CLUES ON PRICING REHAB
I am totally clueless on the costs of rehabbing. If Im looking at a 2 flat with a basement. All 3 floors have about 1000 sq ft. of living space. I can buy the building for 300k. My idea is to knock off the entire front of the building and add forward into the yard about 600 sq feet enough room for another bedroom, bathroom and maybe another living area. (ground level and second level) Also, the rest of the house needs to be updated. So 3 bathrooms redone, 3 new kitchens, new floors on all levels, and new dry walI. Also, I'd like to run heat to the basement unit as it now uses electric heaters. Windows are good, roof is new. Am I a complete fool when I take a wild guess at $100,000 for a job like this??
Also, Can anyone direct me to a website or place that I can learn about estimating the costs for projects like this. Lastly, if I write up a purchase agreement for 300k, and the appraisal will come back now for 325, what is the likelyhood that I can get a mortgage and/or rehab loan for the extra amount to do this?
I hope someone gives you better advice than me on this...LIkely you will pay about 100 bucks a sq foot for the addtions.Kitchens and baths are the most expensive rooms in a home...I did a DIY kitchen and bath and it cost me about 4K to do both using those put together cabinets from home depot and decent tile. All my own labor , plumbing and wiring. I also did my own kitchen with Kraftmaid cabinets and that was 12K just for the cabinets alone so big price ranges in all these types of projects. If I had to guess I'd say 100K is being optimistic as you are looking at some major renovations. DOing new construction is often easier than ripping out walls and upgrading. You might get by with 100K if you do carpet, peel and stick tile, low end cabinetry and low end fixtures. I'm waiting for the experts on this one.
you have said youself "i am totally clueless" and "wild guess" learn what you are doing before you take on a project of this size or get a contractor. during a project is not the time to learn. you should have a working knowledge or someone with experience that can help you. rehabbs. can be a daunting task for anyone even those with exp. i know i've completed several. some have tried to kick my a$$..............km
First off, directing you to some site where you can gain insight into estimating this type of project, would probably only serve to doom your project from the start. You can't even begin to acquire enough practical knowledge in a short enough period of time to be able to help yourself with this property. Suggestion, get some qualified, well respected contractor experienced in this type of work and have him (or her) estimate the project for you. Blindly shooting from the hip with a "guesstimate" isn't going to enhance your bottom line on this. I don't know your market there, and you haven't said whether you plan to do all or some of this work yourself, or hire it out to someone. And there are a lot of variables concerning types and quality levels of materials that could be considered. Plus, factor in the necessary knowledge for the proper foundation work as well as the tie in to the existing building, and you get a lot of questions that need to be answered in order to obtain an accurate estimate. But in my market,even factoring in bare minimums for these things, there's no way you could get this done, using outside sources for anywhere near 100K. That's not to say, you can't find someone who will say they can do it for that, but it shouldn't take very long before the problems arise and the reality sets in, that they are in over their heads or they are looking to scam you with a "low ball" price up front and then lower the boom somewhere down the road. (Or just up and disappear in the middle of the job).
There are many facets to this, so recognize your limitations. If you don't have the necessary experience to do the job yourself, find someone who can provide it for you. And take every opportunity to "pick their brain" and learn so that someday, you will be able to provide this function for yourself.
Dave
Rehabinator- As I said I am "looking at a property", not that I have a purchase agreement signed and I am closing next week. lol The best way to learn is by actually seeing, researching information, acutally pricing rthings yourself at the store and asking many many questions to experienced people! Is that not what this site is for?! Children stop asking questions in school and raising their hands because of people like you who make fun of or discipline what came out of their mouth like they are stupid or something. It's the kids who laugh in the face of criticism and keep asking questions who grow smarter and are successful. I mean no offense really, this is all in good fun...but thanks for your great insight and direction as to where to get started!
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On 2004-09-29 16:38, nciboy wrote:
Rehabinator- As I said I am "looking at a property", not that I have a purchase agreement signed and I am closing next week. lol The best way to learn is by actually seeing, researching information, acutally pricing rthings yourself at the store and asking many many questions to experienced people!
I'm not knocking you for trying to learn. I'm knocking you for being so unrealistic. The project you are mentally spinning your wheels on is so far over your head it doesn't make sense to anyone else but you. If you are as serious as you believe you are then go about the true steps of discovery. Spend the 30-45 days it is going to take to you to understand this projects ramifications. Start making appointments with contractors, design/builders, draftsman and even architects to get a true grasp of what you are inquiring about. The time it takes to learn what it is going to take will probably mean this deal will be gone before you can act, but since you don't have anyway to act on the current deal in the first place it doesn't even matter. However, once you do actually learn what you need to know, then you will be in a position to understand the next deal that comes along. That is much more productive then the mental masturbation you are employing currently of, "Hey, there is this house, I wonder if I could do, blah, blah, blah to it and it would make me money?"
Rehaberenator-
Thank you. Your advice to talk to many contracters and architects certainly seems daunting and for sure the deal would be gone by the time I learn. I made an offer today on a 3 flat that needs no work, its very new and the rents and my expenses will be a break even. I am very interested, however, in now pursuing a kind of deal whic requires major rehab like I described before. How do you recommend I get started in learning more about these kinds of deals and how can I position myself to be ready for one.
First - why would you buy something to break even on? One little hiccup and your break even is in the red and bleeding cashflow.
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Your advice to talk to many contracters and architects... How do you recommend I get started in learning more about these kinds of deals and how can I position myself to be ready for one. I am very interested, however, in now pursuing a kind of deal whic requires major rehab like I described before.
Don't talk to many. Talk to one specifically about a actual project. Doing generalities will not do you much good, you need specifics. A real project, real numbers, real contractor ect...
However, what you are talking about is not a "major rehab" what you are talking about is spec building. Nobody who has "no clue" as you described should even consider taking on a project of that magnitude, not unless you have extremely deep pockets and can afford to take a $50,000 loss once or twice if things go badly.
Crawl, before you walk, walk before you run. You will get farther ahead doing smaller projects and gaining real experience then trying to 'research' how to do a huge one and never actually do it. As you do the small ones you will learn the secrets, the shortcuts and most importantly the pitfalls, and can apply them to larger and larger projects.
Hey thanks a lot for the advice! To answer your question on why break even. It's my first home purchase valued at 500k. Ill be living in one of the units and breaking even. Basically I'm living for free from the income on the other 2 units. (So its not really break even, you have to live somewhere!) Anyways, thanks for the ideas. I'll be saving some cash now and preparing line of credit and getting ready to start rehabbing small single family forclosures around 100k for next project after about 6 months of getting use to this property. Thanks again.
Hey thanks a lot for the advice! To answer your question on why break even. It's my first home purchase valued at 500k. Ill be living in one of the units and breaking even. Basically I'm living for free from the income on the other 2 units. (So its not really break even, you have to live somewhere!) Anyways, thanks for the ideas. I'll be saving some cash now and preparing line of credit and getting ready to start rehabbing small single family forclosures around 100k for next project after about 6 months of getting use to this property. Thanks again.
I have been in one phase of construction for 30 years and am now into rehabbing and am on my second $35000 project and it is amazing how much I am learning and the things I have run into that only experience will teach you. Start out small and work your way up or you are just asking for trouble. Good Luck
This question has been asked my more newbies.......and yet the answer is always the same.
Bottom line, rehabbing should not be confused with remodeling and new construction.
If you are estimating a project, it better be very small and you should have some sense about what you are doing.
As others have pointed out, you can loose your your shirt if you dont know what your doing.
Hook up with a good GC and even Home Inspector.........even if you have to pay for their services....its well worth it......the years of knowledge they possess can save you tens of thousands of dollars in head aches.
There are NO WEBSITEs OR BOOKS that can teach you how to estimate a rehab accurately.....each one is different.
With time and a good team working for you, then you can learn.
(I think we can just about put a disclaimer on the rehab forum about this very question......it comes up alot.)
NC
Good Advice from all! While I am no expert, this is what I usually do: once a property has piqued my interest (I get 2-3 calls a week from an ad that I have been running) I go myself for a walkthrough. Cannot say that these are nice paint and carpet deals - they usually require some brain surgery to fix 'em up (no one ever tells you the truth on the true condition of the property). If I want to go to the next step, I tell Mr. Seller that I have to have my contractor come out to estimate repairs before I make any kind of offer. I've already estimated in my head what it's going to take (this is after many walkthroughs and many hours at Home Depot pricing things out - lol!). My contractor comes out and checks it over - he'll either tell me I am nuts or the project is doable. We are usually *very* close on our estimates for repair. I am the one on the higher side to include The Screw-Up Factor and Estrogen Factor. Because I do not how to do anything myself besides paint, having my Guy come over is a blessing. The $50 I give him to do a check over is WELL worth the future cash bleed.
great post GRIPES, thanks.
" Buy it, Fix it, Sell it, Profit " by Kevin Myers. Very good book.
[addsig]
Any book that specializes in what you are attempting to do. If it is changing a toilet in a rehab a book that shows you how.