Estimating Rehab Cost

[Dennis Burgess]

What advice can be given to a new investor with no construction background looking to master the Rehab process? 

[David Nisbett]

Dennis, I would advise against jumping into any deal without having a very good understanding of the numbers. The rehab on a project has the potential to make or break a deal, and I would emphasize that even more if aren't familiar with the construction process and its associated costs.

I recommend reaching out to local contractors for quotes on tasks you envisage carrying out on deals you are pursuing.

Most contractors at small rehab level will know to single digit % margins what the $ cost would be per square foot. They'll need a few basic details on the structure, i.e. age, condition, building style (timber/brick), location etc.

This should furnish you with enough information to know whether the deal could possibly work.

Keep a record of all this information, and I would start building a database of what the cost is for each task/trade per sq ft.