Hey BP, I am thinking about purchasing my first property!!! It's a 4plex with each unit renting for about 650-700.
It is in good shape, but definitely in need of some cosmetic repair.
Each unit is 2 bed 1 bath with about 1100 sq.
What do you guys normally spend on these items, keep in mind its a 4plex and all 4 units need the following:
new flooring (kitchen, bath, some carpet, hardwood just needs a good waxing)
What would you estimate to be the cost, I know it would be a ballpark fiqure but it will give me a good idea of where to start.
@Stephen Akindona will you be doing the rehab/updates yourself or hiring it out? I do most of my work myself and I like to think of the minor updates such as cleaning and paint at roughly $3-5 per square feet of the entire house. If you are adding in rehab items like flooring or carpeting, maybe fixtures, etc. then maybe $5-10 per square foot.
For rough example if the house is 1,000 sq. ft. and you use $5 as ball park plan on spending roughly $5,000 on the updates. This is very basic and others may have a better metric but this has worked pretty well for me in the past.
@Jedd Braunwarth thanks for the reply. I think that I will hire it out. I wasn't expecting it to cost that much so maybe I will have to re-adjust my purchase price for the deal to work, or do the work myself!!!
@Stephen Akindona I am sure you could cut all of those figures in half if you did it yourself and went with cheaper paint and flooring. I should have said that I generally use higher quality everything in my units. I try to find the material that is very durable and looks designer. Costs me more upfront but generally lasts much longer and I seem to get better tenants who take care of it. Good luck!
For me, on a typical rehab that I do on an REO in the range of 1100 - 1300 square feet, I usually plan to spend about $10,000. This amount includes labor, material, closing costs, and holding costs (utilities, yard mowing, interest, etc). If there are larger ticket items that are needed (cabinets, windows, hvac, etc) then I add it on top.
I've never been able to refresh a whole house for anything less than $10K, but you might be able to do lower, since I am getting social prices. For a 1100 sqft house, I would roughly budget around $13 000 based on my spreadsheet calculators.
Updated over 4 years ago
Oops meant to say I get Socal prices
Thanks guys, this info is very helpful!
Are they vacant or occupied? I would recommend that staging the rehab on a 4-plex as units become vacant is the way to go. Especially if you think you will do it yourself. I just did something similar and a couple units came up vacant at the same time and it 's a push to get them done all at once.
@Colleen F. they are vacant and would need some rehab before I could get tenants in, especially if I want the full rent amount for the area.
I would estimate around (per unit):
$1250 - Paint ($1-1.25sqft)
$3-4 Kitchen/Bath Flooring (Lineolium)
This is a rough number if I were to look at one unit at a time. If I knew I would be getting all four units I could discount some. Also setting up different accounts for bulk pricing helps. You could save 40% on paint here. I have a carpet contract for cheap renters grade carpet and install for 30% less then above etc.
Lot of work. If you do it set it up to hit the ground running with contractors lined up and materials selected. The biggest time waster is poor scheduling and not realizing that doing nights and weekends is going to cost you in terms of vacancy. How do you know the market rent is right, are there a lot of similar buildings around? Is it vacant by design or because of poor management?
One strategy if you do it yourself is have the easiest unit done so you can show while the other units are being rehabbed. That way you can say I will have another one ready in x time.
@Colleen F. I have looked at rents in that area and done my homework. I called current Landlords in the area that had properties for rent and just talked with them also looked on the MLS for rents in that area over the past 6 months and found out the people rented anywhere from 650-700. The property is actually an REO, so when the bank took over they forced everyone out. It is actually pretty good shape to have been vacant for the past 3 years.
Wow , three years.. A bank force out makes it sound better since it isn't vacant because it is not marketable. Sounds like you did all the right research.
In the northeast you would have had to winterize it. Lots of luck with getting it ready. Good shape means you can turn them over quick and get them rented.
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