Order of Rehab- First flip, need help

8 Replies

Hi everyone, 

I just closed on my first investment property this past Monday. I'm strongly considering managing the project myself. I received a very high bid from my contractor and that's why I'm debating running the project myself. What do you suggest is the best order of a rehab project? I want to avoid making mistakes and spending more than I should. 

The current contractor is charging me 10K for a new roof (it's a 1,500 SQ FT house), 4.00/ SQ FT for carpet and 4.50 sq/ft for laminate. He's also charging me 3/sq ft for paint, and 22/hr for demo. He's also including two dumpsters at 500.00 a piece. 

This is a brief summary of what the property needs:

Exterior:


  • remove old roof and replace with new one (Shingles/asphalt)
  • Some serious landscaping (Removing plants, trimming tree branches etc)
  • Partial Painting (Brick/Aluminium siding)
  • New garage door

Interior:

  • Install drywall in the lower level of the house (it's a split level house)
  • Painting
  • Demo wall between kitchen and living room to make it an open layout
  • Remodel 2 bathrooms (Tiling, new countertops etc)
  • Panting kitchen cabintes and install hardware, new appliances, tile, and new countertops.
  • Installing carpet on the family room and basement
  • Replace closet/bedroom doors and trim
  • Replacing and installing outlets/switches 
  • New water heater 
  • Install laminate 

    The total project costs came at 67K (including an 11 % fee or 6,700 the contractor is charging me for running the project). If I were to save only 6,700 , then I would really consider hiring the contractor. But I really think he is overcharging me for labor. Any help would be greatly appreciated. 

Demo and structural issues come first. Next come non-finish work that impedes the completion of other jobs. Next comes non-finish work that can damage finished surfaces. Last comes finished surfaces. So in your list above (I'm not going to hit everything), I would do something like this:

1. Replace the roof; 2. Demo wall; 3. Remodel bathrooms (leave finish work); 4. Replace water heater; 5. Install drywall; 6. Replace closet doors; 7. Install kitchen; 8. Install floors; 9. Install landscaping

You should work from the inside out, bottom to top, from rough to finish. If you have a foundation issue, for example, you correct it before you start putting in drywall, which is liable to crack by jacking and shifting. 

Whether the costs are reasonable for the job, I can't say, but the administrative costs are high IMO for someone who is doing the job themselves. If they were only overseers, and bringing in all outside labor, it's probably not a bad price. 

Account Closed

I would be apprehensive to sign someone up for $22/hr for anything.  It has nothing to do with the amount but everything to do with quantity.  What is their incentive to get done quickly if they are getting paid an hourly rate?

Have you gotten at least one more quote?  Without that, you don;t really know if the GC is high or low unless you have experience pricing work and have done a detailed estimate yourself.

JD's post covers sequencing well.

Originally posted by Account Closed:

Hi everyone, 

I just closed on my first investment property this past Monday. I'm strongly considering managing the project myself. I received a very high bid from my contractor and that's why I'm debating running the project myself. What do you suggest is the best order of a rehab project? I want to avoid making mistakes and spending more than I should. 

The current contractor is charging me 10K for a new roof (it's a 1,500 SQ FT house), 4.00/ SQ FT for carpet and 4.50 sq/ft for laminate. He's also charging me 3/sq ft for paint, and 22/hr for demo. He's also including two dumpsters at 500.00 a piece. 

This is a brief summary of what the property needs:

Exterior:

  • remove old roof and replace with new one (Shingles/asphalt)
  • Some serious landscaping (Removing plants, trimming tree branches etc)
  • Partial Painting (Brick/Aluminium siding)
  • New garage door

Interior:

  • Install drywall in the lower level of the house (it's a split level house)
  • Painting
  • Demo wall between kitchen and living room to make it an open layout
  • Remodel 2 bathrooms (Tiling, new countertops etc)
  • Panting kitchen cabintes and install hardware, new appliances, tile, and new countertops.
  • Installing carpet on the family room and basement
  • Replace closet/bedroom doors and trim
  • Replacing and installing outlets/switches 
  • New water heater 
  • Install laminate 

    The total project costs came at 67K (including an 11 % fee or 6,700 the contractor is charging me for running the project). If I were to save only 6,700 , then I would really consider hiring the contractor. But I really think he is overcharging me for labor. Any help would be greatly appreciated. 

 Daniel-

I've chosen several books from foreclosure to flipping and am reading a very good book  now that outlines the process from finding, fixing, and selling. I just finished the chapters that give great detail for where to start and how to organize the stages and steps in each stage. 

It's called:

FLIP How to Find, Fix, and Sell Houses for Profit. The authors are Rick Villani and Clay Davis.

It was my third book I choose to read that dealt more with flipping. The other books focused on foreclosure but this one I found to be very detailed.

So some of what you ask about where to start is in this book with some good details. I consider this my coffee table book and will be using it for my process.

Hope this helps.

Find subs for each job and you can do multiple items at once. Get a roofing crew who only does roofing work and get a separate crew to do the demo and rebuild, etc. 

If you are going to need to do outside work, especially painting and landscaping, get to it now. It's going to be winter soon and that could affect the quality of items like how the paint looks after it goes on and how the landscaping turns out.

I'd also suggest doing the big stuff right away -- like demoing the walls and bathrooms. If you're going to even possibly have to change out any of the mechanicals (hvac, water heater, etc.) or deal with major plumbing or electrical I would go to those right away, too. Otherwise you're going to find yourself later being short on budget when you're needing to tackle the big ticket items... like when you realize your furnace is in bad shape. It's one thing to change your bathroom tile choice to save some money and it's not easy to do that on a major mechanical item that you decide to fix (or are forced to fix) later. 

I agree with the comments related to order.  Given your location, it's critical to get the roof done asap.  You don't want to hold up a sale because the weather is preventing you from replacing it.

I'm less concerned with the management fee than the overall budget.  In my area, many of those prices are full retail or higher.  Perhaps I misunderstood, but a 1500 ft, 2-story house has a roof area of 10-square give or take.  $1000/square is 4x what I pay.  I'd get multiple quotes on all of the major items or have other GCs quote the project. 

What was your rehab cost target when you purchased? 

Thanks everyone for all your input. 

@Erik Hitzelberger I was contemplating a budget of 60K, but there are many areas where I think he's charging me way too much. I already got bids from carpet/flooring which came out at 30-40 % lower than what he's charging me. Roofers haven't seen the property but they are telling me I'm looking at 5,000-6,000 roughly. If I receive a final quote from the roofers, I might decide to either look another contractor or start the project by myself. Even if the current contractor decides to lower the price, I don't think I'd be comfortable dealing with someone who was planning to overcharge me 30-40 % of actual costs plus a 11 % management fee. 

Account Closed Roofing prices depend on the area but that price still seems a bit high for regular asphalt shingles. Around here it would be about $300-$350 a square. Does that price include the dumpster and hauling of old shingles, i hope so?

And i agree that you are being charged a premium by that GC, maybe time to look for another.

@Florian N. Thanks for the input. And no, he's including two dumpsters as part of the demo. After I asked why we had two dumpsters, he said the garage door and the the roof would go in one of the dumpsters. He quoted me the roof at 10,700 without dumpster.