Rehab Estimate for Analyzing Deals

[Lawrence M.]

I'm starting to analyze deals in the Central PA (Carlisle, Mechanicsburg, Harrisburg, Lancaster) area. I'm looking for suggestions on how others have come up with $/sqft to use in deal analysis for Flips and BRRRR's. This would be just to do an analysis. Or what other methods do you use to plug in a rehab estimate for analysis?

I've been reading Luke Weber's The Flipping Blueprint where he uses 3 levels at low $20's, high$20's, and low $30's per sqft. I see how this makes it quick and easy based on what type or how extensive of rehab you plan to do. 

[Carl Manning]

Lawrence,

I only work with Flips in Lancaster City at this point and everything starts with the After Repair Value (ARV).

Take your ARV and times it by your risk. In the past 70% would be a safe number but you can't find deals that safe anymore. More and more flippers are pushing 80%. The higher the number the more risk you are taking on and the less profit.

Finally minus your construction amount.  For a house in the city less than 1300 sqft I have been hitting around $46/sqft.  You can do rentals much cheaper than that.  Most old houses need more work than you would expect and managing contractors is very difficult right now so I would leave your self plenty of buffer for your first few houses.

(ARV X 0.75) - Construction budget = Offer price

Here is what my last deal looked like:

($175,000 X 0.75) - $45,000 = $86,000 To the seller

My all in price was $131,000.  That leaves $44,000 that gets divided up to Real Estate commissions, interest for borrowing the money, utilities, etc.  And you get the piece that if left.