How Do I Figure Rehab Cost Quickly????

Rehabbing, Fix and Flip, Rental Properties
1

My husband and I are new to rehabbing. We have several houses we are looking at. The problem? Well, we have a contractor who will be “Our” contractor. But, he is a busy man. It takes him well over a week sometimes to come up with quotes for the rehab cost.

We are obviously in competition with others who do the same thing, (one is a realtor) so when they get the heads up (especially on a REO) then they are out there making bids.

How do we quickly come up with a close repair/rehab estimate so that we can decide that day.

Example: Found an REO on Monday, great location. We are waiting on our contractor (it’s FRIDAY) and still no estimate. He’s a great contractor and we want to keep him… How do we make this work faster. We’ve already lost one deal because of this…

Thanks!!! ;D

2

you have to know in advance approx how much certain materials and repairs cost.

for example, I know that in my area, I can get surplus new kitchen cabinets for around $1,700 a set if I do the labor. This will vary depending on exactly how many and what style I need, but it will be close. Nice Home Depot laminate countertop will be around $1,400 installed. Low end appliances range, DW, micro $700.

count doorknobs, outlets, switches, toilets whatever and multiply. a gallon of paint will cover an average bedroom 2 coats. Doorknobs are $8 here. Switches $1.50 ea. covers the switch and cover and I can install a BUNCH of them in an hour. that kind of stuff

make a list, add it all up, then you have your materials.

for labor, you will have to estimate how long for each job and what’s your guy’s labor rate. We do mostly our own labor, so we just figure that into how much profit we want on the end.

If you have major stuff, like a new roof or foundation repair, that’s where being wrong can really cost you. Either wait for the estimate OR have contingencies in the contract where you can get out or renegotiate if the bid is higher than you expected.

Add 15% for unexpected things and there ya go.

I worked it up into a spreadsheet where I can just fill in the blanks on my laptop right there on site and it’s done.

3

That sounds like a frustrating way to do business. It also sounds like you need the contractor, when it should be a partnership or at worst he needs your business. I mean if that’s what’s going on now, and you’re accepting that kind of treatment from him why would he change? If he does work cheaper, but you lose deals what’s the use? If he does work better, and quicker but you lose deals what’s the use?

With this kind of relationship, I don’t see how he could be “the guy”.

My .02,

Jeff

4

Well I have never done a rehab, I have only wholesaled, but I am looking to get a property to rehab this week. Anyway I always make a really generous estimate of 20k or 30k for the uglier or more upscale properties. I also have a rule, when it comes to any untraceable with the eye mold or ANY possible foundation problems, and that is FUGETABOUTIT !!!..

5

One thing that will help you speed up the process is to get your measurements down in the rooms that need the work. Kitchens and bathrooms are generally your more expensive areas to rehab. Measure the room square footage, cabinet volume, countertop measurements, etc. This will help you to price out the needed materials on your own (at least to get a ballpark idea). For example, if you know that you will need to replace countertops and tile flooring, you will be able to get pricing on the material costs from you local home improvement store(s) - Home Depot, Lowes, etc. for the needed sqare footage… You should be able to ballpark the necessary appliances as well. You can usually get new lower end appliances for kitchens (dishwasher, fridge, stove, etc…) for under $500 apiece. I always go for new lower end brands, than used high-end appliances.

In my area, you can normally count on around a 50/50 cost for materials/labor (i.e. every $1 of materials will cost $1 for labor). I’m sure this can vary from contractor to contractor as well, but at least you’ll be able to estimate your ballpark repair costs. Remember, the little things add up. Grout, drywall mud/tape, trim, bathroom fixtures, etc. are all things that need to be accounted for.

If your contractor cannot come out personally and bid your job quickly enough for your liking, give him a list of measurements for the things you want done, and ask him to give you an estimate. As mentioned by the previous poster, make sure to build in a contingency percentage (I use 20-25% to be extra safe) for unexpected costs.

One other suggestion… I would not put all of your eggs in one basket with one contractor. Let your guy know that you are going to get three bids on the project and that time is of the essence. Don’t worry about hurting his feelings- this is your business and your money at risk. Having more than one contractor in your list of contacts will be nothing but positive for you.

The uncertainty of repair costs will always be present on your first rehab project. Once you have gone through your due diligence on the material costs, you will feel much better about things.

I always use a three-ring binder for each property with clear plastic insert sheets to keep my receipts in to help stay organized. As your rehab work is being completed, create a spreadsheet with all of your material costs in different categories- budgeted and actual. Once you are finished with the rehab, this will be an excellent tool for you to use on your next project.

Good luck- and remember, you will never feel completely comfortable on your first rehab until you sell it for a profit. If it was easy, everyone would do it!