Estimate property repairs is simple and easy. When You Are starting out in real estate or if you have experience, it is extremely important to know how to estimate repairs the right way.
There no easy formula, but with practice you will get better over time.
If you are wholesaling you don’t need to have the numbers right, but you don’t want to look like you are completely out of the loop or don’t have a clue or worst saying that it only need $2,000 of work when in reality needs $10,000.
There are many people that I know that recommend not to say how much it needs of work. They usally say ” Every investor is different and the work perform will changed from contractor to contractor so the best way is for you to look at it and see if the sale price is the right for you”.
I don’t have a problem with this answer but 9 out of 10 times when a cash buyer call you, they will ask What is the cost of repairs?
In this case you need to know the actual condition of the house, any updates the house will need, what is the condition of the roof, a/c, plumbing, and foundation, so the cash buyer can run some quick numbers and see if deal is good or not.
How to Estimate Property Repairs
Estimate property repairs is not that complicated.
I will share with you are formula we use all the time to estimate property repairs.
Property Square footage x Repair Assumption cost
So the Property Square footage can be calculated by looking at the county records
The Repair Assumption costs can be calculated like this:
Depending on location, and home condition we typically spend anywhere from $10 -$30 per sq ft on renovations. A standard full rehab, including paint, all new flooring, new counters, new cabinets, new fixtures, doors, blinds, and a few other misc. items runs about $20 per sq ft.
For example if the property sqft is 1500 x $20, the repair cost is $30,000.
If the home needs new windows, roof repair, mechanical replacement (such as heating/AC unit), pool issues, major plumbing, electrical, structural or other repairs, these repairs would be added to the standard $20 per sq ft. I usually as a ballpark add $5,000 for major ticket items, like A/C, foundation, Electrical or other structural issues.
Using the example above if the house needs A/C and a new roof, to the $30,0000 I add $5,000 for A/C and $5,000 for roof, to a total of $40,000 (30,000 + 5,000 + 5,000)
Homes where custom or higher end materials used would be higher as well. Homes that do not need all new flooring, and or cabinets, counters etc. can likewise be adjusted down.
Typically a normal rehab for us , that needs bathroom and kitchen updates, paint, and carpet will be about $15 per sqft. For our rentals where paint and carpet is needed it may vary from $8 to $10 per sqft, without doing any major renovations to kitchen and bathrooms.
Always ask your buyers what is their estimated costs or call them after rehab is completed so you can see what the true cost is and continue to improve your repair costs.
Estimate Property repairs is simple and easy. If you are wholesaling a house this may be a great start.