Luxury Home Rehab Estimating

[Christopher Telles]

Hey there BP nation. First time questioner. I've been on BP for a little over a month and reading and learning a lot about fix N Flips, and also participating in the forums sharing knowledge from my experiences in real estate. 

I'm looking for some guidance from some of the more experienced California flip investors in luxury homes to see if they might use a matrix or formula to plug in a set of  rehab estimation numbers for a luxury rehab as they are initially looking into the potential of a project being an acquisition candidate before they actually walk the property.

I can typically create an estimated improvement budget for almost any commercial property in both office and industrial for proforma purposes before visiting the property, but residential is a new animal for me. 

Below I will provide an overview of a property that looks to meet most of the underwriting criteria I've established for a viable investment e.g. 75% ARV test, affluent neighborhood, great school district, strong resale market, etc., but thought this information would be useful for those who might answer. The ARV is pegged at $1,200,000 supported by nearby comps.

I'm currently underwriting a 4bd 5ba luxury home that is approximately 3,000 sf in a Southern California affluent inland neighborhood in Los Angeles County. The home was custom built in the mid 80's and is in terrific shape, but its now dated and will need a new kitchen, baths, and some walls removed to open up some of the space that buyers find more attract today. Obviously new flooring and other accoutrements will round out the improvements.

I know there is no way to know what the actual budget number 'will be' until the property is walked, but I'm curios if there are some numbers, based on the luxury rehabs more experienced rehabbers have rehabbed, they use to plug into a quick proforma review they may use while investigating a new luxury market property before walking the property. Example, price per overall square foot, kitchens X, baths y, flooring Z. 

I've estimated the rehab for more moderate priced homes but I suspect a luxury home is going to have a dynamically different rehab cost structure, and as I've stated I'm curious to know if there is a way to estimate a prototypical rehab number for a luxury home.

To your continued success!

[Jeffrey Stasz]

Hi All. 

I actually flip high-end properties in the Hudson Valley in New York. Most of my customers are City folk looking to purchase their county homes. So, while the market is a bit different I suspect our customers and costs are probably pretty similar. 

Here is a project I just completed: http://www.realtor.com/realestateandhomes-detail/4...

I agree with the above post that pricing it by the sq/ft is a bad idea. In high-end properties small decisions can radically effect your sq/ft costs. 

So here is how I would set this up: 

Kitchen: 

Appliances - $6,000 

Cabinets - $10,000

Countertop - $70-110/sqft

Sink - $1,500

Faucet - $500

Cab pulls - $500 (or $6-10/pull) 

Install - $2,000

Flooring: 

Floor product (unfinished): (expect to pay 4 - 10 dollars per board foot for anything quality) 

Floor finishing (sanding, coating etc) roughly $3/Sq ft (as long as you are using a standard coating (polyurethane) if you want to go higher end with an oil or stain expect this to jump to 4-5/sq ft 

Bathrooms:

Demo: $/hour x expected hours 

Underlayment: Schulter Shower System (approx: 500/shower enclosure) 

Tile/grout/thinset: 6-10 sq/ft

Install: $3-6 sq/ft 

Lighting and Electric: (pricing includes installation)   

Switches: approx $30/switch  (this assumes a mid range Leviton 3-way dimmer) 

Outlets: $10 (TR Leviton duplex, GFI where needed and duplex/USB combo in Kitchen Island and a few choice locations) 

Lighting:

Surface mount approx $150/fixture

Can: approx. $250/fixture (assuming old work install by electrician)

A little more on why I do it this way: 

Kitchen: You can figure out exactly how much your kitchen is going to cost before you start. And because appliances are so expensive, I find it best to buy my kitchen at the outset. That way you know, concretely how much this stuff is going to cost. If all of the nice homes in the area are packed with Viking then you can expect to pay 20K for appliances. 

Bathrooms: People expect custom. If my buyers see pre-formed plastic on the floor they assume the entire place is junk and pass. That means I am always building custom enclosures. I use the Schluter system because it is easy to install, fast and comes with a good warranty. 

Flooring: Most buyers can't tell the difference between pre-finished floors and the "real deal". That said, I still choose to install custom floors. I work with local mills to do custom runs of interesting varieties and lots. That way my floors are always a unique size, variety or have additional features (heavy spalting for example). A custom floor makes the entire project feel way different and gives the realtor something to talk about.  

If you're trying for a quick and dirty estimate this might not be too helpful. However, with higher end builds quick and dirty estimates are hard to pull off because materials and labor are just way more expensive. This breaks down what I generally find to be the most expensive parts of my build and will hopefully get you to a number that cuts down on surprises. 

Some things I left off: 

Windows: 700-2,500/unit 

Insulation: 3-6/board ft. I live in a cold place and people want foam 

Paint: $3/sq ft. 

Hope this helps everyone. 

- Jeffrey