Multi-Million Dollar San Diego Rehab Project - A Quick Case Study
Hello,
I have not seen much in terms of case studies of $2M+Rehabs in the Bigger Pockets Forums so I wanted to contribute a little bit:
My partner and I primarily organize joint ventures with developers on ground up construction of small subdivisions and rehabs/specs of multi-million dollar coastal homes.
We recently closed on a $2,500,000 ocean view home in La Jolla, San Diego with a 17,000 square foot lot. We recently went through plan check for a 2,300 square foot expansion of a 3,700 square foot home and plan to have permits in hand over the next 2-4 weeks. We are gutting the entire property and adding an amazing basement and outdoor amenities that will rival some of the best homes on the street.
Rehab numbers are being finalized but are estimated to be between $750,000 to $1,000,000.
We anticipate a resale value between $4,800,000 and $5,200,000 for 6,000 square feet.
Lessons:
At the high-end market (when including additions) estimating costs are more difficult because of structural designs and final approvals from the City. A range is acceptable to investors until permit approval but final numbers of course will be stamped out. Because the costs of finishes are so high this also contributes to the range. ($50,000 appliance package would be an example).
It is critical that the general contractor is highly skilled and experienced. We have one of the best contractors in town who has had experience building over 5,000 homes so you get the idea.. (yes, 5,000).
The quality of the team organized must be unsurpassed at this level. Our architect, engineer, contractor, Realtor sales team and investor are all over 55 years of age.
I hope this short case study gave you some idea of what its like in this price range.
Feel free to ask questions!
Mark Gottschlich