Cost per sq ft (SoCal)

[Carlos Castellanos]

For those of you So Cal Flippers/Rehabbers doing fix/flip in LA County, Riverside County, San Bernardino County, I had a friend give me the following numbers and wanted to hear feedback from others who are "in it" regularly.

For quick repair costs calculation on a “standard” rehab we use $22.00 per square foot. A “Standard” cosmetic rehab we include: All New Flooring (carpet and hard surface floors), Interior and Exterior paint, baseboards, electrical and plumbing fixtures, new kitchen and bathrooms (including cabinets, granite, appliances), blinds and window treatments, doors and a little bit of landscaping such as a flower bed or some plants. If the house needs a new roof we add $6000 and new HVAC add $5000. These are just guidelines for a quick analysis to determine if we should make an offer or spend time visiting the property before making an offer (when available). Last 10 deals we’ve done were “sight unseen!”.

What are your thoughts on the numbers above? TIA!

[David Robertson]

Here is my rough estimate of the the Scope of Work you described for a 1,500 sf, 3 bed, 2 bath rehab in Kansas City.  I would imagine SoCal is significantly more expensive.

My estimate is $26/sf for the Scope of Work you described which is close to the budget your friend gave you.  

BUT, IT'S PROBABLY WRONG!

The problem is the Scope of Work you described is in a 'BEST CASE SCENARIO' and excludes a whole bunch of hidden costs that you will likely run into on your rehab, so your $22/sf is likely significantly lower than what you will actually run into on a project.

Here's a breakdown of what is included in my estimate and everything that's excluded and shows why your $22/sf is likely significantly lower than it should be...

Exterior Work:

Exterior work is limited to painting the exterior siding and a limited landscaping budget of $550 which will buy a handful of shrubs and some mulch beds.  There is also a new exterior door latch included.

The Exterior Work budget excludes everything else:

No roofing, no siding repairs, no exterior doors, no windows, no concrete repairs, no shutters, no mailbox, no new address #, etc, etc, etc?  Where are all these other exterior repairs in your $ per SF budget?  Will your cosmetic rehab realistically not have any of these exterior repairs?

Interior Work:

The interior work includes the following:

• Demolition - 2 guys getting paid $20 per hour for 2 days (32 hours x $20 = $640
• Dumpster $500
• Kitchen remodel - lump sum allowance of $12,500
• Bathroom remodels - 2 bathroom remodels at $3,500 each
• Interior doors - 10 new door handles
• Interior woodwork - allowance of 200 lf of wood base at $2.50/lf
• Interior painting - painting interior walls, ceilings & trim
• Carpet - included 750sf of carpet at $2/sf
• Hardwood - included 750sf of hardwood at $8/sf

The Interior Work budget excludes everything else:
No remediation/abatement, no framing, no drywall work or patching, no insulation, no new interior doors, no interior woodwork (other than base).  Will your cosmetic rehab realistically not have any of these interior repairs?

MEP Systems (mechanical, electrical & plumbing)

The kitchen and bathroom plumbing is assumed to be included in the Kitchen & Bathroom allowances above.  Electrical work only includes new light fixtures in the property.

MEP work excludes everything else:

No sewer line repairs, no hot water heater, no new piping, no new HVAC equipment, no new supply air registers/grilles, no new thermostat, no new electrical panel, no new wiring/circuits, no new outlets, no new coverplates.

General Exclusions:

This estimate also does not include permitting costs or any General Contractor's Overhead and Profit if you are hiring a GC to manage the project which could add 15 to 35%+ to your project costs.

In Summary, Don't Use a $ per SF #

So when you look at my big long list all of all those exclusions do you still feel comfortable with your estimate at $22/sf?  Is every flip going to be a best case scenario cosmetic rehab?

This is why you shouldn't really be estimating costs by a $ per sf and you should be putting together an itemized list of repairs for each individual item.  When putting together an estimate you should be thinking about all of the risks on the project and assigning a cost to each risk.  

If you are uncertain about some repairs, you should also be factoring in a contingency to cover the unknowns.