Originally posted by @Robert Muzyka:
Meryl, what advice would you give a new flipper in this scenario? I don't have any construction or rehabbing experience, I want to tour a property and be able to make an offer within the hour.... This requires me to at least have a ballpark estimate on rehab/repairs. How do I come up with an estimate? Is it necessary for me to always have a GC walk a property with me until I am experienced?
Any other help or advice would be appreciated. Anything I can be reading to help speed up the learning curve on estimating repairs?
This is a tough question. It takes a long time to truly understand what goes into construction. I thought about answering this a couple different ways but I think the best way to answer is by telling you how I got my understanding.
You have to ask a ton of questions of your subs. GC's are managers. Look at it like it's a walmart and the GC is a store manager. There are a ton of different departments. Clothing, auto food, loading docks, security, cash managers, cleaning staff, security, customer service. Does the store manager know exactly how to run a fork lift? Probably not. But he has to know that the forklift guys know how to run the forklifts. My point is that GC doesn't even really know the exact details of what's going to happen in a house when he's walking it with you. If you want a line by line he's going to ask the subs. He can ballpark it based on experience for sure but what goes into that experience is years of being in the trenches. Working the day to day, solving logistics, materials, and labor problems. If you don't have that kind of experience and don't intend to get it then you should find yourself a partner that does. Or hire a service that will estimate it for you quickly. For a field estimate like that done with no plans and only pictures you'll pay $600 bucks. As a side note- people often misread General Contractor's because they look like "construction guys." They're smarter than your average bear but they're just tradesman who look the part. That is not what you need in a GC. You need a manager. Carhartt's and pickup do not a manager make.
If that doesn't satisfy you then my next suggestion would be to start asking tons of questions and read about how each of the building systems works. You have to talk to your subs so you understand what makes something easier or harder for them. There are so many nuances to this.
In my opinion it's also different in a fix and flip versus a rent and hold. If it's a fix and flip and you're looking to make a hit you're probably going to expect to spend some money. On a rental you're going to ask yourself how long will this hold up without having to repair it or if you can do some value add rehab/ repairs it's going to be minimal and you can usually calculate you ROI pretty quickly based on retail items. Cabinets, countertops, lights etc. Stuff that's easily purchased that a service or handyman can install.
So now you have a rehab you want to do what I can tell you that will actually be useful.
The cost of construction is variable throughout the country but assuming you doing this is metropolitan area with licensed trades these would be my rules of thumb.
I'm doing this per day, per man because that's how a lot of subs calculate their own costs. Plus their material and overhead.
1. Labor is 250 a day per man. This can be significantly cheaper if you're rural.
2. Carpenters are going to be 300 per day per man.
3. Plumbers-600 a day per man usually plus a helper which is about half the plumber. Rarely do they work alone on construction. So 900 a day per team. USE GOOD PLUMBERS. Lazy plumbers cause more damage then anyone.
4. Electricians are different. The licensed guy or master electrician will usually show his guys whats to do and the assistants pull wire for him. If it's a small job I can get electricians for 55 an hour plus his help. Most people, if paying by the hour are going to pay up in 90's if by the opening it varies but I usually here 40 to 50 an opening. Look for 200 Amp electrical panels. Panels are expensive to replace and a necessary step if you're upgrading electrical.
5. HVAC is too variable. Too many choices on furnaces, duct runs etc.
Roofs aren't a big deal to me its an item that gets replaced every 20-30 years. If you're the guy buying it at the unfortunate 20 to 30 year mark it'll be your main selling point.
Sewer work is usually very expensive.
I could honestly go on forever. But without knowing what you're looking at, your budget, the kind of thing you're doing it's hard for me to tell you what to look for. So I suppose on a general level you're going to want to take someone with you. And in the off time, try to learn what it is that is problematic and learn how to recognize it. I can tell estimate within 10% of what something will cost every time I look at it but it's so difficult to convey that body of knowledge to someone because it's specific to the property, the locale, the purpose.
If you have more specifics DM me.
