how to estimate rehab costs

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Learning how to wrap your head around a construction project and come up with an accurate budget is a critical skill in value add real estate investing and a cornerstone in successfully pulling off forced appreciation.

The best way I know how to do this is to look at the big picture and then systematically break it down into all the required components.

Step 1: Walk the Jobsite

The first step is to get your bearings on the project. You will want to take photos, maybe a walkthrough video, and get measurements.

Step 2: Break Down the Work

I have found that the best way to do this is to work through the project linearly through time. Then, working through the construction process, write a breakdown of the basics of what you will be doing in each step.

Step 3: Scope the work

So now you have a list of what you want to do in each category. At this point, it is somewhat high level. This is the point where we will start drilling down to more specific finishes and quantities.

Step 4: Start Estimating

You will need to estimate both labor and material costs for this part of the project. To estimate labor, you can start calling flooring subs and see what they charge per square foot, or you can look online for averages per square foot.

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