This information is an excerpt from a recent discussion on BiggerPockets.com with Dave w/ HouseFlippingSpreadsheet.com & a fellow investor:
I am looking for someone to give me a price per square foot for rehab cost. I have found several auction properties and am unable to view the inside. Any help is greatly appreciated.
Blindly using $/sf values without completely understanding what's included is a very dangerous way of estimating rehab costs.
Rehab costs vary widely, so if you are going to use $/sf you need to understand that the Scope of Work, level of finish, & market will impact your prices.
I would recommend performing a pricing exercise and calculate 3 different detailed estimates of a typical sized rehab project that you will pursue, with different grades of rehab (light, medium, heavy).
You can then use your estimated $/sf values as a quick, high-level estimation for your rehab projects.
Pricing Exercise Steps to Calculate $/sf values
- Find a Typical prospective rehab property that you will pursue at the auctions
- Create a detailed Scope of Work for each Scenario (light, medium, heavy)
- Create a detailed list of whats included in each scenario:
- Light - Paint & Carpet?
- Medium - New kitchen, bathrooms, finishes throughout?
- Heavy - New floor plan layout, structural changes, MEP upgrades & finishes?
- Create a detailed Estimate for each Scenario (light, medium, heavy)
- Talk to local contractors about specific scopes to get local repair pricing
- Once you've calculated the Total Repair Estimate for each Scenario, calculate the cost per SF
- Divide your Total Repair Costs / Property Square Footage
This pricing exercise will give you a much better understanding of whats included in the $/sf values and provide more accurate pricing for your specific projects & market.
You can use these $/sf values to help estimate preliminary, high level estimates until you get a chance to create a detailed Scope of Work & estimate for the project.