Jerry Nortons Price Per Square Foot Estimator?

Question

Hey guys,

I’m in Oregon.

I’m sure there’s people here who have seen the Jerry Norton flipping and wholesale videos online.

My question is about the numbers he throws out as rule of thumb numbers. I’m aware he invests all over and these numbers get fudged accordingly, but does anybody here have any input to their experiences with the numbers?

This is his breakdown for houses under 1500 sq:

1) Light rehabs (carpet and paint) come in at $15,000.
2) An average rehab being full remodel…kitchens baths etc is $30,000.
3) Heavy rehab is full gut and exteriors at $60,000.
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I’m pretty familiar with my own pricing as a contractor and I’m pretty middle class with my clients. I don’t care do the “just make it work again” jobs, but I also couldn’t tell you anything about WOLF appliances.
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i can see how the light numbers could work….I could see how you could squeeze a cheap average remodel in at that cost…. But it has to be really cheap! However the full gut I can only see that price covering the exterior, I tend to come up with about $100/sf for gut jobs with new exterior.

anybody else in here wanna talk prices? The good thing about being a contractor is you can do all the work. The bad thing About being a contractors is you don’t know what other contractors cost.

Will Barnard · Answer

These gurus will say just about anything to sell yo there newest program, secret, or bootcamp! Humbug!If you want to go about your real estate business using some arbitrary price per Sf for rehab calculations, be my guest, but if you are going to swim in those waters, let me first toss you a life vest - you will need it!Let's say you have two identical homes on the same street, both 3 beds, 2 baths and 1500 sf single story, model matches. One home (Home A) needs a new roof, new electrical panel, new water heater, foundation repairs, plus the remodel upgrades of new kitchen, baths, flooring, new windows, paint, landscape. The second home needs just the remodel upgrades. If you used the arbitrary price per Sf calculation, you would be way way off on home A compared to the later.The ONLY way to estimate rehab costs correctly and accurately is to build your SOW (scope of work) and then use your itemized spreadsheet to input each line item needed with each respective cost. Even if you go the route of employing 1-3 contractors to bid it, you still need to provide them a SOW. Knowing what each line item will cost takes time and effort too. You need to research material costs and then labor costs for each line item. Once you have those, you can plug them in to your spreadsheet, then plug in the SOW line items and bam, you have your final number. Once you do this enough, you will learn to break up the home into sections (kitchen, bath, flooring, paint, windows, doors, landscape, roof, HVAC, electrical, plumbing, etc.) and you will know your average cost per section (or per sf in the case of flooring, tile, etc.) (and per linear foot for trims). Then you simply walk through each potential purchase and add up the sections in your head and walk out with a number that will be very close. Lock it in closer using your spreadsheet.

Brendan Lawrence · Answer

well if thats not one of the most spot of replies to a post ive seen on this forum then I don't know what is. thanks Kevin, not only was that a good piece of mind but incredibly informative, I could picture the whole scope of work entailed and got an image for the project. I appreciate this!

Kevin Scott · Answer

@Brendan Lawrence I think his videos were a while back and I believe he also has a video on using price per sq ft which is a little better. Plus I think it's geared towards wholesalers so they at least account for something in their offers. Of course, each market is a little different. I use sq ft unit pricing in Washington and it gets me close enough to make a buying decision. Prior to lumber going way up, we did an almost full gut in Chehalis for around 60k and one in Tacoma that was mid-level for around 30k. But the Chehalis house was small (1300 sq ft). It was one of the first projects we did after we stopped doing the rehabs several years back (went to just buying and reselling or listing most properties) but most of our subcontractors were still around from when we were doing a lot more volume. Typically our unit pricing was known for most of the areas we are in prior to buying which obviously helps. Exception of demo, electrical, and plumbing which I either get a quick rough estimate or use a past job. Chehalis was an extremely rough hoarder house that I didn't get to go into prior to buying so assumed the worst and it was worse than that :) but it was right around 60k regardless. Current material prices would probably raise the cost by around 4 to 5k more. 1/3 of the extra material because the roof needed to be fully re-sheeted. Work involved: 3/4 of house new drywall and all interior paint Floors throughout Roof and sheeting 1/2 the siding 1/4 of the exterior trim and all exterior paint All new windows and doors All new electrical, 1/2 new plumbing (all new fixtures) All interior trim and new dividing wall Tile shower and backsplashes New kitchen and appliances Massive amount of garbage and demo and light landscaping (plus a shed removal) I worked with and helped a new GC on this so I am not including his markup but it was small as he wanted me to show him how to approach this and we pretty much scheduled all the subs and gave him their info to use on his own projects. Future projects with the same GC are guaranteed profit lower margins plus other incentives. .

Brendan Lawrence · Answer

well that makes me feel a bit better. I'm assuming that you're using the same crews each time and have come accustomed to how much they'll cost you for each portion? fortunately I can get the projects going at MY cost to operate and I'll have to work in other crews as I confirm that my pricing is similar to theres....or adjust for the next one.

David Avery · Answer

No two houses are alike, Older homes require plumbing and electrical issues. Sometimes Roof and Furnace/AC. Another home may not need any of the above. And just new make up!With material and product going out of this world in cost. You can almost spend $10 more per foot just for the material increase!So many investors ask me the same questions and I need 10 minuets in a house and I can give you the numbers within $2500.Unless this is your full time job, no book or Podcast will alter my experience.Since we are both in the business. We are the experts!