Estimating Rehab Costs - What am I doing wrong?

[Gregory Butterfield]

Hey there BP, you guys are looking handsome as always!

I am a hopeful real estate investor, attempting to use the BRRRR method, and I am having trouble calculating rehab costs. For example, while analyzing a property and taking notes on items that needed to be replaced; I had determined that I would need $18.5K in just materials. This was only to re-floor the house, rehab the 2 bathrooms, paint indoors, replace doors, and appliances. The $18.5K did not even include labor or any siding work that needed to be done to the property. I used the excel spreadsheet from The Book on Estimating Rehab Costs to make sure that I was including all of the materials that would be associated with these repairs.

After doing research I feel like $18.5K in just materials is way too high. While looking at one of David Greene's rehab projects in the same city (http://greeneincome.com/index.php/2016/12/01/alexon/), David paid $6.5K to have the property repainted, kitchen floor replaced, cabinets repainted, new doors installed, plumbing repaired, electrical upgraded, garage repaired, bathrooms refinished, new appliances and fridge installed, and some repairs made to a handrail. My estimate was way over that and I did not even plan on touching the electrical or plumbing systems for this project. With my rehab estimates always being at least $20K, I am pricing myself out of most properties and they don't seem to be in line with other investor's costs.

What am I missing BP? I did use Lowe's to price out the materials to at least get a ballpark so that may be part of the issue. Additionally, I tried to only pick mid to low grade materials and steered away from high-quality, expensive materials.

Any suggestions are greatly appreciated and if you would like to, please share some of your real-life rehab numbers on projects to help us noobs out! Thank you BP, you rock!

[James R.]

@Gregory Butterfield

I'd recommend calling some local painters for rough estimates. They should be  able to give you a general dollar amount per square foot. 

My painter changes a $1.18/sq ft for single story exterior. That includes pressure washing, caulking, and painting exterior, soffit, and fascia. Prices can vary greatly by area. 

Your interior price seems high. I just paid $1300 for a 1600 sq ft SFR and that included all materials and repainting the kitchen ceiling. I did install all new baseboard myself which I sprayed before hand so that cut down on the price.

Your appliance price seems high. You should be able to get a basic rental stainless steel kitchen package in the $1500 to $2000 range. My last SS kitchen package was $1350; look for sales. Obviously a high end house/kitchen will require you to spend more. 

What are you doing for a kitchen cabinet refurbishment? Are you talking about just paint and hardware or are you replacing all the doors? I've had acceptable results with a paint called Cabinet Rescue and using a Wooster micro plush roller. Not as good as spraying but a lot less prep, quicker, and cheaper. Easy to do touch-ups. If you can DIY then $200 for paint, rollers, and pulls. 

If the glass and door trim on the medicine cabinet are in good shape then just sand and repaint the interior to save a few bucks. Same with your exterior doors; if they are solid just sand, putty, paint, and new hardware. 

If I had to replace a sliding glass door then I'd strongly consider upgrading to a french door. Looks good, more secure, better seal, renters and buyers prefer them. 

Your LVP price is right on. Easy to install yourself. Keep in mind if you install new flooring then you'll need to remove and reinstall your baseboard or use quarter round. Extra time/money.