Real Estate Broker · Austell, GA · Member since 2013 · 72 posts · 24 votes
Hello BP Members,
Can anyone explain how the rehab costs differ for small multifamily properties versus single family homes (SFH)? I purchased the BP Book on Estimating Rehab Cost, but considering it's focused on SFH, I'm curious how I should adjust potential rehab costs.
I currently own a duplex, but now looking at a triplex that needs renovations. Are the costs simply three times the SFH costs for the same square footage? Are they typically a percentage more? Is there a rule I could use to estimate (1% rule, 50% rule)? Is it just a measure of square footage?
I'm in the Atlanta metro, but would love to hear the various ways other multifamily investors consider rehab costs. Thank you.
I currently own a duplex, but now looking at a triplex that needs renovations. Are the costs simply three times the SFH costs for the same square footage? Are they typically a percentage more?
If you read the BP book on estimating, it certainly didn't advocate estimating based on square footage... :-)
Just like the book recommends, put together a detailed scope of work and budget from there. But, instead of adding one set of kitchen cabinets (for example) to the SOW, you might need to add 2 or 3 sets to the SOW for the triplex. Likewise with many of the other components.
For things like roof replacement, you'll still only have one roof, but the size of the roof is going to be greater, so your SOW will have a larger square footage for the roof, resulting in a proportionately higher cost.
Happy to answer more specific questions if you have them, but I certainly don't recommend trying to use per-square-footage estimates until you get very, very comfortable with estimating the "long-hand" way...
I currently own a duplex, but now looking at a triplex that needs renovations. Are the costs simply three times the SFH costs for the same square footage? Are they typically a percentage more?
If you read the BP book on estimating, it certainly didn't advocate estimating based on square footage... :-)
Just like the book recommends, put together a detailed scope of work and budget from there. But, instead of adding one set of kitchen cabinets (for example) to the SOW, you might need to add 2 or 3 sets to the SOW for the triplex. Likewise with many of the other components.
For things like roof replacement, you'll still only have one roof, but the size of the roof is going to be greater, so your SOW will have a larger square footage for the roof, resulting in a proportionately higher cost.
Happy to answer more specific questions if you have them, but I certainly don't recommend trying to use per-square-footage estimates until you get very, very comfortable with estimating the "long-hand" way...
Real Estate Broker · Austell, GA · Member since 2013 · 72 posts · 24 votes
10y
Thanks for the reply @J Scott, I haven't read the entire book yet. I just started and was wondering how I should be interpreting and/or adapting the information considering my focus was multifamily properties. I'll finish the book and then come back with more detailed questions.
Financial services executive · Frederick, MD · Member since 2015 · 609 posts · 341 votes
10y
@Derek Caffe You're going to have more hardware, appliance that sort of thing. Four kitchens, more bathrooms, more showers, more electrical wiring since it is all likely metered separate and thus more breaker boxes and so on and so forth.
Read the book man. It's a starting point that will give you enough knowledge to figure out 95% and then we are all here to help you out with the complicated 5%.
Broker · Logan, UT · Member since 2013 · 1k+ posts · 1k+ votes
10y
I just meant scope of work for your mechanical systems.
If the building is post 1986 and originally constructed as multi-family you should be okay and your city may have permit history including plans.
However, single families that were converted or older homes that need the mechanicals upgraded can be tricky.
You want each unit to have their own appliances and metered separately. Typically this means hot water heater, furnace, and electric panel. Make sure there is no crossed wiring (a panel in one unit controlling fixtures in another).
Also, how are your common areas handled? Do you have shared laundry? Some configurations have an extra meter to control these common areas paid for by the landlord. How does that fit into your scope of work?
This is the main distinction between multifamily and single family and can be expensive either up front or in the long-term if you manage a shared utility environment.