Gut Rehab

Rehabbing, Fix and Flip, Rental Properties
1

Hello all,

This is my first post on the forums. I’m looking at purchasing a 2 family home in need of a complete gut rehab and I’m wondering if anyone could give me a ballpark price on this job. This will be my first rehab. I have an idea of what it might cost but I’m not entirely sure. To start, I will be the general contractor, I have sub contractor contacts that do amazing work and at reasonable prices.

The house: 1800 sq ft
Total of 5 bedrooms and 2.5 baths.
Two full kitchens
Newer vinyl siding and vinyl replacement windows on the first floor
Knob and tube wiring
Newer roof (shouldn’t need replacing)

The interior of the house is in rough shape, some drop ceilings, lot of damaged plaster, awkward layout, disgusting flooring, both kitchens in very rough shape, same with bathrooms. Basically everything in the interior of the house needs replacing.

What I expect to do/have done: Rewire entire house, pull down all plaster and replace with sheetrock and add insulation, address any plumbing issues (i know, vague), laminate flooring in half of house and most likely carpet in rest, new cabinets, countertops, sink, appliances etc for both kitchens, new toilets, sinks, vanity, tub/shower and tile floors in bathrooms. Vinyl replacement windows on second floor, approx 8 windows. Basically a full interior remodel. I have to take another look at the heating system/water heaters.

I’m not looking at anything high end here. Basic, stock cabinets, laminate countertop or something similar, cheap tiles and vanities etc. I can do some of the work myself, but not all.

My father owns a plumbing company so labor and materials will be cheaper than for most. I can do the laminate flooring, cabinets, countertop install, and other handywork myself. Electrical hired out.

I realize its difficult to estimate a rehab like this without seeing the property but if anyone can throw out a ball park estimate that I can refer to, that would be great. I have my own idea of what this might cost but that might be a little off since this is my first project, haha. Thank guys!

2

Also forgot to add, this rehab isn’t for resale, it plan on holding and renting out both sides.

3

Full gut rehab. Don’t do it.
Electrical complete to code ,15,000 minimum
Plumbing with assistance 10,000
drywall including tape and mud 6000
Painting----------------------------3000-5000
windows@ 500 ea include labor=4000
Vinyl siding 100/sq=Approx 2500
Flooring=2-3 $ / sq ft= 3600-5400
Full kitchen @ 5000 Ea=10,000
This comes to 54100-57400
How about landscaping and furnaces and gas pipes
and insulation.
Take it from me that you have no idea what you are getting into. The only people that do a full rehab are are those that have never done one.
Then you will decide like I did that I will never do that again,fortunately i survived financially but not by much.
You need To add purchase price to the total to see if the cash flow is positive when the total amount is amortized over 20 years. If it is a looser it will always be a looser, especially when a vacancy occurs.
Redhawk

4

I’m looking at getting the place for $60,000ish. I’m a real estate agent so I’ll get commission from that, not much but some. I have the cash to buy and put $60,000 into the place, so I wont have any lender fees. Average rent in the area for a 3 bed is 1100 and for a 2 bed is 950, but those are not updated or in great condition. I think, with completely updated units, I could get 1150 for the 2 bed and 1300 for the 3 bed. I’d be getting 2,450ish a month in rental income. Say i was even to take out a 20 mortgage and put 20% down, to be conservative I’ll say it’ll take 130,000 for purchase and full rehab, I put 20% down and take out 104,000 on a 20 year mortgage, my monthly payment is only about 950 a month with taxes and insurance. Lawn care, snow removal etc will be taken care of by me. Utilities paid for by the tenant. So there won’t be much other cost leaving me with 1,500 positive cash flow…

5

Demo: $4,000 Includes dumpsters

Permits: $5,000 includes HVAC, Electrical, Plumbing

Electrical rewire for both units $7,500.00 which should include two new electrical services includes outlets, fixtures and GFCI upgrades.

New plumbing (PEX) for both units $4,000.00 includes diverters for baths

Insulation $1,500.00

Drywall $6,000 Mud/tape/ and finish

Subfloors and VCT in kitchen and baths $3.500.00

Cabinets to include vanities (6 wall units and 8ft base per kitchen) post form counter tops with double bowl sinks $8,000.00

Prime and paint $5,000.00includes basement if applicable

Carpeting or refinishing $6,000.00

Interior doors and hardware $2,000.00

Windows $3,300.00

Misc Approx 10% $5,700.00

Total $61-62k

6

Thanks Mr. Rehab.

Thats around what my top end rehab costs were for basic, non-elegant upgrades. Demo, painting, insulation, some of plumbing, interior doors install etc will all be done by me with only material costs, no labor costs so that should lower the cost a bit. So my estimation of cost is just about right with some variations. Any other input is great. Again, this could be my first gut rehab so any help is appreciated.

7

Hi,

I don't know what area of the country some of these guys are in or what there idea's of a remodel are, but sometimes a full gut just makes sense, but really look things over before you pull that trigger as if there is one side of every interior wall you can save, it will obviously save you money.

My professional background is in Construction Management and I am a licensed engineering and building contractor in more than one state, I have a lot of building experience having been doing it for over 31 years!

Go order these online and get the following books from RS Means, these are construction estimating books and have a labor and material averages for every skill set (Trade) based on square footage, linear footage or piece such as truss! They have reference pages which indicate how much to adjust (Plus or Minus) for materials and labor for your area of the country!

Don’t leave your self in the dark, create your own numbers based on home size, wall square footage, linear footage, etc. Some of the guys above numbers are way high, some are probable pretty fair, but it’s hard to know exactly unless we know where you live as if you do a remodel in New York City it is obviously expensive compared to say Phoenix, and a home in Los Angeles is more costly than say a remodel in Columbus, Ohio.

There are four books by RS Means which are pretty affordable! Here are those four:

  1. RS Means - Home Improvement Cost Guide, Exterior, 9th Edition. $24.95
  2. Contractors Pricing Guide 2010 - RS Means Residential Square Foot Cost’s. $39.95
  3. Means Repair & Remodeling Estimating. $69.95
  4. Architects, Contractors & Engineers Guide to Construction Costs 2011. $59.95

And these are good books if you can afford to get them or add them when you can!

  1. BNI General Construction Costbook 2011. $99.95
  2. RS Means Site Work and Landscape Cost Data. $169.95
  3. RS Means Interior Cost Data 2011. $179.95
  4. RS Means Mechanical Cost Data 2011. $169.95
  5. RS Means Plumbing Cost Data 2011. $174.95
  6. RS Means Electrical Cost Data 2011. $174.95
  7. RS Means Residential Cost Data 2011. $109.95
  8. RS Means Square Foot Cost Data 2011. $184.95
  9. RS Means Building Construction Cost Data 2011. $174.95
  10. RS Means Concrete/Masonry Cost Data 2011. $159.95
  11. RS Means Electrical Change Order Cost Data 2011. $169.95
  12. RS Means Estimating Handbook Third Edition. $99.95

Now there is $2064 dollars worth of books here worth there weight in gold, and you could buy a set this year and concievable use it for 3 to 5 years just to adjust for inflation, but the first price that’s way out of line you will know it right away and this is great to check line item estimates against your area / states average cost.

Be a Pro, invest in your future especially if you see yourself doing more than one fix & flip, or fix and hold property that needs minor to major rehab!

You can find them online : http:// world wide web bnibooks dot com

                          GR
8

My 3rd deal was a complete gut and rehab. I partnered with a contractor, he did everything at cost and brought some money to the table as did I so it worked out really well and I learned a ton. My suggestion is to find a project manager, expert flipper, contractor, etc and partner or work with them in some way. They may be able to bring their team and cut the rehab costs in half. Finding a rehab solution is a difficult decision, you always want to do difficult decisions in 3s. Meaning get 3 rehab bids from contractors that that have survived your first filter. You will likely have to call 15-30 contractors, in the end this will really pay off.

This is a rental so you want basic finishes and to only do repairs that will add value as a rental. You don’t have to gut the whole house, focus on kitchen, baths and curb appeal where you get the most added value and bang for your buck. If I was doing this deal, I would not put a penny more than 40K in and I would do my best to keep it as close to 30K as possible. In fact, I would probably tell my contractor and project manager to make it as nice as possible with 30K. They will let me know any overages that will add significant value and any items that if not fixed now could be extremely costly in the future.

It helps that you can handle some of the flooring and plumbing. Your dad has to have buddies in other trades that can keep the cost down as well. The cash flow seems to make sense, it sure would be awesome if you where only in 90-100K and receiving $2400+ per month. Keep in mind though, there are a lot of good deals out there that have this time of cash flow upside but without all that work and risk. This is clearly a very distressed property and only a lowball offer should be given. Honestly I would offer 40K and try to meet in the middle at 50K.