best way to estimate rehab costs?

Question

Hello all...I am have been working on analyzing deals but really struggling with estimating rehab costs. Any suggestions?

Alfath Ahmed · Answer

Hi April - I have done a ton of BRRRR's now which has made it easy to guess the rehab cost. However, I would write down in an excel sheet all of them and process that go into a rehab and do a estimation column and write-down those numbers.

I can give you an example in my market here in Cbus for SFH 1,200 sqft:

Roof - $7k to $9k

Siding - $9k

Windows - $450/window labor + material

Flooring - $5/sqft

Paint - $3k to $4k

Standard Kitchen - $7k

Standard bathroom - $5k

This is just a general idea from what I am seeing.

Bruce Woodruff · Answer

Yes, just find a good veteran GC to walk the properties and throw out numbers for you. You may have to pay a couple hundred $$, but it's well worth it..Bear in mind that an hour walk-though may or may not uncover everything that will be on the final Scope Of Work....so add 20% to the number that you get from the GC.

You will need to do this quite a few times before you will be able to do it yourself, someone said you can after just one time, but that would be wrong. Every project is way different, too many moving parts in this business....

Shannon Mogilinski · Answer

Hi April--Seasoned GC who now only does my own real estate investments here--ABSOLUTELY have a GC or contractors walk the property and give you an estimate.  To do that however, you need to give them a list of what you are looking to accomplish (assuming you do not yet have any type of plan) and here is why...the scope of work will greatly vary the pricing and you will not be able to have an apples to apples comparison.  AND this is crazy important because--guessing, presuming, and assuming are not how you get to reliable numbers for a renovation.  If you do not have someone you can call to perform the work at that estimated cost, it will be a struggle to meet your budget.  I still work this way myself even as a 15 year veteran.  Also, they know things about where you are working...

Keep in mind that your municipality will have codes and regulations as well that can be hidden costs.  For example, do you need a permit to swap out windows (lead renovation EPA requirements for the age of home or do you need tempered or fall protection) all the way to a city that has $3,000 permit fees.  On that note, I highly recommend do not ever skip the permit process and always check in with the city;  Not doing so can quickly tank any deal. Permits are a pain but liability for a poor renovation is brutal.  The city is your first line of defense.  Best of luck

Ko Kashiwagi · Answer

Have you gotten any bids from contractors in the area? Once you get one estimate, you can have an easier time ball parking for other deals.

Logan Lambert · Answer

Hey April,

The best way to estimate rehab costs is to connect with contractors. I would suggest finding an investor friendly contractor who understands the difference of the scope between a flip and a rental and preferably is an investor themselves. Establish a relationship with them and learn their numbers and it will make it much easier to crunch numbers if they can not get out there right away and you need to make an offer. What area are you investing?

Min Zhang · Answer

I usually have a contractor walk through the property to give me an estimate. That way, I can see if the rehab costs make sense and if there’s a good profit based on the sales comps. It helps me feel more confident about the numbers before moving forward

Ray Lin · Answer

The best way is to get actual estimates from contractors. I had to repave a driveway for an apartment complex. Three different contractors gave me 3 quotes, one for $30K, $60K and $110K. I went with the lowest bid. The labor and materials cost varies widely in different markets. When I'm submitting a bid for a home purchase, I'm always estimating on a higher cost for rehabs.

John Morgan · Answer

Just double whatever your bid is and you’ll be good.

Caleb Brown · Answer

You need to have someone to walk it. Photos will not work on estimating. Happy to connect for the KC area.

best way to estimate rehab costs?

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