I am sure that at any point of your career, the rehab estimate you made was completely out of range.

I know how that feels.

I wasn’t good at this either until I knew how to make the estimate properly. Here’s me explaining what I learned from a book, recommended by my friend.

Obviously, reading the book will give you more insight.

Anyways, here are the brief points to estimate the rehab cost efficiently.

Step 1: Asses the neighborhood & your buyers

Before you start crunching the numbers, you need to make sure that you assessed your buyers and the neighborhood well.

First of all, look at your target buyers. I mean who will be interested in the property after the rehab.

Then consider the location of the property.

After assessing them both, start calculating the cost.

Step 2: Carefully draw a Mind-Image of how you want it to look

Walk around your place. Look at every corner, every wall, every room. Draw the image in your mind and decide how you want it to look after you make the rehab.

In this step, your targeted buyer group and the neighborhood should have an impact. For example,if your property is in a high maintenance area (more affluent), be sure to plan accordingly. Also, think about how your targeted buyer group would like it to be. These 2 considerations will help finalize what changes you should make.

Step 3: Categorize the to-do-list

Now that you have finalized what changes you want to make to your property, it’s time to categorize the to-do-list.

First, categorize the list into two parts. One is Repairing and other is Addition.

First separate everything that falls under repairing, like fixing the wall, fixing the ceiling, etc. Next, categorize everything you need to add to make the place more suitable for recent times. For example, you might need to add a wall divider to make good use of a big room. Or you could just replace the balcony and room separator with glass, instead of a solid wall.

Now, there is a good reason why you should separate the repairing task from the modernization works. The reason is the price of materials used in repairs.

Tools or materials needed for repairing work are comparatively cheaper than the materials needed to update or add to the place. That’s why it’s efficient to separate these two.

Then list out the materials separately. For example, say you need glass for your window repair and for the balcony divider. Now calculate how much glass is required for all the repair work and note it. Similarly, say you need some plywood to add a divider between the kitchen and dining. Now find out where else do you need the plywood and how much. Note them. Do this for everything including materials, general carpenter/construction tools, power tools, etc.

Step 4: Put the cost of all the materials & tools and sum it up with workers’ bills

The last step is to add everything up.

After putting the prices of the materials, tools, etc., add it up. Then add the bills for workers, engineers, interior designers with it. Now you have the final estimation which will be very close to the actual figures.