How To Be Quick At Estimating Repairs

Estimating rehab costs

There are a couple of different ways to estimate repairs when looking at investment properties. If you have control of the property and inspection period any of the options below work. If you're buying from a wholesaler then option two and three are your best choice. Experience will play a big role in what method you chose and finding an experienced investor to mentor you will go along way. Here are some of your options:

1- You can hire a contractor to give you an estimate for the whole rehab or get estimates from all the different trades needed to complete the rehab. Usually the time needed to schedule all the trades to give you estimates will take too much time. The same with hiring a contractor to over see the whole rehab. The contractor as well needs to get his sub contractors out there for bids as well. Even if the contractor has his own crew it will usually take days before he can get a firm price.  Time is of the essence when competing against other rehabbers.Rehabbers like myself have a rough idea in about 10 minutes from the first time visiting the property. I have an idea of what the property is worth before I visit the home. This allows me to make a decision immediately after walking through the house. If I like the house and the numbers work, I sign the contract and give a deposit ASAP.

2- Using a rehab estimate sheet helps to find the rehab cost if you have done several rehabs. You simply write down what each repair cost based on previous experience and add it up. This usually can be done rather quickly and gives you a ballpark figure. I say ballpark because the total cost of the rehab can be over or under what you estimate. You have to be prepared for under estimating repairs because there are many little repairs that are missed and add up quick. Getting too attached to the house and over improving may cause this to happen as well.

3- I get asked all the time what is the cost per square foot to rehab a home. Recently I tried to figure that out so I went back and looked at my last 20 rehabs. I categorized the flips into three groups. Group one I call "Cosmetic rehab" and nine of the twenty flips fell into this group. None of these homes needed anything major like a roof, a/c, windows, electrical or plumbing. I divided the rehab cost by the square footage and came up with a cost per square foot for each home. The rehab ranged from 7-15 dollars per sqft for an average of $12 per sqft. For example a 1000 sqft home should cost around $12,000 on average to do a cosmetic rehab.

Group two I call "moderate rehabs" and five of the twenty fell in this group. These homes needed complete rehab on the interior and at least one major repair (roof, a/c, windows, electrical, plumbing). These moderate rehabs ranged from 16-22 dollars per sqft and averaged $18 per sqft. For example a 1000 sqft moderate rehab should cost around $18,000. My rehab on Bryston was considered a moderate rehab.

Group three I call the "full Rehab" and six of the twenty were in this group. Most of these homes had everything replaced (roof, A/C, kitchen, baths, doors, baseboards, flooring, paint, stucco and new driveways for all 6 homes. These full rehabs ranged from 25-32 dollars per sqft and averaged just under $30 per sqft. This means on average a 1000 sqft home would cost around $30,000 to replace everything. Some of my full rehabs were Willow Ln ($32 per sqft), Lake Dr ($26 per sqft), Hargill Dr ($25 per sqft), Deerwood Ave ($27 per sqft), Hampton Ave ($29 per sqft), Harmon Ave ($29 per sqft). I did not include my Princeton Ave rehab because we did a lot of new construction there adding around 1000 sqft. The total cost was $45 per sqft because the new construction cost was $55 per sqft to build from ground up.

These are just a few ways to estimate repairs. When trying to buy REO's you don't want to get estimates until you have control of the property. You don't want to waste the contractors time giving estimates on properties you don't have under contract. This will only exhaust your resources making future potential rehabs more time consuming.