The 2019 National Building Cost Manual is a particularly useful tool for buy-rehab-rent-refinance-repeat (BRRRR) investors. It lists area modification factors for every city in the United States. These area modification factors can come in handy while estimating repairs. So, for instance, Boston, Massachusetts has an area modification factor of 37%. Santa Fe, New Mexico, on the other hand, has an area modification factor of -8%. Simply put, construction repairs that would typically cost $92 in Sante Fe will cost $137 in Boston!
With such a wide variance in construction costs, it is critical for a BRRRR investor to get an accurate repair estimate. Incorrect cost estimates can lead to incorrect financial decisions, and possibly, huge losses.
Many novice investors make the mistake of calculating repair estimates based on square footage. That is a mistake. Any experienced investor will tell you that repair estimates will vary immensely on a case-to-case basis. An accurate estimate is not really possible without breaking down the total cost of rehab into individual components.
How can a new investor with no prior construction or cost estimation knowledge accurately compute rehab costs on a deal that they are evaluating?
In this blog, we list some useful rehab calculation tools that BRRRR investors can use to estimate costs for their projects.
So, let’s take it from the top.
*A note: We are not affiliated with any of the below companies, we just want to best serve you in your investing. We make no specific claim with respect to the accuracy of any information that any of the following tools or organizations generate.
If you are looking for a basic calculator with a clean, easy-to-use interface, the Bigger Pockets Rehab Estimator Calculator is a good option. As a free BiggerPockets member, you can use this rehab calculator a maximum of 5 times. If you want unlimited access, you will have to upgrade to their membership fee.
How to use the Bigger Pockets Rehab Estimator Calculator
While we loved this calculator for its ease-of-use, we were disappointed with the lack of real-time cost data. If you are looking for a rehab calculator with in-built, state-wise cost information, scroll down and check out our option #2, Flipper Force.
Flipper Force is an excellent rehab tool for those looking for a more comprehensive solution. Flipper Force started out as an excel spreadsheet and then evolved into a full-fledged, web-based software platform. In fact, you can still access their excel spreadsheets here.
However, we recommend you try out their web-based platform.
This is how you can use Flipper Force for estimating rehab costs:
Much more than a simple rehab calculator, Flipper Force is a full-fledged project management solution. We loved the fact that this tool has an integration with Zillow that allows you to auto-populate property data.
Apart from estimating costs, you can also build project schedules, analyze deals, track tasks, and expenses, and manage budgets. Pricing ranges from a one-time fee of $127 to $257.
In an earlier post, we had revealed how you can use the Home Depot Project Loan Program to finance your rehab purchases. Well, additionally, Home Depot also has a useful rehab calculator to help facilitate your next BRRRR.
This rehab calculator can be useful for estimating costs for:
Check out this snapshot:
A Bluehammer estimate is a great starting point for negotiating prices with contractors. This is a free resource that is used extensively by insurance companies as well. Bluehammer computes an estimate by pulling data from an extensive area-specific, cost database.
This is how you generate a Bluehammer estimate:
If you are looking for an integrated, end-to-end solution, Propstream is another great option for you. Apart from estimating rehab costs, using Propstream, you can also:
This software is priced at $99/month.
If your BRRRR property requires a simple remodel, you can very well use one of the above listed options to compute a rehab estimate. However, if your investment is a deep value-add or “full-rehab” property, you might have to go for a complex remodel that requires preparing detailed designs and hiring multiple subcontractors.
In this scenario, it is a good idea to work with a contractor who can teach you the nuances of rehab estimation.
We strongly recommend paying a contractor to walk a few properties with you so that you can understand how costs vary by project and by location. An experienced contractor can rely on their experience and historical data to accurately assess rehab costs. Walking with a contractor will teach you how to break down a rehab into different functions (HVAC, plumbing, flooring etc.). Doing so will help you prepare a detailed and more accurate cost estimate.
So walk a few properties with the contractor. Understand how costs vary in different situations. Take notes. And apply this knowledge to your own BRRRR project. This will come in handy when you do your estimates of rehab costs for evaluating offers on your next BRRRR.
We hoped this guide helped you gain a good understanding of the different options that you, as a BRRRR investor, have at your disposal. Watch this space for more updates!
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