Grand Rapids, MI · Member since 2015 · 4 posts · 3 votes
Hi BP!
After redecorating and refinishing most of my Logan Square, Chicago condo over the last 2.5 years (and hitting the market at the PERFECT time)- we were able to sell for 140% of our original purchase price, and will pocket over $85k. We accepted a full price offer and will close in mid-June.
Now we are looking for a fixer-upper in East Grand Rapids, MI, and hope to be even more intentional about improving our new home. Eventually- the equity built in this home will be the jumping off point for the start of our real estate investing business. (more on that later!) My question for you is this:
What is the best way to estimate renovation costs before/during the buying process on a distressed home? We will be using an FHA 203(k) loan, and have been approved up to the maximum finance limit for Michigan ($271k). I don't want to under-estimate the repairs, have an offer accepted, and then end up having to walk away from the house because we couldn't afford the work that needs to be done. We are trying to expedite each step of this process to reduce the time we need to live with friends/family members.
Realtor · Detroit, MI · Member since 2013 · 278 posts · 114 votes
11y
Here is a link to a Rehab Cost Guide. It has Retail Prices but it does give you an idea of where to start. I hope this helps. Congratulations on your sale.
Baltimore, MD · Member since 2015 · 301 posts · 82 votes
11y
Talk to your 203k broker. They should have contacts to approved, licensed, general contractors that they have dealt with in the past. Using a GC that is familiar with the 203k process will make things a lot smoother.
Also, depending on the amount of rehab required (35K+), you will NEED a HUD consultant. He will do initial inspections and inspections throughout the rehab process to make sure everything is going as planned.
Once you have these two people, have them both come to your property at the same time to put together an estimate. Having both of them there will make sure everything is covered in the estimate. It will help to write down what you want done to the property to help guide the GC.
A GC estimate is usually free but the HUD consultant will charge an initial retainer fee ($400 or so).
This will be the best way to get started down your 203k path. I am currently working on a 203k myself and just submitted an offer on a potential property after doing what i mentioned above.
Feel free to contact me if you have any questions!