Here's The Easy Way To Estimate Repairs...

money Hi Moguls, Lex Levinrad back again with my follow-up lesson about estimating repairs.

In Part 1, I provided an overview of how to estimate repair costs by understanding the material costs as well as the labor costs. And I gave some solid reasons why you really don’t need a general contractor for this kind of stuff.

So today’s lesson is going to pick back up in more detail – with specific examples and dollar amounts regarding rehab material costs.

Let’s dive in to Part 2…

Start at the Bottom: Floor Tile

Basic ceramic floor tile can be as cheap as $0.69 cents per square foot. But it can also cost as much as $10 per square foot.

If you are fixing up an expensive property, then you would want high quality tile… or you might even decide to use marble. But, for your average starter home that would make a good fix and flip or a basic rental – cheap ceramic floor tile that is $0.69 cents a square foot will do just fine.

So, if you have a 1,500-square-foot house and you plan on replacing all of the flooring in the house with tile – your cost of tile would be 1,500 x $0.69 which is $1,035 for materials.

Remember - that is just the cost of materials. How much would it cost you to install the tile – your labor? That is a variable cost, which can vary greatly. Depending on where you are in the country and how good you are at finding inexpensive labor, you could get tile installed from as little as $1.25 a square foot… to quite a bit more than that.

Your typical general contractor would charge as much as $5 to $10 per square foot or more to install tile. Suffice it to say that rehabbers who are renovating 50+ houses a year are not paying these high retail prices that general contractors charge. Many rehabbers, like myself, have their own crews that can work at a fraction of that price.

floor Remember, your general contractor has to pay sub-contractors to do the work. But there are many people who know how to lay title or do other components of the work on your property that are advertising their services on Craigslist or in the newspaper classifieds for a lot less money. Some of them may not be licensed or may not do good work - so it pays to get a referral if you can.

In the above example on ceramic tile, the cost of the tile is readily and easily available for everyone to see. Walk into any Home Depot and you can see ceramic tile that is 16x16 for $0.69 cents per square foot. You can even go online to their website and do a search of “ceramic tile” to see the costs of 12 x12 tile, 16x16 tile and 24x24 tile. They make it really easy for you by displaying the price per square foot online so that you can compare prices for different sized tiles.

Now, it will take laborers half the time to install 24x24 tile than it will to install 12x12 tile (since the tile is twice the size). Larger tiles look nicer, too. On most rentals, the standard is 16x16. On many fix and flips, rehabbers are now using 24x24 or larger. Newer homes and higher-priced homes typically require larger and more expensive tile.

So when I walk into a simple starter home, I estimate $2 per square foot for both labor and materials. I estimate $1.25 per square foot for labor and $0.69 per square foot for materials, which is a little bit less than $2 per square foot.

Please note that when you first start out rehabbing properties, you might find it difficult to find pricing this low. It will take you time. But it does exist. And if you are wholesaling and flipping properties, then the people buying from you are able to get prices this low since they rehab many houses and have their own crews.

Once you complete your first, second and third fix and flip – you will start developing a crew of people who can help you with your next property. And you will become much more familiar with pricing on labor and materials.

The Biggie: Kitchen

Let’s take a look at your basic kitchen on a typical 3 bed, 2 bath home.

diy The main components of the kitchen are:

Cabinets
Countertops
Sink
Faucets
Appliances

Appliances are best purchased somewhere other than Home Depot or Lowe’s since their pricing on appliances is not very competitive.

The cost of countertops, sinks and faucets are readily available by casually strolling through Home Depot or Lowe’s. The major components of your rehab in the kitchen are the cost and installation of the cabinets, countertop, sink and faucet. (You might also decide to install a dishwasher.)

Cabinets can be very expensive. To keep it cheap, you want to go with what are known as “ready to assemble” or RTA cabinets. Both Lowe’s and Home Depot carry these. If you look at the original kitchen layout of your property, it’s not difficult to measure the length of each wall to estimate how much space you have available for cabinets. If the old kitchen on the property you are rehabbing is still there, then use the same dimensions if you like the layout.

Both Lowe’s and Home Depot have their cabinets marked with the width, height and depth. Depth is standard and so is height (for each type). So basically, what you are looking for is the width. You want to buy a combination of cabinets that will add up to the correct width for that wall in the kitchen. The base cabinets are for the bottom below the countertop and the wall cabinets are for the top that hang on the wall.

Larger kitchens might have an L shape. On L-shaped kitchens, there are base cabinets but no wall cabinets for one component of the L sometimes. Once you have calculated how many base cabinets you need and how many wall cabinets you need, then figure out based on the dimensions on the boxes how many cabinets and sizes you will need to purchase to match the layout of your kitchen. Once you know how wide your cabinets are, then you need to purchase a countertop that is the same width.

problem And, if you’re having a hard time with all of this, the employees at Home Depot or Lowe’s can even help you figure it out - for free. Simply sketch the layout of your kitchen on a pad and pen (with the dimensions), and then take that sketch with you to the store. They can help you find an RTA cabinet box that has the exact dimensions of the cabinets you need. Once you have figured out the cabinets, choose your countertop, sink and faucets. Those are the major costs of your kitchen.

Your typical starter kitchen does not need more than $2,000 to $2,500 in materials. These are basically almost fixed costs. They don’t change and everyone can see the prices. You might have a local cabinet store that can even beat Home Depot or Lowe’s prices. The key thing to remember is the installation of these cabinets – the labor is where you can get killed in price.

And, as we learned in Part 1, that is why it is so important to separate the cost of labor and materials.

Save Some for Later

Okay, Moguls, we’ve covered a lot of helpful rehab info in this lesson. I don’t want your brains to explode! So, since we’ve discussed two big things – tile flooring and the kitchen – let’s call it a day for now.

In Part 3 of my series about rehab costs and materials, we’ll talk about bathrooms, bedrooms and a more… stay tuned!