How to Estimate ARV and Rehab Costs?

[Christian Sabatini]

While looking for potential investments, I've tended to steer away from analyzing deals that require heavy rehab simply because I am not sure how to estimate rehab costs. I've watched the BiggerPockets video going over how to estimate ARV (based on comps of your post-rehab property, etc.), but how do I know how much I actually would need to put into a property?

Any feedback is greatly appreciated!

[Evan Polaski]

@Christian Sabatini, this market is incredibly hard.  ARVs, talk to realtors, and factor in quality of area.  Mortgage rate increases tend to have a bigger impact on lower end properties where the buyer pool is going to be more focused on monthly payments.  

Getting rehab costs: best option is to get a contractor to walk property with you and quote job.  J. Scott's book gives some decent cost estimates, but labor and materials are all over the place right now (i.e. we finished a gut rehab in March, and our current rehab is now coming in anywhere from same to 50% more for various quotes for similar scope of work).  I would also price shop finish materials at Home Depot, Lowes, tile stores, cabinet suppliers, etc, because your design decisions can greatly impact overall budget, i.e. $2 psf tile or $30 psf tile.