something (and to your point, relevant to the market I’m looking at). How have you gone about this process for markets outside of your own? Asking your agent (or other on-the-ground person) to look at the property and take pictures in your place?

If you are new and out-of-state, you are behind the 8-ball for sure and need to be very careful. Agents, for the most part, like 99%, know nothing about rehab costs. The photos online won't be of much use to you as the photos where the money spend is at are in the basements, attics, and the exterior of the house, and every corner of those if that helps.

[Dylan Robinson]

Quote from @Jonathan Greene:

Quote from @Dylan Robinson:

Quote from @Jonathan Greene:

You can not do it if you don't know the numbers yourself. It takes a very long time to even get in the ballpark. This is why most wholesalers are terrible because their numbers are never even close on the repair costs. You can read The Book on Estimating Rehab Costs by @J Scott as a guide, but the current numbers for your area will be different.

Don't let someone tell you that you can just do per square foot. That does not work and is only for experienced renovators who know their buy box and know they will always go to the studs and redo everything.

Just get out in the field, see every dump on the market, take sneak photos to show to a contractor, and get some investor and contractor friends who will be in the ballpark on the costs.

Understood, Thank you very much! His book is next on my list; just looking for ways to actively do something (and to your point, relevant to the market I’m looking at). How have you gone about this process for markets outside of your own? Asking your agent (or other on-the-ground person) to look at the property and take pictures in your place?

If you are new and out-of-state, you are behind the 8-ball for sure and need to be very careful. Agents, for the most part, like 99%, know nothing about rehab costs. The photos online won't be of much use to you as the photos where the money spend is at are in the basements, attics, and the exterior of the house, and every corner of those if that helps.

Absolutely, at this point everything helps. Thanks again!