How to estimate reno costs

[Mick Murray]

Looking to purchase our first BRRRR. There are multiple distressed properties in the area I want to purchase, but I don't want to wear out my contractor in getting bids in order to calculate ARV to make an offer. I'd like to be able to eyeball and estimate reno costs, make an offer, and then get the reno bids in the option period. But I don't know where to start to estimate reno costs.

Any tools you'd recommend?  Standard multipliers?  Rules of thumb?

Thanks

[Larry Turowski]

@Mick Murray I was once in your shoes. Offer to pay your contractor $100 to walk through with you and give you a ballpark estimate.  This shows that you respect them, their time, and their knowledge. And you are not just a tire kicker. You really mean to buy a rehab and they'll get first dibs on doing the work.

Discuss roughly what you would do with the house and the level of materials you would use and ask what the total material and labor cost would be, approximately.  If they say, $35k to $40k, assume $40k and maybe add on another $5k (or 10% if that is greater) for margin.  It is well worth a $1,000 education fee to have them walk through 10 houses, or even $2,000 to walk through 20.

Just be sure that you have a good contractor that knows what they are talking about, and they are not giving you a deal.  You want an estimate that would hold true even if you went with a comparable contractor.

After you have been through enough of these ballpark estimates you'll be able to come up with a solid ballpark estimate on your own.