Estimating rehab work for newbie

[Daniel Petta]

Hey everyone, I'm just starting out and haven't pulled the trigger yet on a property and constantly refining my proforma model but wanted to seek advice on estimating rehab work.  Most of the deals I'm looking for are going to have some value add work that will need to be done.  Instead of floating some random number in my model for work that I have no experience in yet.  Wondering if folks have some actual costs for major rehab work such as new roofs, new/replace plumbing, upgrade electrical, etc.   

I know that no two properties are the same and everything is with a grain of salt but wanted to get a sense of what I could expect per square foot.  

I should mention that my strategy is to buy and hold for cash flow so not flipping so different scope of work than those flipping for appreciation.  I'm also looking at multifamily.

THanks,

Daniel 

[Jaron Walling]

@Daniel Petta The ONLY WAY to accurately calculate rehab costs is by walking the property. You'll want to develop a scope of work for each room and write (or type) notes for issues you find. After that you start pricing materials and factor in labor (the most expensive aspect) to complete the renovations. Finding contractors is huge. I don't have advice for that because I'm not in your market. I took the approach to learn some skills, DIY, and hire contractors for big ticket items. Your approach could be different but that's why distressed properties are fun.

You'll find real quick the best deals do NOT REQUIRE massive rehab. Kitchens, baths, flooring, HVAC, water heaters, and roofs are a must fix but if you're new to flipping or remodeling don't buy a challenging property. You'll find more surprises (every property has them) that cost you money and more importantly time. The longer it sits empty the more it costs you. 

If you're buying for cash-flow renovate with durable materials that look OK and be happy with boring finishes. It's a rental property so renovate it and run it like a business. You'll increase the value either way if you bought it correctly. Make sure the breakable/ touchable plumbing fixtures are new. That's where you'll get water leaks in the future. Replace the doors and locks. The hinges and door frames get beat up after years of abuse. Actually repair and test things on tenant turnovers. You'll fix issues before they break on Sunday evening at 9pm. Cheers.