How to calculate real estate rehab costs – What real estate pros use
One huge question newbie real estate investors ask quite a bit is… “how do I estimate the 
cost for my rehabs?” There are many ways to do this… some easier and cheaper than others. Heres a quick post that goes over ways to accurately estimate rehab costs on a piece of investment real estate. This comes in really handy for people looking at getting into wholesaling.
First,
…you can hire a licensed contractor experienced in remodeling homes. Note that I said experienced in “remodeling homes”. Remodeling/rehabbing is a whole different ball game than new construction. Make sure you are working with a contractor experienced in remodeling. Have one or two contractors do a walk through and give you an actual estimate to do the work. Some contractors will charge a fee, but not always. Get the estimate in writing. If you get more than one estimate from contractors, average the numbers to come up with a pretty accurate rehab cost estimate.
Second,
…partner with a contractor you trust. This is an excellent way to estimate costs. After your first few deals this is probably the way you will choose to do your estimates. Call up your contractor and have them do a quick walk through. Often contractors you have a good relationship with (and send work to) will have no problem spending 15 – 30 minutes walking through a property for you. Just be sure to return the favor from time to time by sending them jobs.
Third,
…do the walk through yourself and research all of the prices yourself. NOT ADVISABLE. If you have never done extensive remodeling you shouldn’t try to do the estimate yourself the first time. I promise you… it will be worth it to pay a little money to either buy a rehab cost manual or hire a contractor to do a walk through.
Fourth,
…this is one of my favorite ways. If you are a wholesaler, you should listen carefully… this could save you a ton of time and money. There is a manual out there that comes out 
every year called the “National Repair and Remodel Estimator“. This manual is huge and is packed full of updated costs, time estimates for jobs, and everything else you will need to estimate costs for rehabs. It’ll tell you what it will cost to do every aspect of the job and is suprisingly accurate!
I know of a bunch of wholesalers who use this manual to evaluate the costs of rehabbing properties so they can determine their asking price quickly and accurately.
This manual is pocket change when you consider how much time and money it will save you. I know it has been well worth it for my buddies who do a bit of wholesaling!
I believe this years even includes a CD rom to make it easier for you. You can check out the manual by clicking the link below. Just to be totally on the up and up, that link is an affiliate link and I will get a bit of lunch money if you purchase through that link (a whopping $1.32!)… but if you think you have received at least $1.32 in value from my blog, I hope you don’t mind distributing a bit of Amazon.com’s wealth to us little folks 
Whatever method you choose, be sure that the estimate is accurate. You don’t want to be caught in a deal that goes way over budget because you didn’t estimate the costs correctly. Probably the best method is partnering with a contractor and getting an actual bid to do the work. This method takes a bit longer however. The best method for getting accurate estimates fast is the rehab cost estimator book I mentioned above.
Good luck! Let me know how you estimate your rehab costs… I’d love to hear from you.
If you liked this post be sure to subscribe to our RSS feed.
Hey, my name is Trevor and I'm the founder of The REI Brain and a real estate investor since the age of 21. Right now, my focus in real estate investing is multi-family income properties and I have plans on moving more into the commercial real estate investment world in 2008 and beyond. 
Leave a Reply