Good real estate investing is just math.
If you buy a home for $50,000 and it needs $10,000 worth of repairs, then you can make $40,000(ish) when you sell.
Estimating rehab costs is arguably the most daunting part of real estate investing. How do you estimate rehab costs accurately if you’re new to real estate investing? And how do you do so quickly so you can make a cash offer?
That’s what we’re going to cover in this guide.
If you’re a new real estate investor, then you’ll learn the fundamentals of estimating rehab costs in your market for any property… and if you’re a seasoned investor, then this should be a useful refresher.
Let’s dive in.
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Pre-Shopping Hardware Stores
Before you go looking for deals, make a list of repair estimates specific to your area.
This will come in handy when you’re walking properties and determining your max cash offer — in fact, this list will become your go-to resource for estimating total rehab costs on a property.
It’ll take a little bit of time but it’s 100% worth it.
First, make a list of all the potential repairs/renovations that your properties will require: paint, doors, flooring, siding, etc.
Then visit your local hardware store — Lowes or Home Depot, more than likely — and take as much time as you need to jot down the price for each list item.
Here’s what this should look like.
Note that these numbers are based on nationwide averages — we highly recommend coming up with your own market-specific numbers for each list item.
Flooring Cost/Sq Ft
Hardwood Flooring - Solid $7.00
Hardwood Flooring - Engineered $6.00
Sand/Re-Finish Existing Hardwood $3.00
Laminate Flooring $3.00
Vinyl or Linoleum $2.00
Ceramic Tile $5.00
Paint Cost/Sq Ft
Walls Only $2.00
Walls & Trim Only $2.00
Walls, Ceiling, & Trim $2.00
Add'l Wall Prep - Spackle/Texture $2.00
Sheetrock Install & Repair Cost/Sq Ft
Install & Finish - Walls & Ceiling $3.00
Install & Finish - Walls Only $3.00
Install & Finish - Ceilings Only $3.00
Skimcoat/Texture Only $3.00
Remove Popcorn Ceilings $3.00
Interior Pre-hung Door $150.00
Interior Sliding Closet Door $150.00
Interior Door Knobs $15.00
Interior Door Stops $7.00
Trim Cost/Lin Ft
Door Trim $2.50
Floor Trim/Baseboards $2.50
Crown Molding $3.50
Plugs & Switches $75.00
GFI Plugs $100.00
Light Fixtures $100.00
Ceiling Fans $125.00
Electrical Panel $3,000
Full Rewiring $5 Per Sq Ft
Replace Hot Water Heater (40 gal) $750.00
Replace Tankless Water Heater $1,500.00
Bathroom Sink(s) $125.00
Bathroom Faucet(s) $75.00
Kitchen Sink $350.00
Kitchen Faucet $200.00
Shower Stall (Fiberglass) $400.00
Bathtub Only (Fiberglass) $450.00
Bathtub & Surround (Fiberglass) $550.00
Shower Wall Tile (Enter Sq. Ft.) $10.00
Showerhead & Faucet Set $200.00
Complete Replumbing $4.50 Per Sq Ft
Kitchen Features Cost/Lin Ft
Kitchen Cabinets $185.00
Formica Countertops $50.00
Granite Countertops $150.00
Tile Backsplash $30.00
Kitchen Items Cost
Side-By-Side Refrigerator $1,100.00
Range / Stove $650.00
Range Hood $250.00
Garbage Disposals $250.00
Vanity Cabinet / Low-End Counter $350.00
Vanity Cabinet / Granite Counter $600.00
Vanity Mirror $80.00
Towel Bar / Toilet Paper Bar / Etc. $65.00
Re-Glaze Bathtub $450.00
Re-Glaze Tub & Tile Surround $800.00
Demo & Install Roof - Asphalt $4.50 Per Sq Ft
Demo & Install Roof - Metal $15 Per Sq Ft
Roof Repair (Extensive) $5 Per Sq Ft
Roof Repair (Minor) $3 Per Sq Ft
Fascia - Demo & Installation $3.00 Per Lin Ft
Soffit - Demo & Installation $4.00 Per Lin Ft
Decking Replacement $50.00 Per Sheet
Demo Existing Siding (No Asbestos) $0.50 Per Sq Ft
Vinyl Siding $5 Per Sq Ft
T1-11 Plywood Siding $5 Per Sq Ft
Cement Board / Hardiplank $10 Per Sq Ft
Wood Siding $8 Per Sq Ft
Brick $10 Per Sq Ft
Stucco (Hard Coat) $7 Per Sq Ft
Single Front Door w/Lock Set $500.00
Single Side/Add'l Door w/Lock Set $350.00
Double French Patio Door $850.00
Double Sliding Glass Door $750.00
Garage Door - Single Car (8-9') $750.00
Garage Door - Double (~16') $1,100.00
Garage Door Opener(s) $175.00
Exterior Paint Cost Per Sq Ft or Lin Ft
Siding Only (Enter Total Sq Ft) $2.00
Soffit & Fascia (Enter Linear Ft) $1.65
Standard w/Permit & Protection $385.00
Standard Size w/Impact Glass $600.00
Standard Size w/No Permit $250.00
Restore Wood Historical Window $400.00
Large Bay Window Replacement $800.00
Replace Pieces of Glass $100.00
Replace Screen(s) $40.00
Complete HVAC Replacement $40 Per Sq Ft
Compressor Replacement Only $1,000
Handler Replacement Only $3,000
Service HVAC System Only $150
Complete Ductwork Replacement $40 Per Lin Ft
Fences & Decking Cost Per Sq Ft or Lin Ft
Wood Deck: Treated - (Enter Sq Ft) $15.00
Composite Deck - (Enter Sq Ft) $35.00
Sand & Re-finish/Paint Deck (Sq Ft) $2.00
New Railings (Enter Linear Feet) $20.00
Wood Fencing (Enter Linear Feet) $15.00
Chain Link Fence (Enter Linear Ft) $8.00
Additional Exterior Repairs Cost Per Sq Ft or Lin Ft
Insulation (Wall/Floor/Attic) - Sq Ft $1.00
Gutters & Downspouts - Linear Ft $6.00
Add/Repair Concrete (Sq Ft) $7.00
You can copy and paste the list items on the left and make it your mission over the next week to determine your market’s cost for each.
We also recommend calling contractors to determine labor costs for these items as well (unless you’re going to do all the work yourself) — call painters, drywallers, electrician, carpenters, HVAC experts, and even a general contractor.
Once you have this detailed list, you’ll have a far easier time of accurately estimating rehab costs.
Pro-Tip For Wholesalers: Want to stand out to your buyers and keep them coming back to purchase more deals? Then create a spreadsheet with your estimated rehab costs for each property and pass this onto the cash buyers as a way to “help them get ahead” — that’ll help you stand out from other wholesalers!
Creating Guesstimate Groupings
Obviously, the list you just created is good for coming up with detailed rehab estimates… but what about when you’re walking through a property and need a ballpark estimate to determine if you’ll even be able to make a deal with the seller based on what they want?
After all, you don’t want to spend tons of time putting together a detailed rehab estimate if the deal is unlikely to go through.
So it’s useful to have a simple process for making off-the-cuff ballpark estimates.
To do that, create different guesstimate groupings and assign each a general overview of rehab needs.
Here’s an example…
$15 Per Sq Ft — Needs fresh paint, drywall work, and carpet repair.
$25 Per Sq Ft — Carpet, paint, kitchen, & baths need repaired/renovated.
$35 Per Sq Ft — Completely gutting the property.
You can set these guesstimate groupings to whatever makes sense for your business model and your market.
Once you have them, you’ll be able to come up with ballpark numbers in your head even when you’re walking through a property. Just multiply the square footage by the guesstimate grouping that the property falls into. Then when you get back to your office, you can come up with a more detailed estimate using your itemized list.
Adjusting For Market Expectations
We’ve mentioned multiple times that you’ll want to adjust your rehab estimate from what you see in this article to what’s realistic in your market.
But that’s not the whole picture.
You don’t want to just narrow down based on your city — you want to narrow down based on neighborhood and even based on the specific property that you’re wholesaling or renovating.
What are buyer expectations like in this neighborhood? Will it take pristine conditions to achieve the after-repair value… or can you get away with just doing some light renovations?
Real estate investors often make the mistake of either over-renovating properties (and losing money) or under-renovating properties (and struggling to sell).
You want to find the goldilocks zone — where you do enough repairs to sell the property quickly and make a healthy profit.
But when you’re uncertain, err on the side of under-renovating and remember how powerful a fresh coat of paint can be — you can always continue with renovations down the road if you’re struggling to sell.
If you’re a real estate wholesaler, then adjusting for market expectations is important because it’ll impact how much your cash buyers are willing to pay for the properties (and how much you stand to make)... so this should factor into your rehab estimate.
Walking The Property
We’ve mentioned this several times so far in this guide, but we haven’t talked about it in detail.
When you’re walking through a property, what should you look for?
First, bring along a camera (your smartphone) and a notepad so you can document as much as possible about the property and the repairs it needs — it’s gonna be difficult to remember everything once you’re back at the office.
Here’s a list of the main things to pay attention to…
- Garage Door
- Exterior Paint
- Fences & Decking
- Insulation (Wall/Floor/Attic)
- Gutters & Downspouts
When you find damage, take pictures and make a quick note.
If you’re new to this process, then don’t rush it. The more information you gather while you’re at the property, the easier it’ll be to come up with an accurate estimate.
Nailing The Numbers
By this point, let’s assume that you’ve figured out the average costs of various repairs in your specific market. Let’s also assume that you’ve found a property, walked through it taking detailed notes, pictures, and videos. And finally, you’ve sat down at your desk and are prepared to make a more detailed estimate on the property’s rehab costs.
If you’ve taken all of those steps up to this point, then estimating rehab costs should be pretty easy.
You’ll just reference your guesstimate groupings to get a ballpark number, then look at the spreadsheet you created in the first step, and build a more detailed estimate.
It’s not going to be perfect, of course…
But it’s going to be pretty darn close.
It’s definitely going to be close enough that you’ll know what to do with the property — what you should offer and whether you should get it under contract or not.
And in real estate, knowledge is power.
Estimating rehab costs is one of the most important skills for real estate investors to develop.
If you’re able to quickly come up with an accurate idea of how much a property will cost to rehab, then you’ve got a leg up on the competition — you can tear through leads and deals more quickly and with bigger profit margins.
This guide will get you started.
And ongoing practice will make you a master.