Use These Simple Methods To Quickly Estimate Rehab Costs
Are you in need of learning the secret to estimate rehab costs quickly? First, you need to know what you are delving into. Rehab costs refer to the expenses that are associated with renovating and repairing a property. It may include structural, cosmetic, mechanical, and outdoor repairs. Since rehab costs can vary depending on the condition of the property, you should understand how it factors into your overall investment strategy. Once you quickly estimate the rehab costs, it gets easier for you to spot the properties that are worth investing in. Here are simple methods for you to quickly estimate rehab costs:
Get to Know Your Buyer and the Neighborhood
To calculate your rehab costs, you must get to know your buyer and the neighborhood’s specific characteristics first. This will affect the type of renovations that you need to do which in return, affects the cost. For instance, an inexpensive neighborhood will not need grand and luxurious renovations compared to high-end neighborhoods. You must also keep in mind that the location of the neighborhood will affect the cost of renovation in terms of materials and labor costs. Therefore, doing your research before anything else will help you determine a realistic price point for your property.
Examine Your Property
This is self-explanatory. Get to your property and examine what needs to be done. Be sure to be on the lookout for major damages that needs to be fixed. It is recommended that you take pictures and videos of your property so you have something to analyze after your visit. After all, you will need to have references for your investment properties before doing any repairs and renovations.
Apply these Methods for Estimating Rehab Costs
Now that you have done the initial steps, it’s time to get to know the simple and quick methods to estimate your rehab costs:
- Cost per square foot: To use this method, the estimator will calculate the total square foot of the area first. Secondly, you will have to gather information on the cost of similar projects that have been completed and determine the average cost per square foot. Lastly, the average cost per square foot will then be multiplied by the total square foot of the project.
- Lump sum method: this method estimates the costs of the project where the total cost is estimated as one single, overall cost. In other words, a rough estimate. Mostly used on well-defined projects where the scope of work is clear.
- Room estimation method: this method is a combination of the cost per square foot method and the lump sum method. Once your estimator identifies all the room that needs to be worked on, you will have to know the cost of similar projects before. You will then need to determine the average cost per room and multiply it by the total number of rooms in the project to estimate the overall cost.
Bottomline
When you do your planning and research, the rest comes in smoothly. Don’t forget to analyze the rooms thoroughly before estimating the rehab costs. Ensure that you use the methods above as carefully as you can before coming to an informed, final decision. Need help in estimating rehab costs? Contact us at Real Equity Acquisitions to learn more!