How to use my Rehab Calculator to Estimate Costs
Have you tried to estimate rehab costs with no experience before? It's not easy right? Here on this blog I help real estate investing beginners learn to invest in real estate.
This post shows how to estimate rehab costs. Running the numbers and estimating rehab can be one of the toughest parts of doing wholesale or BRRRR real estate.
So I’m looking at a property that is in pretty distressed condition, and I want to show you guys how I run the numbers. As we walk through, I'm going to show you how I use my new rehab calculator to estimate the rehab as I go through.
Now, this is for those of you that aren't contractors and who may not have a bunch of construction experience, but still want to be confident when you're running your numbers.
And then I'm also going to tell you how I can teach you to run comps so that way you'll have the two most important numbers.
You'll have confidence in your rehab estimate as well as your ARV. So I'm gonna show you how I use the rehab calculator and then let you know how you can get your hands on it as well.
Rehab Calculator
So first let me go see the square footage of this house. That's one of the only things that you're going to need to know other than what you can see as you walk through.
This house is 1,064 square feet. So I'm actually going to show you guys the advanced rehab calculator and I'll show you how to get your hands on the basic one. It’s super simple, but the advanced one's going to get you very specific rehab numbers.
Let's walk through it together.
The property is 1,064 square feet, looks like it is only one one story, and what this next thing is, is the level of finishes, which is asking are you going to be going super low rental grade, are you going to go medium grade kind of maybe a BRRRR or a low-level flip, or are you gonna put like super high-end finishes, marble, and chandeliers into the property?
For this one, it will probably be low to medium, but I'm gonna overestimate a little bit and go with medium. Don't know how many bathrooms are in there, but we'll find out.
And then we're gonna actually start with the outside, going around the exterior.
Exterior Rehab Section
And you basically just answer the questions, and the calculator has the prices built in for you. So if we want to say, “Does this property need a new roof?” Just looking at the front of the property, this property is going to need quite a bit.
And one of the best things you can do to protect your property, whether you're wholesaling it or you're going to keep it yourself, is to put a new roof on and put gutters on.
So we're going to say “needs a new roof.”
And then it says “use your own roof pricing.”
If you know how much a roof costs, then you can override our estimate and use your own.
But if you don't, we've got that pricing already built in there for you.
We're also going to get new gutters, so I click that off and then there’s the soffit and the fascia. We actually don't have many soffit boards or fascia boards up here, but we're going to see what the soffit and fascia are looking like there.
So we've got soffit and fascia boards that are a bit damaged, but in all honesty they don't look too bad and they don't necessarily look like they need to be replaced.
So we've got some options here between repair and replace, and this is just going to be a repair that we're going to do for the soft and fascia on this one.
We probably have some asbestos siding, and I know it sounds a little scary but I actually found out from my siding guy that it's not that bad. Basically asbestos siding only becomes dangerous when the dust gets kicked up and inhaled.
So as it is right now, it's fine.
If you need to repair it, you would repair it without breaking any pieces and you would put on a non-asbestos new siding.
But let's see if there's anything that would need to be repaired.
Paint chips would need to be repaired. That's nothing too intense, you might want to freshen up the paint.
Damage around the crawl space would need to be handled, but we're going to handle that when we get to the foundation section of the calculator.
So the siding's actually not too bad, so what I'm going to do is put in a hardy board repair. Hardy board is the type of siding that we use to repair when you have asbestos because it matches pretty close in look but obviously it doesn't have asbestos in it.
So I do a hardy repair and then next we're going to look at the windows.
Now this house is probably going to need all new windows. We can't tell too much from the outside because they're boarded up, but just looking at that window we're probably going to need new windows.
So I'm just going to count, let's call it ten new windows and out here we estimate 150 dollars per window for the material as well as 150 dollars per window for the labor.
If you want to override that because you know you've got windows that cost 250 dollars and not 150 dollars, then you can click on override and put in your own pricing. But for us, that's going to be our built-in pricing.
And then next up, we have decks, porches, and concrete. So let's look at the front porch, and here we have an option for “update, repair, or rebuild” and those are going to be an order of least expensive to most expensive. To be honest, we're just going to have to rebuild this porch.
Concrete? Honestly, the concrete looks pretty good. All concrete is going to have some cracks in it over time, you power wash this and it's going to look brand new.
So we're not going to do anything there. There's no garage, so we've got nothing there. And then landscaping.
So this is where I was talking about the trees we've got over on the side of the porch that are way too close to the house, because those roots are going to mess with the foundation if they haven't already.
So in landscaping, you can put “low, medium, or high.”
If this was super overgrown that's where that would come in, but for this one I'm just gonna put the number of trees that need removing. That's gonna be two, and we're gonna put that it's a low level of landscaping needed.
From there, we don't know if the septic system is messed up on this house. Typically, city septic systems are fine.
If we go under contract, we would get our plumber out here to check that. But for now, I'm going to leave that blank and I'm going to put a low level of foundation work because although I don't know if there's any foundation damage.
If I find indications of it on the inside, I will change that. But we at least knew in the back that we needed to fix some of that foundation that was covered with metal.
All right now it's time to go inside, so I'm going to go to the interior section of the calculator.
Interior Rehab Section
So what are we looking at? To start, with how many beds, baths, that type of thing.
There’s two bedrooms and one bathroom.
You've got your kitchen in the back left corner and the enclosed old porch on the back side. There's a basement door that you can go down.
There could be anything down there, like mechanicals or a water heater. I think there's both down there.
Okay all right let's finish up calculating the rehab for this place.
So normally, I would just walk through and check off things as I see them, but I couldn't do that. So for the demolition type, this is gonna be a basic cosmetic clean out.
We're gonna rip out the carpet, we're gonna rip out the old cabinets, old toilet, that type of thing. If it was a full gut, we're taking out all of the drywall, the ceilings, just everything. Then I would do that plumbing.
So we're gonna do a lump sum labor plumbing. So is there gonna need to be new plumbing in this house? My guess is yes.
We won't really know that until we get our plumber here, but it's always good to guess that there's at least going to be moderate work on the plumbing needed. And then we just count the fixtures that we need.
So the number of tower tub and shower fixtures that we need is just going to be one. There's only one bathroom, the number of bathroom sink fixtures is one, the number of kitchen faucets is one, the number of kitchen sinks is one, the number of toilets is one, and the number of bathtubs is one.
The number of shower pans? We're not gonna have a shower pan because there's only one bathtub. The number of shower doors? We're not gonna have any shower doors because we have a bathtub with a shower curtain. The number of gas hot water tanks? She said the hot water tank was electric, so we'll say none there.
And so one electric hot water tank, and it’s probably gonna need to be updated. There’s no tankless water heaters since we've got the hot water tank.
And then we're not gonna do any type of tile work in this house in the bathroom. For this level of finish in this area that's not going to be needed, so what we're going to do is just a tu-shower combo with the fiberglass around. We just need one of those.
And then we're going to have electric, so we're going to say that we're going to need a partial rewire. We're gonna do it basically just by looking at what's needed.
Let's say there's one electric panel. It’s a small house. There's one meter.
And how many ceiling fans? Usually, I like to put a ceiling fan in the living room and in each bedroom. So I'm gonna say three.
Can lights? Let's say we're gonna need 10 throughout the hallways, bedrooms, and kitchen.
One vanity light. We’ve got one bathroom.
There’s three ceiling fans and one pendant light somewhere in the dining room.
Then we're looking at exterior lights. So we've at least got a porch light and let's say we're gonna have a back door light as well. So we'll put two exteriors.
One bathroom fan to help the exhaust furnace. We're gonna say we got one furnace, one AC unit, no mini split, one bathroom needs venting with that exhaust fan, one kitchen needs venting and at this point there's no central heat or air.
So while we're not gonna have duct repair, we are going to need to get central heat and air in here. So I'm going to put that there's extensive duct repair needed.
We're not going to be doing any reframing because we leave the bedrooms where they are. We're just going to do some significant sheetrock repair, since there were some holes in the walls.
The number of doors needed? I would have counted these as I walked through. Basically, bedroom, bathroom, bedroom, kitchen, and upstairs. So let's say we need I think five doors.
We've already calculated the trim needed. Let's say we had 10 windows, so we'll put 10 window sills there that need it.
And for interior painting, we are going to use some medium paint.
For kitchen cabinets, we're going to do new box store cabinets. This is a small kitchen. For bathroom cabinets, we're just going to do 36 inch vanity countertops. We're just going to go in with basic formica.
The bedroom doesn't need new flooring. In the bedrooms, we're just going to refinish the hardwood.
In the living room, we're just going to refinish the hardwood.
In the kitchen, let's go ahead and put some tile in just for the kitchen floor because of grease.
For the bathroom, we'll also put some tile in.
General Section
I forgot to finish out the general section of the calculator, and this is going to be things like whether or not you need permits, as well as if you're going to get design plans, treat mold, termites, or add any contingencies.
So you can see here that we have a five percent contingency added in to the calculator. You can override it and use your own percentage, whatever you would like.
And once we're done, you can see that this puts our total rehab at just under $80,000 to fix up this property.
You may think that's high, you may think it's low, but the benefit of more and more of us using this calculator is that we can continue to adjust our assumptions and get better.
Future Updates
And what's even more exciting is that we're working on a feature that allows you to enter in the zip code of the property that you're analyzing, and then it would look at how the cost of living compares to the average.
Whether it's really high or really low, it would adjust the numbers built into the calculator based on that.
We're not there yet, but anyone who uses this calculator is going to get all of the updates that come along as we continue to get better.
You can also see that this is where you're able to send us feedback to help us make it better.
You can put in your email to receive a copy of the calculator’s output as well as the property address, so that you can use this for multiple deals.
Once you hit “submit,” a PDF summary will automatically download the calculator’s results and you can hit “clear all” to use it again on the next property.
Running Comps and Finding the ARV
So if you want to get your hands on this calculator, and you want me to teach you my process for running comps to find the ARV for this property so I could put it into this formula right here and get my offer price, you're definitely going to want to sign up for my Run the Numbers mini-course.
It's a video training we're gonna go through, running all of the numbers necessary for you to start making offers confidently.
Until next time. Thanks for reading!
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