As a real estate investor, one very important skill you must develop is being able to judge fairly accurately how much home repairs will cost. Based on my personal experience, I’ve developed rules of thumb that I use to estimate repair costs, which I will share with you now.
Keep in mind that these are conservative numbers, and in many cases the costs may end up being lower. I like to err on the side of caution so that when unexpected problems occur, they don’t eat in to my profits, since I budgeted for dealing with those problems.
Also, you will notice that this list does not include an estimate for major home repairs like water damage, termite damage, mold damage, etc. These are very serious issues and are complete wild cards when it comes to repair costs. If any of these issues are present in a home, proceed with extreme caution—if you proceed at all.
With all that in mind, here’s my rules of thumb:
Roof replacement: $5,000
Window replacement: $175 per window (windows will need to be replaced on most homes you plan on flipping)
Kitchen cabinet replacement: $2,500
Paint: $2 per square ft.
Floors: $2 per square ft.
Heat pump replacement: $4,000 (likely will need to be replaced if it’s over seven years old)
Bathroom renovation: $1,500–$2,000 to totally gut and renovate a bathroom, if you purchase the materials yourself and just pay for the labor.
Adding a bathroom: $2,500
Electrical panel: $2,000 (requires hiring a professional and a permit)
For more information about how I arrived at these numbers, watch the following clip from my Bird Dog training workshop: