Estimating rehab costs
I have my first wholesale deal under contract. It’s a 3 bed/2 bath 1776 sq ft Victorian. It has already had some work done and the house is solid with many of the original features intact.
All of the construction materials that have not been installed stay with the house. This is tile, mortar, and grout for the kitchen area and bathrooms. The kitchen has already been prepped for the tile so all that is left is to install it. All of the new cabinets are there, but have not been installed. Kitchen appliances are a new cooktop and dishwasher. The house still has the original wood flooring and the wood from the kitchen was salvaged to repair other parts of the house, so there would not be hunting for wood and matching varnish. 90-95% of the plumbing and electrical have been replaced, including a new breaker box. The water heater is also new. The HVAC has been completely revamped to provide central AC and heat throughout the home. All of the windows have been replaced with the exception of a large picture window in the kitchen. They have installed new ceiling fans. They have installed recessed lighting in th kitchen.
There is still a lot to be done, but most of it is cosmetic. Drywall in a few places, new paint and so on. The counters need to be added, a kitchen sink, oven and fridge need to be installed. Both bathrooms need flooring, toilets, vanities, sinks, mirrors and bathtubs or showers.
I researched costs and came up with 30-45k to finish the house. People are telling me that I am too low. Where am I off?
Where is the property located - certain areas are more expensive than others especially if you are having the work done by contractors. Since you said it was a wholesale deal, you need to know what the ARV will be (not as much as what it will take to get there) and what your fee will be. If you are the one wholesaling the property, the buyer will be the one to determine the rehab costs - they may do the work themselves or have a crew already so that is a variable you do not have.
With all of the material on--site that you listed, it sounds like there should be plenty of people that would buy it and flip it.
The key is what is the ARV, what are you paying and what are you looking to make in terms of a wholesale fee. If there is enough meat on the bone between those numbers, you should be in good shape wholesaling it. Based on the work you said needs to be done, your estimate is not far off.
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Yeah, you're probably low. Why don't you get a GC to walk it and give you an estimate and SOW? It's hard for us to say where you're low without seeing the house.....too many variables...but -
The bathrooms are probably $10k each. To finish off the kitchen another $10-15k. The rest will just at you up in hourly labor and misc parts runs......
I would budget $75k and be happy if you come in less....
The home is in Bolivar,MO.
ARV is 225,000
Asking price is 130,000
Assignment fee-10,000
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#3 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
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I would recommend reading the book on estimating rehab costs
Create a Scope of Work (SOW) and send it out to a few GC's for a quote.
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#3 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
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Get a contractor to walk the property and pay them for their time
Didn’t mean to blast you with pics. I thought about that as well. Thank you for the tips!
Even with the pics, it is impossible to say if your budget is on par or not, but guessing, it does sound low but that depends on your SOW. WIthout that, nobody can tell you if your are on or off.
Get a full detailed line item SOW and then price it out. Or you can just leave it up to the wholesaler cash buyer to come in and make you the offer based on their own numbers.
Just a question, is the roof new, and if not how many layers are currently on it as well does it have the wood shake? I ask because we had a victorian quoted for the roof and because of the pitch, layers, and shake it was our most expensive expense. It caught us a little sideways... Probably not much more help, I do feel it is low as well...I agree with the closer to $75K amount. It's never the big items that get you it's usually the small things! Very Cute Home
@Melissa Denton Do you need some contractor suggestions?