Intermediate terms

Renovation Scope & Costing: Essential Terms

Explore key terms that might be helpful when building a Scope of Work and estimating renovation costs for investment properties. This curated collection provides definitions for commonly referenced concepts, supporting your learning journey in rehab project planning. Use it as a quick reference to understand the terminology you may encounter.

Learning Path

Due Diligence

Due diligence is the critical process of investigating and verifying all material facts about a property and its financials before a real estate acquisition, aiming to identify risks and ensure an informed investment decision.

Intermediate14-15 min

Change Order

A change order is a formal amendment to a construction contract that modifies the original scope of work, cost, or schedule of a real estate development or renovation project.

Intermediate5 min

Cost Estimation

Cost estimation in real estate is the process of forecasting the expenses required to acquire, develop, renovate, or operate a property, crucial for financial planning and investment analysis.

Intermediate5-6 min

Project Management

Project management in real estate investing is the systematic process of planning, executing, monitoring, controlling, and closing out a real estate project to achieve specific goals, maximize profitability, and mitigate risks.

Intermediate12-13 min

Cost Overrun

A cost overrun occurs when the actual cost of a real estate project exceeds its initial budget. It represents an unexpected increase in expenses that can significantly impact profitability and project timelines.

Intermediate5 min

General Contractor

A general contractor is a professional responsible for overseeing and managing all aspects of a construction or renovation project, ensuring it is completed on time, within budget, and to quality standards.

Beginner15-18 min

Bid Process

The bid process in real estate is the structured procedure through which a prospective buyer submits a formal offer to purchase a property, and the seller evaluates and responds to that offer.

Intermediate6 min

Renovation Plan

A Renovation Plan is a comprehensive document outlining the scope of work, budget, timeline, and resources required for property improvements, crucial for managing real estate investment projects effectively and maximizing returns.

Intermediate5-6 min

Contingency Fund

A contingency fund in real estate is a dedicated reserve of money set aside to cover unforeseen property-related expenses, major repairs, or periods of income loss, safeguarding an investment from unexpected financial shocks.

Intermediate12-13 min

Contractor Vetting

Contractor vetting is the systematic process of evaluating potential contractors for real estate investment projects to assess their qualifications, reliability, experience, and financial stability, ensuring project success and mitigating risks.

Intermediate5-6 min

Property Inspection

A property inspection is a visual examination of a property's condition by a qualified professional to identify defects, safety hazards, and maintenance needs before purchase.

Intermediate13-14 min

After Repair Value

After Repair Value (ARV) is the estimated market value of a property after all planned renovations and improvements have been completed, crucial for assessing investment profitability.

Intermediate15-18 min

Property Condition Assessment

A Property Condition Assessment (PCA) is a professional evaluation of a commercial property's physical condition, systems, and components, crucial for due diligence in real estate transactions.

Intermediate5 min

Scope of Work (SOW)

A Scope of Work (SOW) is a detailed document in real estate investing that outlines all tasks, materials, timelines, and quality standards for a property renovation or development project, serving as a blueprint for all stakeholders.

Intermediate14-15 min

Fix-and-Flip

Fix-and-flip is a real estate investment strategy where an investor buys an undervalued property, renovates it to increase its value, and then sells it quickly for a profit.

Beginner11-12 min

Rehab Budget

A rehab budget is a comprehensive financial plan detailing all anticipated costs for renovating a real estate property, essential for projecting profitability and managing project expenses.

Intermediate15-18 min