HOW TO ESTIMATE REHAB COST

[Jason Malabute]

When I first started investing in real estate my biggest concern was estimating rehab cost. I was concerned because rehab cost has so many moving parts and I thought the bigger the number the more likely I would have gotten finessed by a contractor. So my fears made me go into analysis paralysis . I wanted to know how much everything cost down to the screws and the mere hour cost of the GC. I almost lost my mind researching the internet and calling local hardware stores. 

Luckily, I realized there was a better way of estimating rehab cost. So I reached out to my PM and my mentor and asked for contractor recommendations. I got connected to 3 local reputable contractors . One contractor said rehab will cost $7k to rehab a typical 800 sqft unit. The 2nd contractor said $8-9k. The third contractor said more like $10k. Since I'm conservative I'll use $9k rehab when  cost when I am underwriting my deals.

The best part is it took me 1 hour to get this estimate (not hours). Last thing you guys is always put a 10% buffer on top of your rehab budget. I have done a $9k, $14k, an $34k rehabs and every time we have always gone over our budget. Consider using a 10% buffer because you will always go over your rehab budget. Trust me.

[Christopher Hill]

Thanks for the helpful tips! Estimating rehab seems like it can be a handful, but it seems you have been figuring it out as you go! I really like J Scott's book Estimating Rehab Cost also.

Best of luck moving forward!