How do you rehab?

Hi everyone,

I have never done a rehab project before so I need some advice.

My mother-in-law has a house (bayarea, California) that needs to be fixed up and have a bedroom and bathroom added to it. Once she rehabs the house, she’s going to sell it on her own. Her property is made in 1923, it’s a 1 bedroom/1bath, 1 story, 765 square feet sitting on a 3800 square foot lot. So here are my questions, and please be patient with me.

  1. What kind of “permission” do I need to acquire in order to do this such as building permit, etc?
  2. Approximately how much does it cost to do add another bedroom and bathroom?
  3. What kind of contractor do I need to hire to do such a job?
  4. What is the average length of time to complete the project?
  5. She doesn’t want to use her own money to pay for the rehab so should she go to a hard money lender or a bank for funding?
  6. Any additional information that I need to know in order to be able to add the rooms and then sell the property.

Since, I’m inexperienced, I don’t know what information I need so anything to point me in the right direction is much appreciated.

Thank you to all in advance.

Also, since I’m adding a bedroom, what is involved in getting electricty hooked up to this room and bathroom?

What do I have to keep in mind to add water and sewer to the additional bathroom?

This house is built in 1923 so I don’t know if there is anything else that I need to take into consideration to comply with modern city standards.

Since you are so inexperienced the best thing you can do is work with people who are experienced. Hire a general contractor. If you don’t even know which kinds of contractors to hire then a very experienced general contractor will be needed. Make sure they pull all the permits as well. Get several quotes with itemized costs, not just one number but a break down of everything. This is all BEFORE the purchase. Then tack on another 1-5% for unforeseen expenses and overruns. Then you have utility costs, holding costs, and selling costs. Expect longer holding costs since your mother-in- law is selling it herself. If the numbers all work out well enough where you or your mother-in-law have a large buffer zone of profit then consider the project further. Hard Money Lenders (HML) will be the best bet if your mother-in-law doesn’t want to use her own money. But there are significant costs in using a HML that you’ll need to factor in. Then you have taxes to pay on your profit which can be deferred if you reinvest the profit into another investment property.

For an extensive rehab I wouldn’t let the work go on past 4 weeks. I would make sure there was 50 people on the site working 16 hours a day or 2 shifts if I could. The reason being if 50 people are working 16 hours a day thats 800 man hours a day which will cost the same as 20 people working 40 hours a week. The difference is the work will be done faster thus less holding costs.

Get a general contractor involved, and be his shadow. Learn how, when, and why things are done. Rehabbing is done in a certain logical order and the general will know which crew should start first. (i.e. - you don’t want the drywallers there ready to go before the electrical, plumbing, and insulation are taken care of).

While Danny’s premise about 50 people working at a time does indeed logically add up to a quicker turn around time, it would also create mass chaos in a 750 sq feet house. As a matter of fact, I’d pay to see 50 people working at once in that size home. You could sit out front and sell tickets… it’d be better than going going to the circus. This is reality, not Extreme Home Makeover. Once the General does a walk-through of the property and you point out what you want done he should be able to give you a reasonably accurate time frame for completion. When you sign the contract make sure to put something in there that states “all work to be completed by (date)”, else they will make other jobs with deadlines priority over yours. This can be done with the overall cost, too. “Materials and labor not to exceed (dollar amount)”, or that you must personally authorize any extra costs.

Also make it known to the General that you will want copies of all the original bids by each individual sub-contractor when work is completed. General contractor’s price is usually a percentage of the job and should be in the 10-15% range. With all bids in hand, you can verify that his cut is in line with that range.

The rest of your questions will really depend on the scope of the work. Here in Wisconsin, though, 2 bedroom homes do not sell well no matter if you have 5 bathrooms. Perhaps you’d get better return on your money if you just added two bedrooms and forego the bathroom addition. 3 bedroom homes are also much easier to sell as they are more accommodating to different family sizes. If it’s a 2 bedroom home you’re going to limit yourself. Perhaps this is different in CA, though, and extra bathrooms are the way to go. Running “comps” (comparable sales) from a couple should be able to tell you the best way to go. If 2/2 houses sell for about the same as 3/1 houses, it’d still be better to go the 3/1 route as it’ll be much less expensive to add two bedrooms than it will be to add one bedroom and a bathroom. Rough-in plumbing costs alone for a new bathroom will set you back $3000-$5000, depending on how difficult it is to run the drain lines. (this is just the labor cost) The pressure lines are pretty simple to run and fit almost anywhere, whereas a 4" PVC drain line that has to be pitched 1/8" to 1/4" per foot, and must be vented correctly can take careful planning.

Running the electrical is easy, but you’ll have to run a new circuit into the breaker box and if you haven’t worked with electricity before I would let an electrician do that, as there is something like 12,000 volts running into that box. Outlets in bedrooms are usually spaced roughly 6 feet apart from one-another in new construction, but I’d say every 12 feet, or roughly one per wall in an average sized bedroom is enough. Bathrooms generally only have one or two outlets, and they must be GFCI outlets (Ground Fault Circuit Interrupter). That way the outlet itself will “trip” if there is a fault and the incoming/outgoing voltage isnt roughly equal. GFCIs are now required by code in all kitchens, bathrooms, and other places where water may be present, such as basements.

If you are going to go ahead with adding a bathroom, I would ask a plumber specifically where he’d have the easiest time running the drain lines. Perhaps there’s an ideal spot to create the new bathroom which would allow an easy tap into the existing soil stack (the large 4" main line, usually PVC or cast iron). The easier time he has roughing in the plumbing, the less it’ll cost you.

I could go on for days about just the rehab part of the scenario, and that’s without touching on the real estate portion. There is a specific book that’ll help you with your remodeling efforts, though, and that is the RS Means Residential Cost Data book. It is essentially the price guide that contractors use to price out jobs. This book will tell you if the bids you’re getting are in line.

You can pick it up at Home Depot or Barnes and Noble for about half price, usually.

If it works for Extreme Home Makeover it works for me. They get done everything in a couple days. It’s my point to create chaos. Infact I want the police to come several times for noise complaints. That intense activity creates a lot of curious people. I want people to tell there friends and families all about this circut going on down the street. I want contractors trucks lined up and down the road. That’s the type of activity that I need to sell very very quickly.