Generalized Repair Costs

This idea of creating general costs is fantastic. The idea is that you can create a fast understanding of approximately what it will cost to repair a property. From this if an offer is accepted or counter offered you can take a greater look at the property and determine the itemized cost for all of the repairs.

It may not be worth the effort to create an itemized repair list if there is no interest from the seller.

By creating a general cost it allows you to go quickly then if there is any movement you can double check your number to create a better understanding.

Just remember to add a contingency clause in the contract to keep yourself safe.

This was one of my questions in another thread. I want to know if I could figure out the repairs by multiplying the number of dollars per sq foot to the total sq feet of the house. For example 8$ per sq foot that 1200sq feet equals 9600$ for repairs.

I am brand new to investing looking at properties.. we decided to go after properties that are in a different state. How can I get a repair guy to evaluate properties for free? Do I create a buddy deal with him, that if a property is purchased we will double his fees?

How do other DG'er s do this?

Creating a relationship with a realtor in the state you want to invest would be the first thing you want to do. Once the relationship has been established, you can then ask for some references for good contractors or handymen. Also attending real estate investment clubs (REIC) in that state will be a good source also.
Getting your handyman or contractor to view your property for free is easier than you think. Getting to know them and building their confidence that you will pass their name along to the buyer as a quality handyman can go a long way. Let them know they are part of a team.
You could offer them a fee if they dont get the contract to do the repairs. This keeps them around to help.

I echo the words that I have seen in this thread.
The more you can stay on top of your costs, especially costs that you come across on most/all of your deals will help you to dramatically increase your efficiency as an investor. Being able to come up with fixed costs for commonly repaired items.
A few of the things that I will assume to be done on every house that I look at. These items include:
- Painting
- Flooring (carpet, tile, vinyl, hardwood)
- Light Fixtures
- Plugs / Switches
- Updating and Cleaning of Kitchens and Bathrooms
That saves me a lot of time when evaluating a property because I don't spend time looking at any of these items when I do a walk-through. This allows me to focus on items that are outside of this scope.
The other thing that this allows me to do is to establish a fixed cost for the above listed items. In my case where I live it would cost me about $17.00 per square foot to work on each of these items on the list. So if I am looking at a 1000 square foot property, I will know before I even look at the property that I have budgeted $16,000 in rehab on this property. Then I only have to focus on pricing out any other needed repairs ie: roof, AC/Heat, other major issues. It's all about being focused on efficiency as you work through this process. Hope this helps.

Happy Investing!

Matt W.

Walton, Love what you have to say i'm writing this down now. simple but great stuff.

I am looking at a vacant house that has no elec. meter (socket's there) and the wires have been cut to the socket from the pole. Obviously the city cut power to the pole prior to someone cutting those cables, otherwise they would have been cooked before getting through the first one.

My question is how to estimate the cost and time involved in repairing this, and getting power restored, so I can factor that into my offer price? I will be wholesaling this if it get's accepted. I sent out emails to contractors and have not heard back yet. I need to get an offer into the seller soon. Has anyone ever dealt with something like this?

Steve

What about if you dont know what needs repairing in the house. Are you still able to figure out the cost by looking at the sq feet of the house times whatever amount of dollar per sq foot?

I don't know how one could estimate repairs without knowing what needs to be done as it could be a $5k cosmetic touch-up or a $100k major rehab and most likely some where in between. Still, I would be interested in what others are doing out there.

Steve

I do like the method mwalton mentions above for calculating the cost of those items you can assume will need to be done. This price per square foot for a combo of repairs would be a real time saver.

I have been using the 'RS Means' manual, available at Home Depot for about $35., and that seems to be pretty accurate. It has a multiplier factor in the back that accounts for your locality. Wherever you live you look up the local factor in the back of the book and multiply that times the total you derive from the book's prices, for example in Seattle it's 1.03. That will give me the cost in Seattle to do those repairs because it accounts for labor wage differences and any differences in material prices as well.

I had not gotten around to forming my own bulk formulas though like Mr. Walton suggests. That makes sense.

Thanks
Steve

.

There was a link that someone posted that gave a generalized cost for each item in a house. Do anybody knows where its at?

Thanks so much for the kind words.
I've been investing for almost 15 years now but have been "effectively investing" for about 8 years. To me it all comes down to keeping things simple, and consistent. Making money through efficiency rather than trying to find "the next big thing" is also super effective.
Hope you have a great holiday season and I wish you success in all you do.
Take Care!

Happy Investing!

Matt W.

I would comfortably say that about 90% of the homes that I look at, and work on require these items every single time. So that allows me to be able to put offers out on properties before looking at the property assuming that I will be doing the 5 things that I listed before. My pricing builds up enough cushion that if other items pop up, I can take care of those as well. I make offers assuming that I will do the 5 main items, then when an offer gets accepted, I will physically look at the property and if there is something that pops up that is a major item, I will have time to back out of the contract legally. Hope this helps!
Thanks.
Happy Investing!!!

Matt W.

I know this might be obvious, but I am just not getting it can someone PLEASE explain. I get adding up the cost of everything to come up with a price like example:
Full bath

Lighting 50
Cabinets 170
Counter top 650
Vanity 700
Bath fan 100
Faucet 75
Toilet 100
Tub 250
Shower head 30
Total price 2125

So now what? how do I get from this to "In my case where I live it would cost me about $17.00 per square foot to work on each of these items on the list." that Matt said? For my area? Because I hear people saying it costs $14/sqft for light rehab and $20/sqft for major. I just don't get it. I'll keep reading, but I hope someone can clear this up for me.

That is the entire purpose of general repair costs. It allows you to simply take a dollar amount and multiply it with the square footage of the property. How simple is this?

This is not extremely accurate. However, it is fast and to account for the inaccuracy we often raise the prices for "just in case." What happens if?

Doing the square footage method allows you to come up with costs very quickly.

The key here is that we as investors use the same repairs in every house. It never really changes. We know going into a house that there will be carpet, paint, toilets, sinks, and so on. This is the same over and over and over. Because of this we can simply determine the costs as you have done then divide the dollar amount by our typical house and walla a common dollar amount we can charge over and over again.

Does this make a little more sense?

If this is a common cost in your area just account for it. The reason we raise prices on all of our costs is to account for the what ifs. And if we keep having issues pop up out of the ordinary we account for them over and over in all our houses.

Take for example carpet. Carpet as a mid-grade is $1.19 per square foot. High quality pad is $0.69 per square foot. We often cost out $2.50 per square foot. What is the extra $0.60 for? This is the cost of what if. What if the wire are gone? The extra $0.60 can add up to hundreds in over charge for a house. This extra hundreds can be used to take care of additional needs that were unseen.

The purpose of general costs for repairs is to make the thinking process of repairs easy and fast.

I had mentioned this in other answers but yes you can figure the repairs even if you do not know what they are for the house. Why? The reason is that you estimate the same repairs for all you houses. I for example always estimate paint. You might say what if the paint is nice? True, it can be nice but what if the house had painting hung throughout the house? I need to paint to cover the holes. It is more common to need to paint than to not. Because of this paint is always accounted for.

This is a small example but you can do the same thing throughout every part of the house. Boost your costs up a little to cover the extras that may pop up on you and you should be good.

Try it on a couple of houses and compare this idea to an itemized repair costs and see how close they are.

Your normally replace toilets, sinks in the bathroom and kitchen?

I am starting to get a more clear view of what you are talking about thanks to the other comments posted and I will be using your 2.50 for carpets from now on and then I need to find out a price for paint as you are right on that one as well. I have looked at home depot, lowes and heck walmart and they all seem to be 28-35 for gallon of pain so figure one gallon covers generally 350 sq/ft so $1 a sq/ft for the good stuff. This is just for the paint though not labor. I just realized I needed to figure that in as well lol.

We have 6 basic "packages" we use. Everything is new:

Plumbing - $2.00 - $3.00 per square foot depending upon age of the house.
(Kitchen sink, Kitchen faucet, Vanities in bathrooms, faucets for vanities, toilets, shower head and occasionally a new tub)

Electric - $1.50 - $2.50 per square foot depending upon age of the house.
(lights in hallways, bedrooms and other areas; fans in kitchen and bedrooms, switches, switch covers, outlets, outlet covers and occasionally a new electric panel)

Flooring - $4.00 per square foot
(Carpet is usually cost out at $2.50 sqft and tile is cost out at $9.00 sqft. The average for the whole house - 75% carpet - 25% other is $4.00 sqft)

Interior Paint - $2.00 per square foot

Yard - $1.00 per square foot

Roof - $1.00 to $4.00 / $4.50 per square foot.
(The dollar is for general maintenance such as missing shingles. $4.00-$.4.50 is for complete replacement depending upon pitch of roof.)

HVAC - $1.00 to $4.00 per square foot.
(The $1.00 is for general maintenance, cleaning and repair. The $4.00 if for a full replacement of say a heating unit.)

Appliances - $3,000
(no cost per square foot but includes Fridge, Oven, Microwave and Dishwasher)

The costs in the example above are high. Yes, on purpose. The reason for this is to cover additional "What Ifs".

For example:
We charge $2.50 for carpet. Truly the carpet is $1.19 and the pad is $0.62. Total we have $1.81. What is the additional cost for? What ifs...

What if there is stairs we did not account for? What if we need to pay for hall away? What if we lift the toilet and see dry rot? The money from the additional cost in the carpet can pay for this. Keeping in mind every package and item is bumped up there is money to pay for additional needs.

The additional costs can equate to thousands of dollars in extra money to take care of the "What Ifs".

Below is a list of repair costs. These costs are a little high to cover What Ifs. The information is from Lowes and includes install.

Materials Cost
EXT. DOOR $600.00
INT. DOOR $250.00
DOUBLE EX. DOOR $1,000
PAINT tot. sq. ft. $1.50
CARPET-sq ft $2.00
HARD WOOD-sq ft $11.00
REFINISH HARDWOOD - sq ft $2.00
LAMINANT-sq ft $5.00
CER. TILE-sq ft $9.00
VINLY PEAL&STICK-sq ft $2.00
Fortress Tile $3.00
VINLY ROLL-sq ft $5.50
KIT. CABNITS- per Running foot $300.00
KIT. Appliances $2,500.00
KIT. SINK $750.00
TUB & SHOWER $2,000.00
TOILET $350.00
BATH SINK w/ Vanity $1,400.00
FANS - each $170.00
LIGHTS – each $100.00
PLUGS & SW. - Each $2.00
ELECTRIC tot. sq. ft – general sq. ft $1.00
ROOF-sq ft Complete $4.50
ROOF-sq ft-Gen $1.00
YARD-sq ft $1.00
WINDOWS-Each $400.00
WATER HEATER $850.00
HVAC-general – sq ft $2.00
HVAC-complete unit – sq ft $4.50
GARAGE DOOR $1,500.00
DEMOLITION sq ft $1.00
SHEET ROCK sq ft $2
GENERAL CLEANING $350

Okay, I don't know your area, but I am sure these costs are close enough for mine and if nothing else should at least cover labor with the what if factor. Thank you for taking the time with this. I have recorded every bit of it. You are super awesome ddowd. Figure run repairs high and ARV low and I shouldn't be able to go wrong. Now fast question is this costs for a gut rehab or normal rehab with less gut factor more cosmetic?

came across this searching for something.....

bumping this thread for the sheer goodness of content!

enjoy!
Jen

Truly, if you wanted to check the costs you can visit Lowes. Most of us investors use this as a base point for financing. What is great about Lowes is that they display the cost of the item and the cost of installation. If you account for these costs and add a little for just in case you will have your prices for your area.

It is good to walk through Lowes and take a room at a time to work number because when you walk through properties you begin to just check numbers such as: 8 doors; 12 windows, 2 sinks. By doing this you are able to come up with a pretty good number very quickly.

Thanks for all the great information.

You bring up a great question, if you can determine the repair costs by using a determined price multiplied by the sq. Ft.
I want to make it very clear, that you only do this when you have successfully done several properties. Once you have determined the repairs, you will need to determine the repair costs in your area. Determine If your repairs are light, medium or very extensive. This is how you determine the costs. Here is an example of how one might do this. Let’s say your repair costs are $8.00 for a light repairs and $15.00 for a medium repairs and $20.00 - $25.00 for extensive repairs. You will take this price and multiply this by the sq. ft. This will get you close to the repair costs and will help you to determine the repairs cost quick.

Stay focused.

Hi, Everyone!

Here's a general rule of thumb to use when calculating/guesstimating your repairs/rehab costs budget.
The numbers really depend upon the finish out level you're wanting.
Remember: Don't just put 'lipstick on a pig' as they say!

Low Repairs/Cosmetics: $10/sf - Paint, fixtures, minor repairs (plumbing/electrical), appliances, minor landscape, etc. for rent-ready (everything in working order)

Median Repairs: $15/sf - Above Plus: Countertops, Carpet, flooring, fixtures, hardware, better appliances, landscape, power-washing, etc. (nicer rent-ready, cohesive)

High End Repairs: $20+/sf - Major Areas: Roof, HVAC, Foundation, Plumbing, Windows/Fencing, Quality Appliances, Fence, Electrical Panel, Re-Wiring (resale/retail)

Remodel/Reno Costs: $30-$50+/sf - Remodeling and/or Reno, Major Damages Repaired

Avg. Cost of New Builds; $100-$150+/sf

NOTE: There are Remodeling/Contractor MANUALS you can purchase online that have STANDARD pricing. A great tool to have so you don't get ripped-off! ;D

Just bought a 9-year Whirlpool 'energysmart' Residential Electric (programmable) Water Heater from Lowe's for $525.
Of course, we installed it ourselves.