Learning about construction/rehab costs

[Hannah Smith]

What is the best way to learn about simple rehab and construction costs? Are there online resources available? Should I ask contractors I trust to walk me through things?

I would really like to learn as much as I can even if I can’t do all the work myself.

Thanks all!

Hannah

[David Robertson]

Hey Hannah,

Learning to estimate rehab & construction costs takes time and unfortunately there's so easy and quick way of learning...Here is the process I would recommend...

#1 Read the Book on Estimating Rehab Costs

JScott's 'The Book on Estimating Rehab Costs' is a great resource for new rehabbers to learn how to Estimate Repair Costs on 25 common rehab repairs.

https://www.biggerpockets.com/store/the-complete-guide-to-flipping-and-rehabbing-physical-new-edition

#2 Explore Lowes and Home Depot to Learn About Material Pricing

Take a tour through Lowes and Home Depot (or their websites) and look at finishes materials and fixtures that you will consider using in your rehab projects. This will help you get a better idea of what tile, hardwood, carpet, plumbing fixtures and light fixtures costs for your rehabs.

#3 Contact Local Contractors for Pricing

Call local Subcontractors and get budget pricing for common repairs on your typical rehab project.

For example, call a roofer and ask what their average cost per Square of Architectural Asphalt Shingle Roofing would be on a 1,500 sf house, with a 6/12 pitch.

Note: Some contractors will be reluctant to share pricing without seeing the property, but tell them you are just looking for a rough budget number you can use on future projects.

#4 Compile Your Prices into a Spreadsheet or Estimating Software

Once you start to get a better understanding of Labor and Material costs you will want to store this data into a spreadsheet or software that you can use to help you streamline the estimating process.

The Book on Estimating Rehab Costs comes with a spreadsheet that you can use to help you populate your own database of labor pricing and material pricing. Or you can download my estimating templates I have in my Biggerpockets fileplace:

Simple Estimate Spreadsheet

Detailed Estimating Spreadsheet

There are other Estimating Softwares available as well which can help you manage the Estimating process as well...

#4 Practice, Practice, Practice

Walkthrough potential rehab properties (or find properties virtually online) and practice creating detailed scopes of work, quantifying repairs and estimating rehab costs for the projects.

#5 Get Your First Rehab Project

You can practice all you want, but ultimately you will learn the most about estimating rehab costs by actually rehabbing a house. Getting your first rehab project will require you to create a SOW, talk to contractors, compare and review bid proposals, review budgets, & make countless trips to Home Depot. You will inevitably make mistakes and underestimate things, but you will learn 90% of what you know by just doing your first rehab!

If you don't feel comfortable estimating costs, then you need to team-up with someone:

It takes time to learn how to estimate rehab costs of your projects. Ultimately, if you don't know how to estimate costs (or don't feel comfortable) you need to team-up with someone who can help you with the estimating process.

#1 Pay a GC for a Consultation and Property Walkthrough

You can hire a General Contractor to provide a consultation to walk the property for you and provide an detailed estimate breakdown of what they would charge for the repairs to the property.

Note: Creating Estimate Proposals can take Contractors several hours to create, so be respectful of their time. If you don't have the property under contract you will likely have to pay the Contractor for their time ($150 to $300).

#2 Partner with Someone that Has Construction Experience

To get your feet wet, you could partner with another house flipper, contractor or construction professional that could help with Estimating Costs.

Note: In a partnership, both parties need to bring something to the table...If you don't have construction experience, what experience or skills can you offer to the partnership?

#3 Hire an Employee

You could hire a part-time or full-time employee that has Construction Experience that could handle the process of estimating the repairs and creating the Scopes of Work for your projects.

Remember, learning to estimate rehab costs takes time, so if you aren't willing to put in the effort to learn how to estimate rehab costs then you need someone on your team to take on this important task...