Estimate Property Rehab Costs
- PINPOINT YOUR COSTS.. The biggest variable when calculating your fix & flip profit comes down to your rehab estimates.
- SPEED AND ACCURACY.. After you find a potential deal and a motivated seller, you need to quickly put together your...
- CONFIRM YOUR VALUES.. We realize that new investors are at the mercy of their contractors when it comes to...
Full Answer
Why can’t I estimate how much it will cost to rehab a house?
Learn how to estimate rehab costs on over 25 repair categories for your rehab projects. Basics of estimating rehab costs Before you purchase a rehab property you need to put together a detailed Scope of Work and accurate estimate of the repair costs needed on the property.
Why are my house costs so low when I flip houses?
Lump Sum Method. Lump Sum Estimation is the process of estimating the entire project as a single 'Lump Sum' number. The Lump Sum method is typically used by experienced house flippers to quickly 'guesstimate' what the repair costs will be based upon their past project experience and cost history. Experienced house flippers can intuitively predict the price range of how much …
Why should wholesalers estimate rehab costs?
Aug 24, 2018 · “First, compile the total list of materials needed, and record a high and low price estimate for each. Once that’s done, add both columns of numbers to get the total cost for both high and low,” real estate investor Ethan Roberts says. “Then add the two totals, and then divide by two to get the average cost.”
How much does it cost to rehab a car?
Estimating the costs of a rehab are more easily done when you break down the home into sections. For example, the main sections of any rehab are the kitchen (cabinets, counter tops, appliances), bathrooms (vanities, tubs, tile floors and walls, mirror, toilet), paint (both interior and exterior), flooring (wood, carpet, tile, stone), base and case, windows and doors, stucco and …
Basics of estimating rehab costs
Before you purchase a rehab property you need to put together a detailed Scope of Work and accurate estimate of the repair costs needed on the property.
Exterior Rehab costs
Curb appeal is one of the most important factors to get home buyers in the door of your newly renovated house flip.
Estimating rehab cost case studies
Watch our detailed Case Studies with real world examples on how to estimate rehab costs for your house flip projects.
Learn How to Analyze a House Flip
Learn How to Analyze a House Flip Deal in under 5 Minutes using our House Flipping Calculator.
Estimating Methods
There are a few different methods for estimating construction costs for your rehab projects. Generally, there is a direct correlation between the amount of time you spend on an estimate and the accuracy of the estimate.
What do you need to flip a house?
Ideally, a house flip simply needs cosmetic work. Things like drywall, flooring, countertops, appliances, paint, finishes, and landscaping are all cost-effective fixes. 2. Use Rules of Thumb. Because real estate deals often come and go within days, you don’t always have a ton of time to figure out an exact cost right away.
How to invest in a fixer upper?
You can’t estimate repair and rehab costs if you don’t know what needs to be fixed. Before investing in a fixer-upper, you must start by taking inventory of the home’s condition and evaluating the problem areas. When investing in a house flip, you want something with good bones.
Why is contingency planning important?
It’s always important to have contingency plans in place in case things don’t go according to plan. In any house flip, it’s a good idea to create “tiers” for your rehab.
As a Guest you have 2 free article (s) left
Join BiggerPockets (for free!) and get access to real estate investing tips, market updates, and exclusive email content.
Understand your buyer and the neighborhood
Before you start calculating rehab costs, understand what the final product will look like. Some high-end remodels take months—cosmetic renovations take just days.
Tour the property thoroughly
Next, with a good understanding of how you want the finished product to look, walk through the property very slowly. Take a lot of photos or record a video on your phone so you can easily recall the condition later. Trust me, you won’t remember it all!
Write down the problems
While you are still on-site at the property, go room by room and write down its condition, as well as any needed repairs. For example, if you walk into the living room and see carpet that looks and smells like dog urine, write down “replace carpet in living room.” Also, jot down a quick estimate regarding the size of the room.
Condense your list into 25 categories
Next, take your comprehensive list of repairs and classify each one into one of the following 25 categories, which encompass all of investment property renovation. For example, if the living room and bedrooms need carpet and the kitchen needs vinyl, group all of them together and include them under “flooring.”
Determine a rehab price for each category
Once you have your 25 categories spelled out, it’s time for the most difficult part: estimating the rehab amount for each category. However, breaking everything down into the basic components of a renovation makes estimating rehab costs much easier.
When in doubt, ask for help
Don’t be afraid to ask for help. You can do this in a few different ways:
What is a Rehab Project
Alright, let’s start from the beginning. You’re looking for a way to make money, and you know that investing in real estate is perhaps the greatest wealth creation device in existence. It creates more millionaires than anything else.
Multiple rounds of Rehab
Now, to dive into estimating rehab, I need to explain that it’s really a two-part process! At first glance, you might think you’re going to bring in a contractor right from the start and they’re going to give you a detailed estimate and you can move forward.
Round 1 – Quick Estimate
If you’re new, then I need to explain that real estate investing is all a numbers game. You’re NOT going to get into this, spend weeks and weeks and weeks on one deal, getting all your ducks in a row, and expect to have instant success with this one deal.
Rental Quality Rehab
Typically with rentals, you want to do an extremely light rehab! In order to be profitable, you’re going to buy places that aren’t quite as rundown, and then you’re going to do as little work as possible in order to make the place decent.
Light Rehab
So you walk through your potential deal for the first time and it doesn’t look like you’re going to need a ton of work. You’re still going to want to do a bit more than for a rental property, in all likelihood, so that you can match the comparable properties.
Medium Rehab
Now with the medium rehab, you’re going to do everything you did before, but now replacing doors, trim, and full kitchen and bathroom remodels. This probably the most common level of rehab, because a house needing a light rehab will often not sell for a huge discount.
Problems with Rough Estimate
Because it’s cheaper to order in bulk, and more expensive to pay for someone to come out and do a small project, those estimates can be a bit off with smaller (less than 850 sq feet) or larger (more than 2,400 sq feet).
Why are estimates low when flipping a house?
One thing you’ll find on each home you flip is that some of your estimates will be low because of unexpected problems or repairs that you didn’t count on, while other large costs you anticipated might prove to be less expensive than your original estimates.
How to estimate material costs?
The best way to learn how to estimate material costs correctly is by spending a lot of time at your local home improvement stores, walking the aisles to see what typical rehabbing materials actually cost. Bring a notebook and pen and write down the range of costs of materials such as carpet, tile, laminate, paint, blinds, vanities, fixtures, and ceiling fans. When you get home, put these costs into a spreadsheet, so you’ll always be able to access them.
Who is Ethan Roberts?
Ethan Roberts is a real estate writer, editor and investor. He’s a frequent contributor to InvestorPlace, and his work has been featured on MSN Money and Reuters. He’s also written for Seeking Alpha, Investopedia, The Fiscal Times, ForSaleByOwner and Smarty Cents, and was one of five contributing editors to The Tycoon Report.
