Trials and tribulations of my first flip!

Rehabbing & House Flipping
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Trials and tribulations of my first flip!

Tim G.
Flipper/Rehabber · Miamisburg, OH · Member since 2014 · 161 posts · 64 votes

Welcome to my thread! I'm going to use this thread as my blog on my 1st rehab property. I ultimately want to get into rental properties and plan to use the profits (hopefully) from this flip to purchase the first rental property.

I close on the house on 2/28/14. My goal is to do the rehab in ~90 days and hopefully sold within another 90 days. To say my stress/nervousness level is rising as we get closer to the closing date is an understatement!

The house is a 3bd,1br ranch with unfinished basement, 1 car garage and 1 carport built in 1970. Based on the comps in the area, the ARV is ~$125,000. I am purchasing the property for $62,750 and have a rehab budget of $20,000. So I complied the 70% rule without even knowing about it! Haha

It seems like a relatively easy flip but there's still quite a bit of work needed....

- new roof, gutters & soffit

- minor mold remediation in basement

- kitchen is a gut

- bathroom is a gut

- bedrooms and living room need paint and floors refinished

There is more but those are the major items. Here's some pictures of the house from the MLS ad.

http://img.photobucket.com/albums/v295/SloRice/7e312f3949868ef43da66f9756bee7cf_zps8bef958e.jpg

http://img.photobucket.com/albums/v295/SloRice/9e20cfc7045fe66c8892fecd5cf7eab3_zps6fd1703f.jpg

http://img.photobucket.com/albums/v295/SloRice/40a6564a897878af879218c5b9182883_zps57272756.jpg

http://img.photobucket.com/albums/v295/SloRice/c20e68e18cfb7e7680f068570d8f9a2e_zpsfac61742.jpg

http://img.photobucket.com/albums/v295/SloRice/89fb473ab32604ebc7f34eeda9dfe0ab_zps0b485c24.jpg

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J ScottPro Member
Moderator
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
12y
Originally posted by @Liam Goble:

Decided to go find the contractor...

he had gutted the entire bathroom down to the studs! Certainly not in the plan at all.

....

He's got this week to turn it around and start shining, or I'm going to line up an 2nd team to come in and execute the plan.

I don't know all the details obviously, but if a contractor were to gut a room that we hadn't discussed gutting, I'd be thinking one of two things:

1. He's an idiot and would eventually do something that would cost me a lot more money than I had anticipated (think lawsuit); or

2. He's a scam artist looking to make more on the project than we had agreed by over-improving and over-charging.

Either way, I would have had him off my project in about 10 seconds.

Did you have a written contract? What did the contract say about the bathroom? What was his rationale for gutting it?

Podcast Guest on Show The Truth About Real Estate Investing in 2024 (What Investors NEED to Know)
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  • Tim G.
    OP
    Flipper/Rehabber · Miamisburg, OH · Member since 2014 · 161 posts · 64 votes
    12y

    So I've been looking for kitchen cabinets for a couple weeks now....just trying to get my ducks in a row so I can buy stuff as soon as we close. Was trying to keep the cabinet budget around $2,000. Everything I've found is absolute junk though for that price. Found out Cabinets To Go is right down the street from my house and they have a 25% off coupon on their website for their grand opening. Cabinets are $2500 through them and I'm very impressed with the quality of these cabinets.

    They also gave me a recommendation on a granite countertop guy. I called him yesterday and he'll install Santa Cecilia, New Venetian or Ubatuba for $30/ft^2. I have 25ft^2 so that's $750. He will also provide and install the sink for $150.

    My total budget for the cabinets, countertop, sink, faucet, disposal and piping is $4000. So come in right on budget. Woo!

    0Reply
  • Tim G.
    OP
    Flipper/Rehabber · Miamisburg, OH · Member since 2014 · 161 posts · 64 votes
    12y

    I have a buddy that is a GM of a local GC company. We met at the house last week to have him look at the roof, gutters, soffit and basement. He provided me a bid of $8100 to do a layover 30yr dimensional shingle, new 5" gutters and new vinyl soffit and aluminum fascia. Maybe I'm way off base, but my sanity check has that being pretty high.

    I have a call in to another GC that did some siding on my personal house. He is going to go over there tomorrow to get measurements and provide a bid as well.

    I had $6000 in the budget for this, so hopefully I don't get hung out to dry on this one....

    0Reply
  • Mike B.Pro Member
    Developer · Chicago, IL · Member since 2013 · 434 posts · 357 votes
    12y

    Call me crazy but $8,100 seems like a good price for all of that.

    847-857-8574
    0Reply
  • Sharad M.Pro Member
    Carlsbad, CA · Member since 2010 · 1k+ posts · 1k+ votes
    12y

    Hi @Tim G. Good luck with your first flip!!

    Your roofing budget seems a little high. I think you should come around $6,000 to $6,500.

    Whoever gives you the estimate, make sure they include the price of permit in their price.

    Podcast Guest on Show #155
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  • Bobby Beard
    Real Estate Investor · Panama City, FL · Member since 2012 · 265 posts · 58 votes
    12y
    Roofing price is high compared to where I live.
    0Reply
  • Mike B.Pro Member
    Developer · Chicago, IL · Member since 2013 · 434 posts · 357 votes
    12y

    @Sharad M. He is getting roof, gutters, soffit and basement for $8,100. Not just the roof…or did I miss something?

    847-857-8574
    0Reply
  • Tim G.
    OP
    Flipper/Rehabber · Miamisburg, OH · Member since 2014 · 161 posts · 64 votes
    12y

    to break that bid down further.....

    Roof - $4800

    Gutters - $1050

    Vinyl soffit & aluminum fascia - $2250

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  • Mike B.Pro Member
    Developer · Chicago, IL · Member since 2013 · 434 posts · 357 votes
    12y
    Originally posted by @Tim G.:
    to break that bid down further.....

    Roof - $4800

    Gutters - $1050

    Vinyl soffit & aluminum fascia - $2250

    That doesn't include mold remediation in the basement?

    847-857-8574
    0Reply
  • Tim G.
    OP
    Flipper/Rehabber · Miamisburg, OH · Member since 2014 · 161 posts · 64 votes
    12y

    No. The mold isn't bad. He said he'd give me a couple $12/hr guys to come in and scrub everything down in the basement. They could probably get everything cleaned up in a day or 2.

    0Reply
  • Tim G.
    OP
    Flipper/Rehabber · Miamisburg, OH · Member since 2014 · 161 posts · 64 votes
    12y

    I have $1500 in the budget for the basement. That includes cleaning up the mold, painting the floor and walls, and inspecting the HVAC (which works because the power is on)

    0Reply
  • Mike B.Pro Member
    Developer · Chicago, IL · Member since 2013 · 434 posts · 357 votes
    12y

    I assumed everything in the basement was included for that price (that's what you said you had him look at). Seeing as this is your first deal, I would suggest getting multiple quotes for everything until you have your team built.

    847-857-8574
    0Reply
  • John Moore
    House Flipper · East Stroudsburg, PA · Member since 2013 · 1k+ posts · 205 votes
    12y

    Don't forget your end game. Line up the mortgage company now selling a house prior to 90 days can cause some difficulties ask the lender about dates on contract. Determine what programs are available in your area, first time home buyers, grants, etc. Know how much down payment may be required, VA Loans seem to have the least restrictions. Spend some time in this area and it will make things easier for your exit. Food for thought.

    1Reply
  • Liam Goble
    Rental Property Investor · State College, PA · Member since 2013 · 287 posts · 99 votes
    12y

    @Tim G. I can echo your nervousness with this first flip. I started my first flip on Monday last week. I already have a few rentals, but this is the first flip for me. I developed the budget for the 70% rule, and I am (realitivly) confident on the ARV. My contractor started on Tuesday. I checked in daily and on Friday, went to see the progress (he was only supposed to clean out trash and remove some old tile).

    I got to the house and heard hammering and a sawzall at work...warning bells were going off in my head. Got inside and was chatting w/ my partner, still hearing the hammer. Decided to go find the contractor...

    he had gutted the entire bathroom down to the studs! Certainly not in the plan at all. I know the guy and thought he had a good head on his shoulders, but I'm developing 2nd thoughts. He's got this week to turn it around and start shining, or I'm going to line up an 2nd team to come in and execute the plan.

    @Mike B. I think the $8,100 for the work described is an awesome price. For point of reference, I had a roof quote (roof only) for approx. 6SQ of roofing to be replaced w/ 75yr architectural shingles for $2200. It was an emergency (at my personal house), so I had to go for it, but assuming Tim is replacing more than 6Sq of shingles, it's a pretty good price.

    0Reply
  • Darrell Shepherd
    Rehabber · Smyrna, GA · Member since 2013 · 864 posts · 510 votes
    12y

    Haha, that thing is practically move in ready from what I do, I like 'em wrecked...

    A few things, use hydrogen peroxide on the basement, it'll get more of the mold (goes deeper) than clorox. I personally dont worry much about mold unless its real bad. Its pretty rare to run into the bad stuff around here, probably even more so in Ohio, not all mold is created equal.

    I dont do layovers and that's pretty high on the roof for a 3/1 around here. What is that, just under 1000 sq/ft? I paid under $4k for the last 3/1 I did and that was taking off the old shingles and replacing several boards...probably 900 sq/ft of house. I used 20yr shingles. Why pay for architectural shingles on that kind of house? Is it the norm for the neighborhood? Seems like a waste to me. You should call around and shop that price, it'll vary by area, but that still seems high, even paying retail. My guy has a program that can measure the roof from Google Earth and price it from that over the phone. Neat stuff. Sofits and fascia are just replacing wood. Very simple stuff, looks way worse when its rotted out than it really is. I dont use aluminum and dont know why you would, but maybe he knows something I dont.

    Gutters vary a lot, I wouldn't do seamless on that kind of house, I'd slap on cheap *** Home Depot stuff, but that's just me. I dont know the neighborhood, of course, and you should definitely rehab it with your buyer in mind. The buyer of a 45 year old 3/1 around here isnt going to care what the shingles and gutters look like as long as they dont stand out, so you can cut some corners on that stuff. On that type of house I'd be more worried about closet space in the master and seeing if I could get another bath somewhere- and seeing if I could get that kitchen laid out with a small pantry cabinet. Kitchens and baths sell houses, shingles do not.

    Sounds like a good buy, though, I like that the windows are already done.

    1Reply
  • Sharad M.Pro Member
    Carlsbad, CA · Member since 2010 · 1k+ posts · 1k+ votes
    12y
    Originally posted by @Mike B.:
    @Sharad M. He is getting roof, gutters, soffit and basement for $8,100. Not just the roof…or did I miss something?

    It seems a little high based on what I pay in my area. I didn't include the basement price in my numbers.

    Podcast Guest on Show #155
    0Reply
  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
    12y
    Originally posted by @Liam Goble:

    Decided to go find the contractor...

    he had gutted the entire bathroom down to the studs! Certainly not in the plan at all.

    ....

    He's got this week to turn it around and start shining, or I'm going to line up an 2nd team to come in and execute the plan.

    I don't know all the details obviously, but if a contractor were to gut a room that we hadn't discussed gutting, I'd be thinking one of two things:

    1. He's an idiot and would eventually do something that would cost me a lot more money than I had anticipated (think lawsuit); or

    2. He's a scam artist looking to make more on the project than we had agreed by over-improving and over-charging.

    Either way, I would have had him off my project in about 10 seconds.

    Did you have a written contract? What did the contract say about the bathroom? What was his rationale for gutting it?

    Podcast Guest on Show The Truth About Real Estate Investing in 2024 (What Investors NEED to Know)
    2Reply
  • Patrick T.
    Specialist · Spokane, WA · Member since 2014 · 97 posts · 38 votes
    12y

    Not to contradict anyone, but as a contractor I would be looking for the simplest way to do things within the bid I provided. So my first thought was that if the bathroom shower/tub needed tile replacement, the best thing to do is get the old material and drywall (you can't separate the tile from the drywall) out and install a clean surround. Anywhere there are tile issues it typically involves going to the studs. So I'll be interested to hear why he did that. And also what was actually agreed on, what was the scope of his bid?

    0Reply
  • Liam Goble
    Rental Property Investor · State College, PA · Member since 2013 · 287 posts · 99 votes
    12y

    @J Scott I am in the process of reviewing the plans with my partner and investors to determine if this contractor needs to be removed from the job. I also need to make sure I've got another lined up once this one is off the job (if this one is indeed off the job).

    0Reply
  • Shawn Thom
    Investor · McKinney, TX · Member since 2012 · 588 posts · 224 votes
    12y

    Congrats on jumping in. I'm only a few houses ahead of you so I remember the nervousness..in fact I still get it, but it is less than first house. you will learn a lot and ask a lot of questions! You have gotten some good advice! My only advice is not to get too far ahead on paying your contractors.

    0Reply
  • Darrell Shepherd
    Rehabber · Smyrna, GA · Member since 2013 · 864 posts · 510 votes
    12y

    Yeah, one of the more frustrating things in this business is paying for other people's mistakes.

    I cant say I'm always on the ball with everything paperwork wise, but I've usually paid for it when I've gotten sloppy. You should always have a written scope of work with itemized costs and a CYA letter that says anything they do outside of this must have a signed change order with pricing before the work gets done in order to get paid. First, its a reference for them to know what they need to be doing, plus it also helps with draws. I personally buy all materials and pay labor weekly, but never ahead of what it would cost me to hire someone else to come in and complete the work plus about 10%. You want a pretty big final draw because they like to drag their feet on all the stupid little stuff at the end.

    0Reply
  • Tim G.
    OP
    Flipper/Rehabber · Miamisburg, OH · Member since 2014 · 161 posts · 64 votes
    12y

    @Liam Goble The $4,800.00 roof quote was for 23.62SQ of 30 year dimensional shingle roofing. I asked him about going to a cheaper shingle and he pretty much said there would be minimal cost savings....but I guess that's for me to decide, not him.

    @Darrell Shepherd Thanks for the tip on the hydrogen peroxide. The mold isn't bad, just some surface stuff on the floor joists and the little bit of drywall and wood paneling in the basement. I plan to rip it all out and paint the concrete floor and walls. The house is 1050ft^2 with a covered deck area as well. He did give me a quote just to R&R the rotted wooden soffits and fascias but I'm afraid that will just become a nightmare and it will all need replaced...guess we can try that route first. You are also correct in that he quoted seamless gutters. I agree with what you said 100% regarding what the buyers are going to look for. The door to the right of the kitchen is a small pantry. :)

    @J Scott I know you're not really commenting on my situation but I just wanted to let you know I have poured over your website for the last week or so and you have a ton of excellent information! Thank you!

    Thanks again everyone for all the words of encouragement! I'm actually doing most of the work myself. Only stuff I plan to sub out are the roof/gutters/soffits and some or all of the basement stuff. I'm a car guy that sold his car about a year ago, so I started pouring my "hobby" time into fixing up my own house. Then decided to do it to another house and hopefully make some money! I consider myself fairly handy but will definitely be posting up some questions in this thread as I go. I'll also be updating with more pictures as I go.

    0Reply
  • Tim G.
    OP
    Flipper/Rehabber · Miamisburg, OH · Member since 2014 · 161 posts · 64 votes
    12y

    here is my total budget I put together when getting everything together. The numbers in red are actual values where I already have a bid on stuff. Everything else is still an estimate. The 1 item that I think is high is flooring....I only plan to replace the floor in the kitchen and bathroom. I plan to refinish the hardwood flooring in the living room and bedrooms. My father-in-law has refinished floors a few times and said he'd help me.

    But the flooring being high is going to offset the back door and possibly the windows. The back door is weird and i'm afraid i'm going to need to replace it. Also the windows have been changed but i'm guessing they're 10+ years old....may be able to just clean them up and put new seals in....

    0Reply
  • Tim G.
    OP
    Flipper/Rehabber · Miamisburg, OH · Member since 2014 · 161 posts · 64 votes
    12y

    new update. Received an email from my lender and we are good to go. So going to try to set up the closing for late next week.....already a week ahead of schedule! Woo!

    I also spoke with a couple other contractor about the roof. They are coming to look at it in the next couple days to get me bids. The last contractor I spoke to seemed to have his sh*t together when we spoke on the phone. I also really stressed the importance of this being a FLIP and needed a reasonable cost. Hopefully he picked up on that! Haha

    I'm pretty sure I'm set on these cabinets and countertop. Thoughts??

    0Reply
  • Andy Luick
    Real Estate Investor · atlanta, GA · Member since 2013 · 456 posts · 237 votes
    12y

    This is a pretty involved flip for a first timer and I'm crossing my fingers for you. I can't imagine doing a 3/1 for a flip but I don't know your market and, these days, I don't take anything I do to full retail. We buy ,repair, rent & sell to passive investors looking for at least a 10% net return.

    On the mold, you will see varying opinions from a lot of well meaning people. Mold is serious stuff. Before you start work in the basement, I'd suggest you turn off the hvac & mask any vents to the basement area. Get some Microban and thoroughly spray down everything..and I mean EVERYTHING before you start removing anything. Once you get the drywall and paneling out, spray everything again. Microban is the industry standard and kills mold on contact. The problem with blogging is now you've publicly acknowledged the presence of mold in the property so handle it properly. A pair of $12.hr workers isn't going to handle it properly and, if there is a problem with it later on, you might be on the hook for far more than you bargained for. Mold is very serious stuff and can make you sick or even kill you if you mess with the wrong one. Always wear a respirator when working with mold.

    Is there a way to add a 2nd bath to the master.....somehow splitting the existing one? What would that add to the resale in the area?

    I'm not sure why you want aluminum fascia and soffits...except to cover up the rotted wood....which you really need to repair the wood FIRST then cover it over if you wish. I'd just repair, prime & paint everything. I prefer seamless 6" gutters with 3"x4" downspouts on most of what we do. We fabricate them onsite and hang with hidden hanger screws. We usually do this as it's best for long term maintenance.

    I'm not sure if the flooring budget includes the new tile for the kitchen....or is that in the kitchen budget? If it is...then you're budget is low. We use screwed down underlayment on our tiled floors...be sure they don't use roofing nails as that's a standard practice. We are working on a home right now where the kitchen tile is all cracked and bucking because they nailed the underlayment. The cabinets look great for a retail flip.

    Take a look at your market and run through some of the houses in the $200k+ range and try to duplicate some of those finishes in your homes. Even on our flips, we use nickel or bronze finishes and always spend more on ceiling fans.

    Happy Investing!!

    2Reply
  • Scott K.
    Real Estate Investor · Madison Heights, MI · Member since 2014 · 693 posts · 216 votes
    12y

    So you have rotting fascia and soffits and you plan on not doing a complete tear off for the roof? You might have some rotten plywood under the shingles. Also for a flip that would be the last thing I would do. The people buying it will want an inspection and that will get listed.

    So you can't really say its a new roof. How much more to do it all and get it over with.

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