Intro & Calc Review - itemized rehab costs, purchase costs

Sacramento, California
Rehabbing & House Flipping
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Intro & Calc Review - itemized rehab costs, purchase costs

Jon Catterson
Flipper/Rehabber · Sacramento, CA · Member since 2020 · 72 posts · 49 votes

Hello all,

I live in Sacramento, CA. My wife (then girlfriend) and I purchased a long-distance SFH in Columbus, OH, in 2021 and sold it in 2024. It went well. Sidenote: @Zeke Liston is a great realtor there, and Donny Thompson was a great property manager. Both provided numerous off-market leads. Donny had contractors he worked with for his landlord clients. 

Now, I want to fix-and-flip locally before perhaps doing long-distance BRRRRs, which I believe do not work well here in Sacramento. I have read The Book on Flipping Houses by J Scott and summarized it for myself, have listened to The House Flipping Framework by James Dainard, and am now reading it and summarizing it for myself. I have utilized J Scott's The Book on Estimating Rehab Costs to estimate renovations. Since the latest edition was published in 2019, I am using the upper end of the ranges due to inflation. I also have a good friend who knows everything there is to know about construction, who corrected some of my rehab estimation mistakes, though he is not a flipper and has some blind spots for what is needed for flips. 

I have a realtor and am searching the MLS. I've made three offers. They were all lower than the list, and the properties went to someone else for list. I think my rehab estimates are high, but I hesitate to go lower since I'm a beginner to this. I will use a general contractor for sure on this first flip, which of course adds to expenses.

My money comes from a self-directed IRA. I am using all cash, no financing. My plan is to flip one or two properties within the self-directed IRA, gain experience, and then utilize hard money or, ideally, private or soft money, outside the IRA. I don't want to do too many flips in the SDIRA to avoid UDFI tax.

Below is an analysis I did on a real property I visited. The rehab estimate is itemized to a certain extent. The one I did was more in the weeds, but what's in the reports gives a good idea of what I thought. 

I would REALLY APPRECIATE any feedback IN GENERAL and on the REPORT. Thank you!

View report

*This link comes directly from our calculators, based on information input by the member who posted.

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Andy SabischPro Member
Investor · Jackson, MS · Member since 2021 · 660 posts · 561 votes
1y

Jon


What is the ft2 of the house . . . to have a new roof put on (and include decking from what you said) with permits in CA, the estimate you have seems low - we pay more here in NE Pennsylvania.  

The $7000 estimate for HVAC may be a tad low depending on the size of the house and size of the unit you are installing.  Once you have the ft2, call a few HVAC people and get a ballpark . . . again, we paid $9,000 for one in an 1800 ft2 house a few months back here.  

The garage conversion could be a can of worms . . . can always add that to the offer as a contingency to verify that the conversion was permitted.  

As far as flooring, what do comps in the area have for flooring?  We usually use LVP or actual hardwood for higher finish homes . . . not sure what $482K buys in your area and the finishes it demands (around here that would get you a 4,000 ft2 on an acre lakefront lot). 

Again, check the buying and selling costs . . . we closed on a $210K house yesterday and our closing costs with just the buyers agent commission were just over $10,400.  

As far as bids, realize that GCs need to make money so spending time giving estimates on the hope you buy the property and then use them is often a non-starter.  Get ballparks from them and when you buy a property and the GC you use does a good job, stick with him on future jobs - we have found we get bumped up when we need him.  

Finally, yup, permitting can suck and you really have to keep your cool which is extremely difficult at times dealing with some of the people in power.

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  • Andy SabischPro Member
    Investor · Jackson, MS · Member since 2021 · 660 posts · 561 votes
    1y

    A few points to reflect on . . . 

    1) How old is the property?  

    2) How old is the roof? Does it need to be replaced?  How old are the utilities (electrical, plumbing, HVAC)?

    3) Was the previous work permitted (enclosing the garage and making it living space)?

    4) Several areas are low estimates (landscaping, windows (we have spent more than that for 3 windows installed), flooring (looks shot), insulation ($400 is nothing), $800 for a carpenter (not sure how much you need done by that is not much work

    5) Not sure I would rip out the kitchen with the granite counters, back splash and the cabinets.  I would look at refacing rather than replacing.

    6) Purchase costs - $2011 seems really low - no agent? Check these costs with a title company. Same for Sales costs of $1,500 . . . 

    7) Misc or contingency is low as $2,500 will be eaten up in a flash . . . hope for the best and plan for the worst is a rule to live by

    8) You have a GC listed . . . have you touched base with one (or three) to get their input based on your local market?

    9) The 3 month holding time is unrealistic.  This needs to include reno, listing, contract and reaching the closing table.  Permits can kill your timeline - we have been on hold on a project for 4 weeks this Friday waiting on a permit.

    Good luck in your flip . . . remember, you make your money on the buy so be sure you do not underestimate reno costs and find yourself underwater.

    1Reply
  • Jon Catterson
    OP
    Flipper/Rehabber · Sacramento, CA · Member since 2020 · 72 posts · 49 votes
    1y

    @Andy Sabisch

    Thanks for your response, Andy. Briefly, 

    1) I entered the year built of 1968 into BP's report. I don't know why it keeps getting deleted from the tool. 

    2) The roof needs to be replaced. Bowing and expanding in different areas. Per the listing agent, the conditioner/compressor needs to be replaced. I'm not sure about plumbing and electrical, but I'm assuming some work. 

    3) Great question. I do not know. 

    4) I don't want to over-landscape. Scott says to make it presentable when a buyer drives up. Beyond that is probably a waste of money. Good to know about windows, insulation, and carpentry. The flooring of $8,200 was for laminate wood throughout. Too low? 

    5) Yeah, I talked about it with my agent. I'm not sure either. He thinks the counters are too far gone. 

    6) I'm using an agent. I just asked Grok for closing costs, adjusted for the purchase price, and eliminated anything related to loans.

    7) Good to know. 

    8) I have talked to one via my agent. He utilizes a few more. I would get bids from several when under contract. 

    9) Thanks. Sacramento County is bad when it comes to permits per my construction friend. 

    I appreciate the questions for me to ask and the feedback. 

    0Reply
  • Andy SabischPro Member
    Investor · Jackson, MS · Member since 2021 · 660 posts · 561 votes
    1y

    Jon


    What is the ft2 of the house . . . to have a new roof put on (and include decking from what you said) with permits in CA, the estimate you have seems low - we pay more here in NE Pennsylvania.  

    The $7000 estimate for HVAC may be a tad low depending on the size of the house and size of the unit you are installing.  Once you have the ft2, call a few HVAC people and get a ballpark . . . again, we paid $9,000 for one in an 1800 ft2 house a few months back here.  

    The garage conversion could be a can of worms . . . can always add that to the offer as a contingency to verify that the conversion was permitted.  

    As far as flooring, what do comps in the area have for flooring?  We usually use LVP or actual hardwood for higher finish homes . . . not sure what $482K buys in your area and the finishes it demands (around here that would get you a 4,000 ft2 on an acre lakefront lot). 

    Again, check the buying and selling costs . . . we closed on a $210K house yesterday and our closing costs with just the buyers agent commission were just over $10,400.  

    As far as bids, realize that GCs need to make money so spending time giving estimates on the hope you buy the property and then use them is often a non-starter.  Get ballparks from them and when you buy a property and the GC you use does a good job, stick with him on future jobs - we have found we get bumped up when we need him.  

    Finally, yup, permitting can suck and you really have to keep your cool which is extremely difficult at times dealing with some of the people in power.

    2Reply
  • Scott ScovilleBusiness Member
    Real Estate Agent · Sacramento, CA · Member since 2019 · 502 posts · 276 votes
    1y
    Quote from @Jon Catterson:

    Hello all,

    I live in Sacramento, CA. My wife (then girlfriend) and I purchased a long-distance SFH in Columbus, OH, in 2021 and sold it in 2024. It went well. Sidenote: @Zeke Liston is a great realtor there, and Donny Thompson was a great property manager. Both provided numerous off-market leads. Donny had contractors he worked with for his landlord clients. 

    Now, I want to fix-and-flip locally before perhaps doing long-distance BRRRRs, which I believe do not work well here in Sacramento. I have read The Book on Flipping Houses by J Scott and summarized it for myself, have listened to The House Flipping Framework by James Dainard, and am now reading it and summarizing it for myself. I have utilized J Scott's The Book on Estimating Rehab Costs to estimate renovations. Since the latest edition was published in 2019, I am using the upper end of the ranges due to inflation. I also have a good friend who knows everything there is to know about construction, who corrected some of my rehab estimation mistakes, though he is not a flipper and has some blind spots for what is needed for flips. 

    I have a realtor and am searching the MLS. I've made three offers. They were all lower than the list, and the properties went to someone else for list. I think my rehab estimates are high, but I hesitate to go lower since I'm a beginner to this. I will use a general contractor for sure on this first flip, which of course adds to expenses.

    My money comes from a self-directed IRA. I am using all cash, no financing. My plan is to flip one or two properties within the self-directed IRA, gain experience, and then utilize hard money or, ideally, private or soft money, outside the IRA. I don't want to do too many flips in the SDIRA to avoid UDFI tax.

    Below is an analysis I did on a real property I visited. The rehab estimate is itemized to a certain extent. The one I did was more in the weeds, but what's in the reports gives a good idea of what I thought. 

    I would REALLY APPRECIATE any feedback IN GENERAL and on the REPORT. Thank you!

    View report

    *This link comes directly from our calculators, based on information input by the member who posted.


    This is definitely a great time to buy in Sacramento. We're getting everything well below market, and maxing out our seller credits. Best of luck on your next flip, and I'm happy to chat anytime. I've been flipping and also helping investors in Sacramento for a while.

    [email protected]415-933-2202
    Scoville Realty & Investments LLC
    WebsiteView Page
    1Reply
  • Kevin IveyPro Member
    Flipper/Rehabber · Marysville, WA · Member since 2020 · 216 posts · 126 votes
    1y

    My understanding is you can't do flips with a self directed IRA since it needs to be a passive income. Check with your CPA and plan administrator.

    1Reply
  • Julius VincentBusiness Member
    Tax Strategist | CPA, MBA + Wharton FP&A | CFO-Level Planning · Houston, TX · Member since 2025 · 157 posts · 172 votes
    1y

    It's true that flips inside a self-directed IRA are tricky because of how the IRS treats "active" income. When you flip a property, it's often considered a trade or business rather than a passive investment. That can trigger Unrelated Business Income Tax (UBIT), which most investors want to avoid inside an IRA.

    That said, the rules aren’t about “flipping” per se...they’re about the level of involvement and intent. If it’s occasional and structured carefully (no personal benefit, no disqualified persons involved, etc.), it might be allowed. But the tax consequences still need to be weighed.

    [email protected]281-407-7353
    Horizon Wealth & Tax Advisors59 Reviews
    WebsiteView Page
    2Reply
  • Gordon CuffePro Member
    Investor · Roseville, CA · Member since 2009 · 1k+ posts · 587 votes
    1y

    @Jon Catterson It will be tough to find a house on MLS where the purchase price makes sense as a flip. You will need to find off market properties. You can look for local wholesalers in the Sacramento area to find you a deal. I fix and flip houses around the Sacramento area and I always have to buy them off market. I sometimes find deals off market that I pass on to other investors. I am currently working on a house in Citrus Heights.

    1Reply
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