How do you personally estimate your rehab costs?

[Frank Cole]

Hello,

Relatively new to investing, and am having difficulty in ball parking repair costs when making an offer.   For you experienced DFW investors who often may even make an offer on a property site unseen, is there a formula , you use to guestimate how much a rehab will cost

(e.g. "x" dollars times sq ft. + big 5 (foundation, plumbing, roofing, HVAC, electricity))? How does that change between rehabbing for a rental vs. rehabbing for retail?

I'll be using a general contractor, and currently plan to flip properties.

I realize that I need to verify my numbers during an option period or prior to making an offer to a wholesaler, but am trying to get a good starting place prior to dragging a contractor out to the property.  

Any and all thoughts are much appreciated!  Thanks!

[Sarah Nowak]

Hey Frank,

This is definitely something that comes with experience. Take a notepad or use your phone to keep track of each individual estimate when you do the walkthrough with your GC (e.g. $X for flooring, $X for paint, $X for kitchen cabinets etc.). Once you've done a few properties like this you'll be able to do rough estimates on your own.

As for a formula....that obviously depends on the condition of the home, the finishes you choose, and who your contractor is but, in my experience, you can expect to pay $20-30/sq ft on average barring any huge unforeseen expenses - for a retail flip.

For a rental, its a little more complicated but usually you'll spend significantly less getting a rental property market ready. You just have to know your market and understand what renters expect.