Estimating Remodel/Rehab Costs
In general, when investors are looking at properties to fix and flip, they look at the remodel under three categories: light, medium and heavy.
Here is a general breakdown on the categories with the dollar amounts you can assign to them, keeping in mind that these are not the only way to calculate these rehabs.
- Light – This involves mostly flooring and paint, with a few light and plumbing fixtures included. This can be in the range of $10-$15 per square foot. The range can vary depending on the extent of the flooring and paint to be done, along with the type of materials you choose. In the case of a fix and flip, you should take into consideration materials that could help you reach a maximum profit when the rehab is done and the property is sold. Suggested Time Line: Considering the formula of 1 day for every $1,000 of estimated repairs, this should take less than 3 weeks.
- Medium – This includes all that is included in the “light,” along with a kitchen and bath remodel. This can range from $20-$25 per square foot, depending on the amount of remodel that is needed. The property’s use after rehab will help you decide the extent of the actual rehab needed. If damage to the kitchen and bath is so bad that an entire tear out and rebuild must be done, you will probably be looking at the upper-end of the scale ($25 per square foot and maybe up into the $26-$28 range). Suggested Time Line: Again, considering the formula of 1 day for every $1,000 of estimated repairs, this could take up to 5 weeks.
- Heavy – This is the all-in rehab where you look at everything from the “light” and “medium” levels to throwing in major items, such as foundation repair, roof replacement, replacement of appliances such as AC/Furnace, and door and window replacement. This level of rehab typically involves big-ticket items that require the longest amount of time to finish the remodel. The range for this is around $30-$40 per square foot. Suggested Time Line: With the before mentioned formula of 1 day for every $1,000 of estimated repairs, this should be less than 8 weeks.
Remember that these estimated costs are based on retail purchases of the materials, like what you would buy at Lowes or Home Depot. A licensed contractor is able to acquire their materials at wholesale price, which could bring a rehab 10-15% below estimates that are done using retail pricing.