Advice needed - what's your experience on rehab costs like this

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Advice needed - what's your experience on rehab costs like this

Alice Huang
Investor · Austin, TX · Member since 2020 · 223 posts · 83 votes

Hello everyone, 

We have our eye on this project. 3/1/1040. 

It needs a lot of work, in San Antonio, Tx.  What do you think rehab will go for?

https://drive.google.com/drive...
Looking for some insight...Is this too much to take on for some rehab newbies?

Cheers,

Alice

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Joseph CacciapagliaBusiness Member
Lender · San Antonio, TX · Member since 2020 · 1k+ posts · 1k+ votes
6y

I work with a lot of new out of state investors that buy here in San Antonio, and I would strongly discourage any of my clients from getting into this type of project, unless they have significant construction experience. Not only is it a big project, but it's also surrounded by dilapidated properties. There is a lot of revitalization going on in that general area, but this particular neighborhood hasn't seen enough of it yet for me to want to pour a lot of time and money into it. Even if you're able to rehab the property within a reasonable budget, this isn't an area that's renting terribly well (if this is a BRRRR). Have you spoken to a local property manager yet? If it's a pure flip, you might be able to make it work if the price is right.

[email protected]979-218-2286
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  • Jaron WallingPro Member
    Rental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
    6y

    @Alice Huang Is there any salvageable part of the house? I didn't see any value other than the walls and maybe the sub-floors. If that's your first flip investment turn around and RUN AWAY. I wouldn't even consider that property unless it's a home run on the buy side in a good location. 

    1Reply
  • Alice Huang
    OP
    Investor · Austin, TX · Member since 2020 · 223 posts · 83 votes
    6y

    @Jaron Walling

    Haha. Thanks Jaron. It’s in that bad of a shape eh....we really wanted to keep the wooden walls and flooring. Some terminate damages as well.

    Would you think it’s a $60k+ job?

    0Reply
  • Clint ShelleyPro Member
    Surveyor · Dothan, AL · Member since 2014 · 425 posts · 391 votes
    6y

    This looks to be a project for the fire department trainees. Donate for a burn exercise and do a new build. My .02$.

    Clint

    2Reply
  • Jaron WallingPro Member
    Rental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
    6y

    @Alice Huang How much experience do you have? That's not an easy project. 

    I'll throw some numbers at you; look how fast they add up. 

    Roof: $6K

    Kitchen: $7K

    Baths: $5K (per full bath)

    Flooring: $5-6K

    ELECTRICAL: $9-10K, you need a new panel $$$ 

    Paint: Probably $5-6K interior, $5K exterior

    HVAC: I don't even want to know.... $$$

    0Reply
  • Joseph CacciapagliaBusiness Member
    Lender · San Antonio, TX · Member since 2020 · 1k+ posts · 1k+ votes
    6y

    I work with a lot of new out of state investors that buy here in San Antonio, and I would strongly discourage any of my clients from getting into this type of project, unless they have significant construction experience. Not only is it a big project, but it's also surrounded by dilapidated properties. There is a lot of revitalization going on in that general area, but this particular neighborhood hasn't seen enough of it yet for me to want to pour a lot of time and money into it. Even if you're able to rehab the property within a reasonable budget, this isn't an area that's renting terribly well (if this is a BRRRR). Have you spoken to a local property manager yet? If it's a pure flip, you might be able to make it work if the price is right.

    [email protected]979-218-2286
    Joseph Cacciapaglia powered by Morty
    WebsiteView Page
    2Reply
  • Stone Saathoff
    Investor · San Antonio, TX · Member since 2019 · 576 posts · 307 votes
    6y

    @Alice Huang

    One of my investors here in San Antonio is actually rehabbing a house about a mile towards downtown, on the exact same street as this one! His scope of work is in the mid 50's. Not sure why so many nay-sayers on this thread for full rehabs, I do a ton of business in this space and the results end up being fantastic. For this one since it's about 100 sq ft larger than the one my customer is working on I would guesstimate around 60K in work, if not a couple thousand higher.



    On a side note, when you're doing your rehab in this area having 2 baths is HUGE on the resale value. Makes a 10K+ difference most of the time. At this size you could be a 3/2 or a spacious 2/2, which gives the best resale value in my opinion. Regardless, make sure you add the 2nd bath.

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  • Joseph CacciapagliaBusiness Member
    Lender · San Antonio, TX · Member since 2020 · 1k+ posts · 1k+ votes
    6y
    Originally posted by @Stone Saathoff:

    @Alice Huang

    One of my investors here in San Antonio is actually rehabbing a house about a mile towards downtown, on the exact same street as this one! His scope of work is in the mid 50's. Not sure why so many nay-sayers on this thread for full rehabs, I do a ton of business in this space and the results end up being fantastic. For this one since it's about 100 sq ft larger than the one my customer is working on I would guesstimate around 60K in work, if not a couple thousand higher.



    On a side note, when you're doing your rehab in this area having 2 baths is HUGE on the resale value. Makes a 10K+ difference most of the time. At this size you could be a 3/2 or a spacious 2/2, which gives the best resale value in my opinion. Regardless, make sure you add the 2nd bath.

    I'm not against full rehabs in general. The question was whether it was too much of a project for a "newbie", and I was also considering the fact that she's out of state. I believe rehab deals are great for the right type of investor, but that's usually someone that is well capitalized, has experience, and a strong team. It's just not something I would recommend for an out of state "newbie", unless there were strong mitigating factors.

    I know rehabbers are a very important part of the market. I don't mean to bash the business model at all. I know it can be very lucrative for the right investors. I have a pretty full rehab deal under contract at the moment, and another with a relatively light rehab. I expect both clients to do very well. I've just also seen it go very wrong for people that didn't fully understand what they were getting into. 

    [email protected]979-218-2286
    Joseph Cacciapaglia powered by Morty
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  • Stone Saathoff
    Investor · San Antonio, TX · Member since 2019 · 576 posts · 307 votes
    6y
    Originally posted by @Joseph Cacciapaglia:
    Originally posted by @Stone Saathoff:

    @Alice Huang

    One of my investors here in San Antonio is actually rehabbing a house about a mile towards downtown, on the exact same street as this one! His scope of work is in the mid 50's. Not sure why so many nay-sayers on this thread for full rehabs, I do a ton of business in this space and the results end up being fantastic. For this one since it's about 100 sq ft larger than the one my customer is working on I would guesstimate around 60K in work, if not a couple thousand higher.



    On a side note, when you're doing your rehab in this area having 2 baths is HUGE on the resale value. Makes a 10K+ difference most of the time. At this size you could be a 3/2 or a spacious 2/2, which gives the best resale value in my opinion. Regardless, make sure you add the 2nd bath.

    I'm not against full rehabs in general. The question was whether it was too much of a project for a "newbie", and I was also considering the fact that she's out of state. I believe rehab deals are great for the right type of investor, but that's usually someone that is well capitalized, has experience, and a strong team. It's just not something I would recommend for an out of state "newbie", unless there were strong mitigating factors.

    I know rehabbers are a very important part of the market. I don't mean to bash the business model at all. I know it can be very lucrative for the right investors. I have a pretty full rehab deal under contract at the moment, and another with a relatively light rehab. I expect both clients to do very well. I've just also seen it go very wrong for people that didn't fully understand what they were getting into. 

     Yeah that comment definitely wasn't directed at you. You're one of the most knowledgeable people I know in the San Antonio market. I would agree full gut rehabs CAN be risky for newer investors. Usually if I'm working with someone who hasn't done this yet I refer them a few of my most trusted contractors and get very involved in the communication and planning process. For someone who wants to be hands off full rehabs are not the way to go.

    1Reply
  • Clint ShelleyPro Member
    Surveyor · Dothan, AL · Member since 2014 · 425 posts · 391 votes
    6y

    I'm a nay sayer because of the experience level combined with the fact the place looks like a pallet shack. It may be a home run. Just budget accordingly.

    Clint

    1Reply
  • Alice Huang
    OP
    Investor · Austin, TX · Member since 2020 · 223 posts · 83 votes
    6y

    @Joseph Cacciapaglia

    The out of state part makes sense.

    To clarify, we’re not out of state investors. My business partner is in SA. I had to return to Canada for the pandemic but will be back after.

    1Reply
  • Lazaro Paredez
    Rental Property Investor · Corpus Christi, TX · Member since 2020 · 6 posts · 2 votes
    6y

    @Alice Huang

    I wouldn’t be surprised if this rehab project touched$75k. If you have the money, and not an ounce of fear, take it on!

    0Reply
  • Justin V.
    Rental Property Investor · Minneapolis, MN · Member since 2016 · 214 posts · 132 votes
    6y

    @Alice Huang

    Well... they gutted it for you, so that might have been 6k in labor.

    Run.

    If still considering, Don’t forget windows $500 each installed, trim and doors ~$2000, guessing plumbing will need to come up to code $7000. Drywall and insulation 10k? Framing fix for termite damage... no idea.

    What is your ARV and list price.

    I’m not sure I’d take on something like this. Comps and rents would have to be really high. Definitely wouldn’t do it if starting out.I am finishing up a full gut duplex flip, my 10th kitchen, and 12th bathroom remodel.

    1Reply
  • Meryl McElwain
    Contractor · Chicago, IL · Member since 2017 · 102 posts · 181 votes
    6y

    @Clint Shelley

    Pallet shack. Lol.

    2Reply
  • Jonathan G.
    Investor · Marietta, GA · Member since 2015 · 382 posts · 258 votes
    6y

    @Alice Huang

    Looks like a real dump and it could mean a lot of money for somebody experienced. If you have no experience in this space, then it's the lucky contractor who may be making all the money along with a likely Wholesaler who has grossly played down actual rehab cost (or genuinely clueless of same) and padded the ARV . Crunch the numbers yourself in regard to realistic ARV and actual rehab cost with some local contractors as it looks like you have some very good resources for same already in this thread. In regards to cost to rehab, it's a full gut as well as likely structural issues from termites and water rot. If your asking, you may be best served letting this one go.

    I’ve read your profile and looks like you may not have experience in this space so Alice , you may be best passing in this one.

    1Reply
  • Rick Pozos
    Wholesaler, Rehabber and Landlord · San Antonio, TX · Member since 2014 · 2k+ posts · 2k+ votes
    6y

    Alright @Alice Huang we have never heard how much you are thinking about paying and what YOU expect the rehab to be. What do you think you can get for ARV?

    Have you seen the days on market for Denver Heights?? When I go to Realtor.com I see lots of down arrows in the prices.

    1Reply
  • Joe Cassandra
    Rental Property Investor · Woodstock, GA · Member since 2017 · 517 posts · 772 votes
    6y

    Some of the quotes on these threads are like retail prices haha

    Paint you could get for $1.50 - $2.5 interior with an investor painter. (same for outside). I just had a 2300 sq ft house painted outside for $2,300. 

    Windows you could find for $250-$300...not $500 as someone said. 

    Make sure you get an itemized list of stuff from the contractor. If he refuses, find someone else.

    2Reply
  • Kelly Layne
    Smithland, KY · Member since 2017 · 12 posts · 0 votes
    6y

    I am a firm believer that so much of this RE journey is just mental.  You need some confidence boosters at the beginning. Therefore, the lower risk projects have a higher likelihood of giving you those wins.  I would start off with something that is just paint, new flooring and new appliances.  (Assuming HVAC works and roof can last a couple more years). 

    0Reply
  • Alice Huang
    OP
    Investor · Austin, TX · Member since 2020 · 223 posts · 83 votes
    6y

    @Rick Pozos

    Thanks Rick. We’ve seen those plain Jane cookie cutters too. That’s not our end goal. Luckily with 13 years of real estate in 4 different countries in new build experience, I’m not good with rehab, but better with designs.

    We’re trying to keep it under $74k. Current bid with a construction manager is just over $70k, material, labour and his fees.

    0Reply
  • Justin V.
    Rental Property Investor · Minneapolis, MN · Member since 2016 · 214 posts · 132 votes
    6y

    @Joe Cassandra

    I called out $500 per window installed (window and labor) which is a little cheap for my area. Can you get 200-300 installed or is that the window? What brand are you running?

    0Reply
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