I'm in the process of buying my first rental property in Newark. Property needs total rehab and was wondering if anybody has experience with total rehabs, what kind of check list do you use, what should I be looking for. How much is too much for total rehab?, what is a realistic number?.. I don't want to get in over my head, I have contractors coming to look at the property to give me estimates, I still have time to back out of the deal if the scope of work is more than anticipated, or possibly negotiate the price of the property. all help will be greatly appreciated.
I think you are jumping into this way too prematurely. If I were you I'd partner with someone who has done flips in your desired area so you get learn how it REALLY goes. If you don't know how to evaluate a flip/rehab, then I don't think it's time for you to do it.
A total rehab for a first rental is tough, you can expect this to take several months and the cost could easily be 60,000-100,000 it is tough to say without looking at it. It is also possible that you don't have enough cash on hand to complete the rehab in which case you shouldn't buy it. Remember that unless you have a FHA 203k or other special loan you need to pay for the entire rehab in cash.
Thanks for your input guys, it’s a big project for it being my first but I’m willing to take it on, the income potential is there and I can’t pass it up... the funds I can get, just want an idea of what I will be spending.. I’ve given my self a max budget of 120k for the reno and even if I max that out I’ll still be making out...
Of course you're willing to take it on, of course you can't pass it up, of course you've given yourself a max budget...
You're not ready for this. If you get it done, you should thank your lucky stars, and I'm extending every hope that you will.
But you probably won't, and you'll be the reason all the gurus have to put up the disclaimer, "ASSUME MOST PEOPLE MAKE NOTHING."
This is not a quality first deal.
Horrible idea ! Do not pass go do not collect 200$
I do a lot of full gut rehabs. They suck.
Go with something easier, especially for your first deal. They take way longer then you'll estimate, and they'll be WAY more expensive.
Hi Nestor: You have had some great replies to your question, all of whom are seriously looking out for your best interest here. We have a couple of properties that required some work, but we know nothing about that part of investing, so we have a joint partnership with other investors who ARE qualified to do that work, we both benefit from the transaction. If your real estate agent has told you this is a once in a lifetime kind of opportunity, then you should consider a partner, and of course, a home inspection first. This is only if all the usual expenses have been accounted for (purchase, taxes utilities, holding, closing, etc.) and your re-hab budget (+15%), plus the market being in the right place or will be soon enough (which is tough to predict). I wish you all the best.