The Guide to Estimating Rehabilitation Expenses

“This is one great deal! It’ll only cost ten grand to fix it up.”

Sound familiar?

The thing that investors who purchase from wholesalers complain the most about is the wholesaler’s poor ability to correctly estimate the rehabilitation expenses. The truth is the better you are at estimating rehabilitation expenses, the more success you’ll find. Why is that? Well…

  • By knowing how much it’ll cost to rehab a property, you will be able to reach an accurate Maximum Allowable Offer and avoid overpaying.
  • By knowing the rehabilitation expenses, you will be able to accurately present the info to your cash buyer.


#1 Understanding the Rehabilitation Needs

Before you even begin to crunch the numbers and accurately estimate how much it’ll cost to rehabilitate the property, you have to be aware of what the final product is going to look like. For example, there are those that only require a quick flip, and there are those that require timely, high-end renovations. So it is imperative to take into consideration the amount of remodeling your buyer plans on doing. In addition, it is a good idea to have a look around the neighborhood to have a rough indication of how much rehab is needed. This is because most investors would probably want to rehab their property to approximately the same condition as the other houses surrounding it.

#2 Touring the Property

Now that you have a well-rounded understanding of what you would like the finished product to look like, be sure to go through the property carefully and capture details via photos/videos, so that you will be able to remember the condition of the property later.

#3 Keep Records of the Problems

While you’re still on-site at the property, visit everywhere place-by-place and jot down its condition. In addition, keep a record of whether or not there are any repairs that are needed. For example, if you go into the bathroom and notice that the tiles are cracked, write down “replace bathroom tiles” while also noting down an estimate of how large the bathroom is. In addition, bear in mind that you should have a careful look at the exteriors of the property and do the same thing.

#4 Condense Into Categories

With a comprehensive list of repairs under your belt, it would be a total mess if you didn’t try to neaten up the loose ends. For example, if the tiles in the bathroom, the tiles in the kitchen and the carpet in the living room need to be redone, group them under one heading: “flooring”

#5 Estimate the Total Rehabilitation Amount

Once you have all your categories sorted, it is high time to get proactive and begin calculating the rehabilitation prices for every item. For example, if you have determined that you will need around 500 square feet of bathroom tiles, 500 square feet of kitchen tiles and 1000 square feet of carpet, using that information, you can call the local flooring store or various contractors and ask them for an estimate of how much they would charge. From there, it may be wise to double the price that they give for a sounder idea of how much they’ll actually put on your bill.

Becoming really quick and accurate with regard to estimating repairs is a handy skill to have, so working with an experienced rehabber is definitely recommended on your first couple of deals. Surrounding yourself with someone who is successful and experienced is always a smart move especially when renovating a property.

Good luck!

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