Content of the material
- Profile Menu
- 3 Tips To Keep In Mind When Calculating Repair Costs
- Doing Extensive Work
- Most Common Rehab Costs
- Common Interior Repairs
- Common Exterior Repairs
- Be Thorough When You Estimate Home Renovation and Repair Costs
- How Much Does a Handyman Charge per Hour?
- Major Rehab Items to Estimate for Houses
- The Roof
- Old Windows
- Heating and Air Conditioning
- Kitchen Remodeling
- Exterior Painting or Siding
- 2. Calculate Materials Costs
- How To Use the Home Maintenance Budgeting Rule of Thumb
- The 1% Rule
- The Square-Footage Rule
- Remember: The inspection report can save you money in the long run
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3 Tips To Keep In Mind When Calculating Repair Costs
Calculating repair costs can represent an intimidating obstacle for inexperienced investors. After all, the amount one expects to spend on repairing a home will play a large role in whether or not the endeavor is profitable. Fortunately, some tricks can ease the burden. Calculating repair costs doesn’t need to be scary, so long as you keep the following in mind:
Learn From A Knowledgeable Investor: There is no reason to reinvent the wheel. Investors have been estimating repairs successful for years, and there’s no reason you can’t learn from those that have come before you; in fact, I highly recommend enlisting the help of someone that knows what they are doing. Find someone that has calculated repairs in your area with a high degree of success and ask for their assistance. Proper mentorship can go a long way while simultaneously saving you from making mistakes and spending money needlessly.
Take Diligent Notes: If you can persuade someone to help you, proceed to take incredibly detailed notes. It would be unfair to expect them to help you with every rehab you intend to complete, so make sure your notes are good enough to guide you through the next deal you acquire.
Develop A System: There is absolutely no reason you can’t replicate a system for every rehab you take on. In fact, I recommend building off of every rehab that comes your way. Take what worked from the previous rehab and apply it to your next one. Did you have luck shopping at a certain store or even buying a certain product? If it worked on a previous rehab, there’s reason to believe it’ll work again, perhaps even saving you time and money.
Doing Extensive Work
If you’re doing extensive work, you’re going to add value and equity to your home. However, if you’re not going to be living there for long, the work might not be worthwhile.
If you’re deciding to knock down a wall or add square footage, expect to pay up to $500 for that job. Demolition and removal are pricey and if you’re getting rid of a load bearing wall that keeps your home together it could be costly.
Working on your basement can be very expensive, whether you’re merely cleaning it up or trying to turn it into a finished room. Expect to pay at least $10,000 if not double or more. It depends on how big your basement is and what kind of fixtures you need to have added.
For any kind of plumbing, electrical, or structural work, you’ll have to pay upwards of $150 an hour. Plumbers and electricians are going to be charging you by the hour and expect to cover all of your own materials as well. For adding an addition, just the engineer creating the plans will run you around $500.
That’s not to mention the cost of permits for your project, which adds an additional $1,000 to the cost.
Most Common Rehab Costs
No two rehabs are the same, and each will present investors with a unique set of circumstances, but that doesn’t mean there aren’t some universal similarities to keep in mind. While not every home is expected to require the same attention, there are a number of repairs that have become commonplace to the average investor. Below you’ll find a list of the most common rehab costs, both inside and out:
Common Interior Repairs
- Paint: No rehab is complete without a new coat of paint. Be sure to account for interior paint when calculating your own repairs.
- Flooring: It is almost always a good idea to budget for flooring when conducting a rehab, as its perceived value is almost unmatched.
- Kitchen: Includes cabinets, countertops, backsplash, plumbing, electrical, sink, garbage disposal, faucet and additional amenities. Remember, kitchens sell rehabs, so make sure to pay special considerations to this room and all of its costs.
- Appliances: While they may sound like more of an addition, appliances may be included in your rehab costs. Like everything else on this list, appliances will go a long way in creating value, so they are well worth budgeting for.
- Bathroom: Like their kitchen counterparts, bathrooms help sell homes, just to a lesser extent. Nonetheless, bathrooms will come with a lot of costs that are worth your while.
- Framing: A lot of rehabs will benefit from having a few walls knocked down. More importantly, you should budget to have a few walls demoed if it can increase the aesthetic appeal of your home.
- Insulation: Wall, floor and attic insulation should all be factored into your rehab budget as an expected cost.
- Walls: Drywall, patchwork, tape, drywall mud and remove popcorn ceilings.
- Doors And Trim: Plan to spend money on new doors and their corresponding hardware, as they will have a dramatic impact on the feel of your home.
Again, this list is by no means comprehensive and only represents a small portion of the costs today’s investors can expect to incur on a rehab. However, it’s my professional opinion that the items on this list are the most common.
Common Exterior Repairs
- Roof: If the roof needs repairs, there’s no reason not to do them yourself. It will cost extra, but I assure you it’ll be worth it when it comes time to sell.
- Gutters: Often overlooked, rain gutters are important and should therefore be included in your rehab costs.
- Siding: Fix the siding or replace it. Either way, curb appeal needs to capture the attention of prospective buyers.
- Masonry: Any exposed brick or masonry work needs to look good enough to make people want to inquire further.
- Painting: Like the interior paint, no home should be flipped without a fresh coat of paint––few costs are more worthwhile.
- Windows: Replace windows if need be; they will make a huge difference in the final product.
- Garage: Don’t forget to account for finishing the garage and the garage door.
- Landscaping: A home’s landscaping is often the first thing people see, so you’ll want to make a good impression.
- Concrete And Asphalt: Makes sure cracks in the foundation aren’t apparent or serious, and account for the costs to fix them.
- Wooden Amenities: Fences and pergolas are often neglected by homeowners, and should therefore be addressed by rehabbers if the situation calls for it.
- Septic: Not all homes have septic systems, but make sure yours is operational and ready for a new homeowner.
- Pool: Pools can be tricky. If you will keep it, make sure it is a selling point and not an eyesore. If you aren’t going to keep it, you need to account for filling it in.
Be Thorough When You Estimate Home Renovation and Repair Costs
Whether you’re buying or selling a home that needs repairs, you need to estimate home renovation and repair costs carefully. Once you start doing the work, it could become a costly endeavor if you’re not careful.
An experienced realtor will help to guide you as to which renovations are most valuable and which are unnecessary, whether you’re buying or selling. Contact us today to be paired with a Clever Partner Agent who can help you figure out which renovations are ideal for your home.
How Much Does a Handyman Charge per Hour?
A handyman charges on average $60 to $65 per hour in the U.S., though the price can range from $55 to $75 per hour for an independent handyman, according to HomeAdvisor.
The rate can climb up to $125 per hour for professional handyman services, though the average is $77 per hour.
In the end, the hourly rate will depend on where you’re located and how experienced the handyman is.
HomeAdvisor has a handy guide to how much your project will cost by zip code.
Major Rehab Items to Estimate for Houses
You must check if the roof is leaking or not.
Before buying or selling a house to potential home buyers, an investor needs to know if the roof is repairable or not.
A leak may cause significant structural and interior damage over time which may require far more money from your pocket, especially if there are title delays.
Different types of roofs have differing lifespans. Fiber cement shingles last about 25 years, wood shake roofs will last about 30 years, asphalt shingle/composition roofs last about 20 years. So, before you decide to change a roof, check whether its age might require it.
Replacing old windows with newer and more efficient ones is a very common way to give the home more overall appeal. You can tell if the windows need replacing if the seals are broken or cracked. There are other ways to tell if the windows need replacing as well.
Heating and Air Conditioning
Replacing air conditioning units is not cheap. So try to check if the unit will work OK with some low-cost repairs before investing in a new one.
No matter what type of A/C unit the house has, it should be expected to last for a few decades with regular maintenance and upkeep. So, if the previous owners had replaced the unit recently, a new one will likely not be needed.
A kitchen is a very important part of a house. Low-cost kitchen repairs and updates such as refacing the cabinets, applying a new coat of paint, or replacing hardware are typically enough for a house flip.
Make sure to replace only those things in the kitchen which cannot be repaired by the new owners. Replacing everything in a kitchen requires a large budget and is rarely worth it to an investor.
Exterior Painting or Siding
Exterior siding is not cheap and usually needs to be replaced after 10-20 years. Painting is a cheaper option.
2. Calculate Materials Costs
Now put together a list of materials you’ll need to do the home repair job. There are a variety of ways to calculate how much materials you’ll need. One method is to use a building materials calculator.
There are also a variety of apps for contractors that will help you calculate materials costs. Our article on apps for contractors lists 10 of the best apps out there.
In general, a good cost calculator tool will help you calculate the amount of material you need to fill a certain volume, depending on the material type (concrete, brick, wood etc.)
For a general contractor with a lot on their hands, it’s important to find the right cost calculator tool to help you estimate your project speedily and accurately.
Depending on the number and type of materials you need and the level of conversion costs you are after, some contractor estimate apps will be more useful than others. In the above list you will find that some apps have more powerful conversion calculators, but come with ads. You have a wide range of options to choose from, so finding the right one for your needs will help you make the best choices for your project.
How To Use the Home Maintenance Budgeting Rule of Thumb
Many homeowners have no idea how much they need to budget for home repairs. This rule of thumb is just a guide. However, it’s not foolproof. There’s also another budgeting guide for upkeep expenses that you may find helpful.
The 1% Rule
If you’re using the 1% rule of thumb, you should budget at least 1% of the home’s purchase price for maintenance expenses. So, if you purchased a $250,000 home, you should budget a minimum of $2,500 for upkeep and repairs using this rule. But is that enough?
Elizabeth Dodson, co-founder of digital home management company HomeZada, doesn’t think so. Dodson explained that owners should set aside 1% to 4% of their home’s value, depending on the property's age. Older properties are likely to need more repairs.
Porch Group’s Anderson agreed that this fund should be higher than 1%, saying 1% to 3% is more prudent. “The annual maintenance costs for any particular home will vary, based on when the home was built, the materials and finishes used, and climate where the home is located,” he said. For example, if you have an older, wood home with wood finishes and live in a wet climate like the Pacific Northwest, Anderson believes your upkeep costs would be closer to 3% of the home’s value.
“By contrast, a newer home built with concrete and stucco finishes, located in a dry climate like Arizona, will likely come in on the lower end of the range near 1%,” he said.
The Square-Footage Rule
An alternative to the 1% rule is the square-footage rule, which dictates putting away $1 per square foot of your home for annual repairs. However, neither Anderson nor Dodson believes this is the best budgeting gauge.
“A fixed price per square foot glosses over some of the most important factors in home maintenance costs, like labor costs for home services,” Anderson said. For example, he explained that a homeowner who needs to replace the roof on a 2,000-square-foot home would pay two to three times more to do so in urban San Francisco than in rural Oklahoma.
Home-maintenance and repair labor costs vary with the cost of living across the U.S., so your budget should reflect your area’s rates.
According to Porch’s data, average repair estimates are the highest in New Jersey; Washington, D.C.; Connecticut; and Maryland. These costs are the lowest in Mississippi, West Virginia, and Arkansas.
Another difference involves the type of home you have. If it has high-end finishes and appliances, Anderson said maintenance costs would be higher than for another house with lower-end finishes and appliances, even if the two homes were similar in size.
Remember: The inspection report can save you money in the long run
Receiving an inspection report can feel like opening a restaurant menu with no prices. Be prepared to go the extra mile to get the financial information needed to make an educated decision about your purchase. No matter the timeline or page count, figure out just how much time and money is needed to remedy the major issues on the inspection report. That knowledge can be leveraged to get the seller to make those repairs or offer credits that will offset the most costly issues.