estimating rehab costs

[Michael Prasto]

Looking into my first deal and stalling a little after walking through property 

side by side twin

asking 70,000 for both sides; 2400 total square feet, 1200 each side

one side is almost completely gutted with new electrical work only.

needs Hvac, sheet rock, full bath, kitchen, floors, half windows needed to be replaced and reframed

other side is "livable" and "passed inspection" think feces, stains and smells

needs new floor, full bath, kitchen, floors, half windows need to be replaced and reframed.

has electrical, radiator heat

my question is I know this is a huge renovation but how do I get a ballpark? Ive read the BP rehab book but this is a lot.

do I just pay a contractor to walk through with me and tell the owner Im interested but need my contractor to walk through?

then ask for line item quote from the contractor?

thanks for looking

-mike

[David Ribardo]

Hi Michael, there are a few different ways. 

If you have a good agent, they should be able to walk you through the rehab costs as you walk through the property. That will give you a rough estimate and let you know if the property is worth your time. For me, as an investor and agent, I am always looking at what level of rehab will yield the most profit.

A second frame of reference will come from your home inspector. They should be able to give you a second opinion, which will be more focused on structural integrity and code standards. 

Paying a contractor is a great strategy for learning. It sets an expectation of spending a few hours walking around a property with them answering a million questions. I recommend doing this with a few contractors, so you get a variety of opinions and see their different approaches to the same property. 

Lastly, you could be like me... buy dirt cheap slumlord property, and learn to fix it all up yourself by watching youtube videos. I did that for my first six rehabs, and it's given me a much better ability to work with contractors. It's also the only way to do an almost-full rehab for less than $1,000 of paint, drywall, tile, lights, and caulk! It's work, not investing, but learning that skill set really has helped going forward.