How to get a rough estimate of rehabbing costs/how to learn?

Question

Hello everyone,

I'm currently analyzing properties in order to buy my first investment property.

I would like to reach a point where I can see a property, get a rough estimate of how much it will cost to fix it up, run the numbers through my excel sheet, and then spend the money and time to hire a home inspector and some contractors to look it over to get a finalized number. How do I do this before getting any real life experience? Are there any good online resources or books you recommend?

Milena S. · Answer

@ Yvonne H. @Tom Shellcross @Andrew Angerer Thank you all for your replies! It was very helpful. I found that YouTube channel and will get started on reading that book. You guys on Bigger Pockets make this process much less overwhelming :)

Yvonne H. · Answer

Milena, Where are you located? The first thing to know about cost is that everything is local, even hyperlocal when it comes to those costs. And some are choice-based--how much work is required vs. how much a home inspector scares you into.

I would not recommend books myself. I have never found anyone else's reality to be mine. Experience in your local area, type of house, etc.  is key. After rehabbing about 20 houses in the same area, I can know just from an MLS photo how much a house will cost to rehab. Not just because I know what labor and materials cost where I work, but also because I know in advance exactly what degree of rehab I will do, regardless of what is prescribed. But since you re asking for a shortcut, you don't want to do 20 houses to get there. Here's my advice.

You have to have to make friends/connections with people who are rehabbing/flipping in your target area. Two reasons:

1. They already have the knowledge you seek regarding cost estimates--they have real world examples and experience to back it up

2. They can share contacts for all the various contractors/labor they use who will give you the best prices.

So, anywhere you see a house being rehabbed, stop and talk to the person who is rehabbing.

If you're not able to make contacts that way, go to your local builder's supply store, make friends with the guys/gals who work at the pro desk.

Ask your new friends to connect you with a few people who are rehabbing as a career. You can usually just meet them directly, standing around the pro desk waiting on an order of some kind.

It is important that you are talking to rehabbers who manage the work and make the sale themselves. NOT to contractors who do work for homeowners, property managers, flippers etc. General contractors are always to be cut out of the equation if at all possible.

Once you've made connections with rehabbers/flippers, ask them what they have spent on various flips/rehabs. Show them pics of some houses you might be interested in and get their opinion. You might even end up partnering with them on your first couple of projects. That's better than any book IMO.Good luck!

Tom Shallcross · Answer

I hit enter too soon...

Book on Estimating Rehab Costs by J Scott who is a great asset to BP.  Great starting point and provides great rules of thumbs to average estimating costs.

Tom Shallcross · Answer

Great starting point:  https://www.biggerpockets.com/store/flipping-estim...

Andrew Angerer · Answer

Phil Pustejovsky on youtube has an episode on this subject, he says it is a good idea to do chunks of 5k when considering rehab. Ex, 5k for minimal repair, 10k for basic repairs, 15k for medium repair and so on. Granted every property is different and it is best to overestimate everything you do.

When interview contractors, try to interview atleast 5 and visit 1 or 2 of their jobs. Ask them good questions, and make sure you both can communicate well.

Besides what comments you get on here, bigger pockets has a book about this as well. just go to www.biggerpockets.com/books

Good luck!