What was your biggest unexpected cost in a flip?

Contractor · Dyer, IN · Member since 2019 · 4 posts · 1 vote

I understand many have flipped 5+ houses or have tremendous experience with the renovation process. However, as a contractor I'm curious what was the biggest "miss" or unknown finding you've experienced in a flip? Foundation, piping, asbestos, or something many of us cannot fathom. It's easy for those starting out to forget due to their lack of knowledge on certain trades, but curious about those "oh s#!" moments.

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Cassie Montalvo

Flipper/Rehabber · Boynton Beach, FL · Member since 2018 · 81 posts · 129 votes

When the city required I updated all the electrical to include arc-faults. That same city also required full specs on nearly EVERY fixture - including the bathroom exhaust fans! Exhaust fans ... really? PS, stay away from Pompano Beach ... NEVER AGAIN

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Russell BrazilBusiness Member
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Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
7y
Demolition I think most people overlook
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Nick Murray
Rental Property Investor · Bel Air, MD · Member since 2018 · 40 posts · 16 votes
7y
Originally posted by @Russell Brazil:

Demolition I think most people overlook
Demolition sounds like a fun part of rehabbing (as long as you don't demolish something you dont want to accidentally)
3 Reply
Pat L.
Rental Property Investor · Upstate, NY · Member since 2012 · 3k+ posts · 3k+ votes
7y
What's behind the walls & the load bearing wall engineering.
3 Reply
Jeremy England
Contractor · Pensacola, FL · Member since 2017 · 311 posts · 156 votes
7y
Closing costs. Might be biggest expnse for 100-120k flips
3 Reply
Jack Seiden
Real Estate Agent · Washington DC · Member since 2016 · 847 posts · 656 votes
7y
I don't know if this counts but just the cost of doing business. Between realtors taxes and recordation closing fees holding costs etc. usually runs me about 80k. Also the house were are working on now has about 60k of terminate damage subfloor entire frame of house had to be replaced. We knew the floors were uneven but assumed it was foundation related and budgeted about 20k so that was pretty unexpected.
2 Reply
Cassie Montalvo
Flipper/Rehabber · Boynton Beach, FL · Member since 2018 · 81 posts · 129 votes
7y
When the city required I updated all the electrical to include arc-faults. That same city also required full specs on nearly EVERY fixture - including the bathroom exhaust fans! Exhaust fans ... really? PS, stay away from Pompano Beach ... NEVER AGAIN
10 Reply
Brian Pulaski
Flipper/Rehabber · Montgomery, NY · Member since 2016 · 2k+ posts · 1k+ votes
7y
$12,100 septic system replacement.
My current house may have a hefty wet basement fix. Not sure yet what the final cost will be, but could be as much or more than the septic one that bit me.
3 Reply
Eric Schultz
Investor · San Diego, CA · Member since 2016 · 265 posts · 305 votes
7y
A crawl space with disconnected ductwork, mold growing on floor joists, leaking pipes, etc. It cost over $10K to mitigate the issues.
3 Reply
Ann Watkins
Real Estate Broker · Houston, TX · Member since 2013 · 187 posts · 111 votes
7y
@Phillip Cooper
City inspectors on rotation, each time one came out he/she required something different with the electrical to clear it. At the end of it I was $5k outside of my budget.
4 Reply
Karen O.
NYC, NY · Member since 2016 · 617 posts · 456 votes
7y
Mold remediation and the place still smelled so bad had to use hi octane Kilz for everything including the subfloor.
2 Reply
Matt Millard
Lewisville, TX · Member since 2015 · 341 posts · 264 votes
7y
The owner changed their opinion of value of the house in its original condition from $230k to $285k. We had wholesalers offering us $170k. I did this as a favor for a family member & will lose several thousand on the deal even though my flip sale numbers were over $35k.
I know that my flip was successful & can’t wait to do another one for my own residence in Colorado Springs!
And the best part is we used cash & then credit cards & paid 75% of renovation out of own pocket & did work ourselves. My credit score also went from a 760 to a 630 in the process with no missed payments so don’t let anyone tell you that near maxed out lines or inquiries are really minor components of the credit scoring system.
I’m completely motivated to do it again using the mostly positive experiences I’ve gained!
2 Reply
Matt Millard
Lewisville, TX · Member since 2015 · 341 posts · 264 votes
7y
Profit of $35k & realtors price opinion.
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Phillip Cooper
OP
Contractor · Dyer, IN · Member since 2019 · 4 posts · 1 vote
7y
Originally posted by @Jack Seiden:

I don't know if this counts but just the cost of doing business. Between realtors taxes and recordation closing fees holding costs etc. usually runs me about 80k. Also the house were are working on now has about 60k of terminate damage subfloor entire frame of house had to be replaced. We knew the floors were uneven but assumed it was foundation related and budgeted about 20k so that was pretty unexpected.
Wow terminate damage in the subfloor!!! Yikes, that’s something I’d never consider.
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Phillip Cooper
OP
Contractor · Dyer, IN · Member since 2019 · 4 posts · 1 vote
7y
Originally posted by @Ann Watkins:

@Phillip Cooper
City inspectors on rotation, each time one came out he/she required something different with the electrical to clear it. At the end of it I was $5k outside of my budget.
The city inspectors will nickel and dime you in the Chicagoland areas as well! $50 to $150 re-inspection checks. The worst thing is they will only tell you one thing that’s wrong and leave, rather than provide an entire list to correct.
1 Reply
Philip Williams
Rental Property Investor · Rockford, IL · Member since 2014 · 385 posts · 702 votes
7y
having an old fence post driven through a sewer line, it had probably been that way for years and it finally decided to fail right at the inspection.......needless to say we had to dig up the yard and fix it. The post had to be at least 40 years old.
2 Reply
Chad U.
Investor · Boca Raton, FL · Member since 2012 · 1k+ posts · 1k+ votes
7y
A crumbling foundation hidden behind overgrowth AND a water main replacement which was plugged with calcium. That on top of two unscrupulous contractors stealing material. All on same job, about $15K unexpected.
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Charlie MacPherson
China, ME · Member since 2014 · 3k+ posts · 4k+ votes
7y
@Phillip Cooper Delays. I've only completed one flip. It had been abandoned for several years, so we had to get the gas lines pressure tested before we could have the gas company reconnect us.
Our plumber was so slow that I was mentally rehearsing CPR - but even dead people move faster than him. Then the inspection by the town took 2 weeks, then the gas company another 2 weeks.
Luckily, we had really good private lending. Had we used hard money, that would have been an extra $3,000 +/- for carry costs, plus taxes, insurance and utilities.
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Ryan BlakePro Member
Lender · TX · Member since 2018 · 936 posts · 713 votes
7y
@Phillip Cooper I will second @Charlie MacPherson comment. New investors come in thinking they can run a $40k flip in 2 weeks. That isn't reasonable. There are a lot of moving pieces and individual subs being used. One storm or one delay of a sub will through everything back. Also, contractors tend to not always schedule that well. There are best laid plans but from what I have seen, most GCs don't really have a master calendar for a project with updates on when to call and schedule each sub. This leads to a lot of down-time. Nothing will upset an investor more than showing up to an empty house halfway through the rehab process.
[email protected]214-420-7324
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Teri Feeney Styers
Real Estate Agent · Grand Junction, CO · Member since 2015 · 1k+ posts · 736 votes
7y
@Phillip Cooper the building dept kicking back my plans over and over (months!) requesting one change after another (but never giving me a checklist) - the biggest being that they wouldn't approve a RBC standard fire separation formula for an up and down duplex but instead made me research and find a UL tested floor assembly and buy the specific products in the assembly design. That floor cost me an additional $7 per square foot! Not to mention the carrying costs while I haggled with them.
1 Reply
Bob Woelfel
Investor/Agent · Kansas City, MO · Member since 2017 · 291 posts · 308 votes
7y
We bought a duplex that needed a full renovation. Roof was in terrible condition and I could see from ground level that it needed to be replaced. So we budgeted to have it ripped and replaced. I mean why do I need to look closer at it if I already know we need to take it off??? After we purchased I got my roofer to the property and it turns out that not only did it have the top layer, it had two layers under it and the bottom layer was cedar shake shingles. I didn't even know it was possible that they would do that. So we had to take off 3 layers and redeck the entire thing as well as the garage. Our roofing costs doubled! After talking to our roofer they see it all the time and it was fairly common in our area. Such a rookie mistake.
2 Reply
Bob Woelfel
Investor/Agent · Kansas City, MO · Member since 2017 · 291 posts · 308 votes
7y
@Eric Schultz How did you take care of the mold on the floor joists? Most of the big companies charge a ton for this. Thanks.
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Alex Natanson
Hudson VAlley · Member since 2018 · 19 posts · 7 votes
7y
I inspected myself a flip - missed a bowing foundation wall due to poor lightning (fixed for 2.4K). Missed absence of insulation - i checked one wall for insulation and it was insulated, but the rest of the house was not (apparently the wall i checked was remodeled for some reason). The gut job, insulation, new drywall, and new electric cost me 20K above the budget. Luckily i bought the house for 85K. Totally (it means the only things i didn't touch were septic, part of the frame, and foundation) remodeled it for 116K and 6 months. The ARV (very conservatively) is now 285K. What the heck i decided to sell my place and moved to the new house considering the school district is better
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Alex Natanson
Hudson VAlley · Member since 2018 · 19 posts · 7 votes
7y
Originally posted by @Brian Pulaski:

$12,100 septic system replacement.
How did you know it was in need of repair? I had no usage of it during renovation, I sell my flips disclosingto the buyers i have no idea about septic.
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Alex Natanson
Hudson VAlley · Member since 2018 · 19 posts · 7 votes
7y
Originally posted by @Brian Pulaski:

My current house may have a hefty wet basement fix. Not sure yet what the final cost will be, but could be as much or more than the septic one that bit me.
If there is water in the basement always slope the water away from foundation walls and build french drainage around, let the downspouts in and dig a catch basin in the lowest point of the parcel (all those measures will cost 2K at most). This is the most common reason for the water in a basement in my area. I don't buy BS from foundation repairing companies about ground water inside cinderblocks ))) 90% it's surface water
2 Reply
Brian Pulaski
Flipper/Rehabber · Montgomery, NY · Member since 2016 · 2k+ posts · 1k+ votes
7y
Originally posted by @Alex Natanson:

Originally posted by @Brian Pulaski:
My current house may have a hefty wet basement fix. Not sure yet what the final cost will be, but could be as much or more than the septic one that bit me.
If there is water in the basement always slope the water away from foundation walls and build french drainage around, let the downspouts in and dig a catch basin in the lowest point of the parcel (all those measures will cost 2K at most). This is the most common reason for the water in a basement in my area. I don't buy BS from foundation repairing companies about ground water inside cinderblocks ))) 90% it's surface water
Are you in NY, and want a job? $2000 and you can do that. I have a proposal for that work, French drain, DS into it, to a dry well and then piped to storm drain, $13,000... if I could do this for $2k, even $5k I would. I still may be stuck doing it, but the water has more sources than what you describe.
Also the septic was tested by the end buyer (it was a flip of mine). It failed and needed to be replaced. All new leach fields as well.
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