Estimating Rehab Costs by J Scott: 2023

Rehabbing & House Flipping
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Estimating Rehab Costs by J Scott: 2023

Jewel B.Pro Member
New to Real Estate · Lehigh Valley, PA · Member since 2021 · 352 posts · 120 votes

Happy Tuesday everyone,

I've just started reading "Estimating Rehab Costs" by J Scott (and will then also read his book on flipping) and I see it's a revised edition from 2019, which is obviously pre-Covid and therefore associated supply chain issues and increased costs and general inflation.

Does anyone know if there will be a third edition coming out in 2023? Or if you're able to give an estimate % increase in labor and material costs (particularly if you have actually read the book and have been active in flipping or rehabbing since then), that would also be much appreciated. Of course, if you've simply been active in flipping/rehabbing even without reading the book and can note your % increase in costs over the past few years, I would also appreciate that as well.

Thanks!

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Jaron WallingPro Member
Rental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
3y

@Jewel B. Going beyond the books is the best way to learn rehab budgets. Real world experience is everything. I read J. Scott's first book and it's valuable. I've read other books as well but without working with contractors to get quotes for projects it's hard to put the pieces together. 

Hands down the most expensive work is electrical. It's dangerous and wire is expensive. Can't really go cheap on this work. The second most expensive is roofing, plumbing, or painting (depending on details). We have remodeled a few SFH in the last four years and our budget has grown from $17k to about $23-25k for a rehab (including new roof). So that's a 23% increase on comparable size properties. That's just my experience with starter/rental properties. 

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  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    3y

    @Jewel B.

    If not you can subscribe to rs means to get data

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  • Cory J ThorntonBusiness Member
    Real Estate Agent · Raleigh, NC · Member since 2021 · 240 posts · 281 votes
    3y

    @Jewel B.- I have not read the books mentioned. I think your answer is going to be market specific. I think across the board there are going to be increases in labor, but some markets may not have the same demand pressure on materials. 

    If you have contractor relationships in a target market, they could probably give you some really good insights. If you have strong local bank relationships those can also be helpful. Bankers are managing construction loan draws and talking to contractors daily. They keep their finger on the pulse of this stuff. 

    Another good resource is Ivy Zelman. Her data and knowledge on single family housing is phenomenal. I haven't accessed any of her paid reports, but at least once a month I will hunt down any podcast with her on it and glean what I can from those conversations. Walker and Dunlop frequently have her as a guest. 

    I hope you're able to get some more specific answers on this discussion. I would be very curious to see what kind of increase everyone is expecting. 

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  • Jaron WallingPro Member
    Rental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
    3y

    @Jewel B. Going beyond the books is the best way to learn rehab budgets. Real world experience is everything. I read J. Scott's first book and it's valuable. I've read other books as well but without working with contractors to get quotes for projects it's hard to put the pieces together. 

    Hands down the most expensive work is electrical. It's dangerous and wire is expensive. Can't really go cheap on this work. The second most expensive is roofing, plumbing, or painting (depending on details). We have remodeled a few SFH in the last four years and our budget has grown from $17k to about $23-25k for a rehab (including new roof). So that's a 23% increase on comparable size properties. That's just my experience with starter/rental properties. 

    2Reply
  • Bob S.
    Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
    3y

    Reading books is 100% not going to give you the info you need. You must get out there and get real life experience. I am certain the books will tell you it cost about 5k to remove and replace a 80k BTU furnace. Well that is incredibly incorrect. We do them for 1700 total. Or 3, 4 k to install a new HW tank, again, wrong, 1k total. Roof 400- 500 a sq, we do them for $240- 250.  I can provide many examples. Again, get a deal, walk through with someone that has experience. Watch how it takes them 10 min and they will know what it will cost to do the reno, yes 10 min or so . real life vs books any day

    All the best 

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  • Scott E.
    Contractor · Scottsdale, AZ · Member since 2010 · 2k+ posts · 3k+ votes
    3y

    J Scott is pretty active around the forums still. I'm sure he'll chime in on if he plans to release another edition.

    But I'll offer my 2 cents as an active house flipper. Labor and material costs have gone up pretty steady for the past 10 years I've been doing this. I used to be able to do a gut rehab for ~$35k, now that same job will cost me $135k (granted I am opting for nicer finishes these days).

    Covid exaggerated the rise in prices of labor and materials, but I'm starting to see and hear indications that this is slowing down. I'm building a house right now and the only things that we need to order ahead of time are trusses and the garage door. Back in the covid days we would have been ordering basically everything right now (appliances, bathtubs, light fixtures, AC unit, etc).

    All that being said, your best bet is to link up with a general contractor in your market and have this discussion with them. What it costs me to remodel a house in Scottsdale, AZ is going to differ a lot from what it costs you to remodel a house in Lehigh Valley, PA.

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  • Jewel B.Pro Member
    OP
    New to Real Estate · Lehigh Valley, PA · Member since 2021 · 352 posts · 120 votes
    3y

    Thanks for the input everyone. Naturally I was already intending to pair the information from the book with real life resources, as it's intended to be used. Like I said, I had just started reading and was curious how much costs had gone up in general.

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