Flipping a foreclosed house in New Jersey (Detailed)

Flipping a foreclosed house in New Jersey (Detailed)

xxx, NJ · Member since 2016 · 3 posts · 1 vote

Hi, I'm a first time house flipper and just bought my first foreclosed property for 108k. The comps in the area are anywhere between 200-220k. Ive been meeting with contractors everyday, but don't really know whats a good deal and whats not. 

Since the house is a foreclosure there are a lot of issues such as:

Downstairs(basement)

  • If anything is missing or broken on the walls its going to need sheet rock
  • Tile on the floors
  • Furnace / hot water needs to be re-piped

Main floor

  • Whole interior of the house needs to be repainted
  • Tile on kitchen floor
  • New appliances / cabinets
  • Laminate floor
  • Granite counter top
  • Recess lighting
  • 1/4 inch sheet rock on the top of the kitchen
  • Bathroom re-tiled
  • Stairs re stained 

Upstairs

  • New door for bedrooms
  • New light fixtures
  • Same laminate floor downstairs used upstairs
  • Completely new bathroom

Outside

  • Roof needs to be fixed (not replaced)
  • Foundation needs to be painted
  • Front porch needs to be touched up

So basically that is what needs to be done for the house. Like I said I paid 108k, but materials and labor seem to be costing about 70k. I was expecting it to be 40-50k, but apparently the furnace might need to be replaced, and the roof might need more work than expected.

I suppose my question is, what else do I need to look for?

What else do I need to get done?

Am I missing anything?

Anything to keep in mind when dealing with contractors (they make make me buy things i don't need so they can profit off it)

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Real Estate Consultant · Bloomfield, NJ · Member since 2010 · 2k+ posts · 1k+ votes
10y

@Alex T. - $70k?  That's a lot for Roselle. And a lot for the list you gave us. I saw maybe $50k worth of work at best.  My guess is that the contractors see that you are new and are therefore jacking up the price. Which will likely mean that it won't stop there as they may try and "find" more problems they couldn't see in the beginning.

Honestly, so you don't lose on this, I would bring in an experienced rehabber as a partner and have him run this for you while you learn. The $70k quotes you're getting tells me that the Contractors may try to get over on you.  If I could offer 2 pieces of advise for dealing with them:

1) STAY AHEAD of your contractor. ONLY pay him for work done, not work that's going to be done. If he needs a deposit =, make sure it's not more than $2k OR offer to buy the materials yourself DIRECTLY. But the stay ahead rule goes for any subcontractors (electrician, plumber) your contractor is hiring. Personally I don't like the fact that all jobs will be handled by the GC you're hiring (I like to be my own GC and hire my own subs).

2) Hire a professional consultant who will walk the site before each paycheck is cut to the contractor (again, for work that has already been done) and have him/her confirm that the work was done correctly. Rule #1 won't make a difference if you can't tell whether or not something was done correctly.

There's so much to rehabbing (if you're not experienced with your own proven and TRUSTED crew) and 90% of it will depend on how competent you are as well as your crew. Both are equally important.  You can get a competent crew who will see that you're new and take advantage of you. You will need to be the type that is tough and not a push over. You will have to take control of this project (and not let your contractor take control) and show them that despite being green (and they know you're green already), you are not going to be taken advantage of. This is an upstream battle for you at this point as I learned the hard way (many years ago) how Contractors think.

Do yourself a favor and bring in an experienced partner NOW before any checks are cut. Trust me on this one.

See this reply in the discussion

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  • Bayonne, NJ · Member since 2013 · 90 posts · 27 votes
    10y

    For future endeavors, bring your contractor in before you buy the house.  That way you can run your numbers and make a better offer.  I dont think it will kill you this time, but be aware thats the most important due dilligence you can do.

    I wouldnt do laminate floors, do hardwood.

    How many reputable contractors came?  They all said 70k?  It is probably going to be more.  The better stuff you put in the higher price youll get.

    What town is this in?  If you can sell for 220k that would be a good flip, so using higher end materials and making it nice might pay off.

    Also, dont really understand your question.  You have the house, what else do you need to do?  Fix it up and sell it!  How would we know what else needs to be done as far as fix up we dont see it or know what it looks like or anything.  

    Good luck my friend.

  • xxx, NJ · Member since 2016 · 3 posts · 1 vote
    10y
    Originally posted by @Erik Pedersen:

    For future endeavors, bring your contractor in before you buy the house.  That way you can run your numbers and make a better offer.  I dont think it will kill you this time, but be aware thats the most important due dilligence you can do.

    I wouldnt do laminate floors, do hardwood.

    How many reputable contractors came?  They all said 70k?  It is probably going to be more.  The better stuff you put in the higher price youll get.

    What town is this in?  If you can sell for 220k that would be a good flip, so using higher end materials and making it nice might pay off.

    Also, dont really understand your question.  You have the house, what else do you need to do?  Fix it up and sell it!  How would we know what else needs to be done as far as fix up we dont see it or know what it looks like or anything.  

    Good luck my friend.

     Whats the benefit of hardwood rather than laminate?

    I had 6 contractors come, im waiting on estimates from 3 but the other 3 were all near 70k. 

    The town is Roselle, NJ.

  • Investor · Moorestown, NJ · Member since 2016 · 3 posts · 0 votes
    10y

    Hi Alex congrats on your first investment property!!! :)

    1). you can go to any Home home Depot and head up to there Pro Depatment ask if they have any flooring that is discontinued or left over and brought back from aanother customer. Make sure you have all your measurements with you. I did a flip in NC and got some nice dark laminate for a whole living room/hallway  and it cost me 200 dollars. Also ask for there handyman list they will give you the name and number. and ask about light fixtures that may have a hair size scratch what a steal you can get.

    2). Get some buddies and yourself and have a paint party saves so much by doing that yourself on the weekends i painted my whole house myself on a weekend.

    Hope this helps. Just have fun with it and before you know it your back at the closing table making a goog profit,

    PS check your local habitat for humanity restore you may find granite tops, doors, and lots more.

  • Flipper/Rehabber · Jersey City, NJ · Member since 2016 · 158 posts · 86 votes
    10y

    @Alex T. First off congratulations on your first purchase. Its the right step towards gaining success in RE. 

    To begin with, BE READY FOR BAD DAYS, DIFFICULT DAYS, DAYS WHEN THINGS MIGHT NOT GO YOUR WAY, and tell yourself that's fine, that's your learning curve and you will get through this. 

    Now the rehab:

    Start with checking the plumbing for the house, electrical work and also your HVAC/heating systems. 

    Fixing or upgrading these things mean breaking walls and you don't want to do that later. You cannot live in a house if the above three things are not working but you can live in an un-painted house with broken walls if the above three are working. 

    Make sure you give enough closet space, that is the most important piece in any bedroom. 

    Roof - you didnt mention how much repairs are needed. 

    most important, decisions about paint color, granite top, kitchen cabinets  tiles in bathroom, don't kill yourself in making those choices, be smart and quick, don't look at 100 designs to make a choice. 

    Associate with a few realtors in the neighborhood to get an idea of what other buyers look for in that town.

    Thanks

    Kunal M.

  • Hackettstown, NJ · Member since 2015 · 192 posts · 26 votes
    10y
    Originally posted by @Doris Robinson:

    Hi Alex congrats on your first investment property!!! :)

    1). you can go to any Home home Depot and head up to there Pro Depatment ask if they have any flooring that is discontinued or left over and brought back from aanother customer. Make sure you have all your measurements with you. I did a flip in NC and got some nice dark laminate for a whole living room/hallway  and it cost me 200 dollars. Also ask for there handyman list they will give you the name and number. and ask about light fixtures that may have a hair size scratch what a steal you can get.

    2). Get some buddies and yourself and have a paint party saves so much by doing that yourself on the weekends i painted my whole house myself on a weekend.

    Hope this helps. Just have fun with it and before you know it your back at the closing table making a goog profit,

    PS check your local habitat for humanity restore you may find granite tops, doors, and lots more.

     These are great tips for newbie like myself. Thanks for that. 

  • Investor · Moorestown, NJ · Member since 2016 · 3 posts · 0 votes
    10y

    Your welcome Vanessa sorry for the typos in my post but glad it helped. Feel free to ask questions anytime. 

  • Real Estate Consultant · Bloomfield, NJ · Member since 2010 · 2k+ posts · 1k+ votes
    10y

    @Alex T. - $70k?  That's a lot for Roselle. And a lot for the list you gave us. I saw maybe $50k worth of work at best.  My guess is that the contractors see that you are new and are therefore jacking up the price. Which will likely mean that it won't stop there as they may try and "find" more problems they couldn't see in the beginning.

    Honestly, so you don't lose on this, I would bring in an experienced rehabber as a partner and have him run this for you while you learn. The $70k quotes you're getting tells me that the Contractors may try to get over on you.  If I could offer 2 pieces of advise for dealing with them:

    1) STAY AHEAD of your contractor. ONLY pay him for work done, not work that's going to be done. If he needs a deposit =, make sure it's not more than $2k OR offer to buy the materials yourself DIRECTLY. But the stay ahead rule goes for any subcontractors (electrician, plumber) your contractor is hiring. Personally I don't like the fact that all jobs will be handled by the GC you're hiring (I like to be my own GC and hire my own subs).

    2) Hire a professional consultant who will walk the site before each paycheck is cut to the contractor (again, for work that has already been done) and have him/her confirm that the work was done correctly. Rule #1 won't make a difference if you can't tell whether or not something was done correctly.

    There's so much to rehabbing (if you're not experienced with your own proven and TRUSTED crew) and 90% of it will depend on how competent you are as well as your crew. Both are equally important.  You can get a competent crew who will see that you're new and take advantage of you. You will need to be the type that is tough and not a push over. You will have to take control of this project (and not let your contractor take control) and show them that despite being green (and they know you're green already), you are not going to be taken advantage of. This is an upstream battle for you at this point as I learned the hard way (many years ago) how Contractors think.

    Do yourself a favor and bring in an experienced partner NOW before any checks are cut. Trust me on this one.

  • Developer · Palm Harbor, FL · Member since 2015 · 307 posts · 96 votes
    10y

    Congratulations! Now the fun begins! I would suggest having you plumber there when you turn the water on (assuming its been off and the house was winterized).  Its not unlikely to have a pipe burst or a leek or two on houses that may have been sitting vacant for a while.

    When you say "Contractors" are you referring to hiring a general contractor to do the whole job?  If so, you can probably save 20%+ if you directly manage the job yourself and directly hire the plumber, sheet rocker, carpenter, ect.

    Adam

  • Mark LangdonPro Member
    Investor · Whippany, NJ · Member since 2010 · 356 posts · 104 votes
    10y

    I agree with @Ibrahim Hughes  that $ 70K seems like alot based on your scope of work. It took me awhile when first starting out to find investor friendly contractors that I didn't pay full retail prices. I am assuming this may be your case. Also try to get a few more bids. It just sounds too expensive based on your list. By partnering up also may get you access to the investor friendly contractor that your partner may have. This deal can go south quickly as you have your additional costs on top of your construction bids of closing costs; financing; insurance; utilities; property taxes; permits; realtor commissions; NJ transfer tax etc.. The first deal most investors don't necessarily make alot of money but we don't want to lose money but at the same time you will learn alot. Good Luck. 

  • Flipper/Rehabber · Montgomery, NY · Member since 2016 · 2k+ posts · 1k+ votes
    10y

    Before I can offer any advice on the renovation costs (I come from a GC background), I would need to know the size of the house, the number of beds and baths at a bare minimum. From my number crunching based on the limited info, $70K initially seems high, however $40K you mentioned seems low. $50-60K sounds more "ballpark" if your paying someone to do the work.

    Number one, most subs will be reluctant to simply patch or fix up a roof or hvac. They will pish for a full replacement. Not so much to make more money, but because their name will be on it and if things don't work right, they won't want to be associated with that.

    If your GCs are simply overseeing a group of their subs, like states they will have their fee on top of every sub price. This will drive the cost of the work up. Everyone involved needs to make money, and the more people, the more money they will want to make, vs. the less you make.

    Send over the details of the house, age, age of systems/roof, size, fixture count (beds/baths) and anything else you'd like to share. With that we could offer significantly more help.

  • Contractor · Los Angeles, CA · Member since 2015 · 4k+ posts · 1k+ votes
    10y
    I don't think the 70k is much, given the scope and given the fact that it is a foreclosure. I have walked a foreclosure more than 10 times, it is all the same dirt grade interior, just next to a newly cleaned hoarder house. I don't know anything about NJ contractor prices, but I would assume using J Scott's book will help on this. Normally in CA 80-100/sf is an average price for those foreclosures, BUT, that is CA, other states you could build a house for 70/sf. The OP didn't say anything how big the house is, it could be 600 sf or it could be 3000 sf, i think the advice on the thread regarding pricing is inaccurate. To the OP, read the book, it will help you. If you go too cheap, 20-40% from what 3 contractors gave you, you might throw in the towel after your first flip, two things could happen, either you will have a nightmare during day time at site until you finish, or you will have to pay twice for the same job, this means you need another contractor to finish the first one. Either way, you'll end up with that 70k or maybe more. Hiring subs is not the right time for you right now, not on a foreclosure, if it were cosmetics or light, then that's ok. Hire a GC (or a mentor/partner rehabber) and see how he works, then maybe on your next you could be independent. You might break even on this one, maybe up to 10k, but at least you'll gain knowledge, and that's important. Good luck.
  • xxx, NJ · Member since 2016 · 3 posts · 1 vote
    10y
    Originally posted by @Brian Pulaski:

    Before I can offer any advice on the renovation costs (I come from a GC background), I would need to know the size of the house, the number of beds and baths at a bare minimum. From my number crunching based on the limited info, $70K initially seems high, however $40K you mentioned seems low. $50-60K sounds more "ballpark" if your paying someone to do the work.

    Number one, most subs will be reluctant to simply patch or fix up a roof or hvac. They will pish for a full replacement. Not so much to make more money, but because their name will be on it and if things don't work right, they won't want to be associated with that.

    If your GCs are simply overseeing a group of their subs, like states they will have their fee on top of every sub price. This will drive the cost of the work up. Everyone involved needs to make money, and the more people, the more money they will want to make, vs. the less you make.

    Send over the details of the house, age, age of systems/roof, size, fixture count (beds/baths) and anything else you'd like to share. With that we could offer significantly more help.

    The house is 1500 sq/ft with 2.5 bathrooms and 4 bedrooms.

  • Flipper/Rehabber · Montgomery, NY · Member since 2016 · 2k+ posts · 1k+ votes
    10y

    As a comparison, I renovated a 3/2.5 home, which totaled to 1,800 SF, in CT back in early-mid 2015. I When I run what I spent it came out to $40,900 for materials and sub labor. I then paid my father $12,000 for his managing and work. All total it was basically $53,000 to renovate what sounds like a similar situation (house wise). I did most of the grunt work myself, over roughly 5-6 months, working 4-5 nights a week.

    Had a paid a true GC and not done the work I did, I would have to easily add $15,000 to what it cost. This puts it not far off where you are coming in for renovation costs.

    Keep in mind I am being very basic with my math here, and can only speak from one flip. The absolute best thing to do when dealing with a GC and subs, is to create scope sheets/lists for them. Have them fill it out (check lists of exactly what you want done) and also give them areas to fill out additional work they explain is needed. You may think the roof needs $500 in "repairs", yet no roofer will put his name on a $500 fix, to a 25 year old roof that needs replacement in his eyes. In that case, you might be in a tough spot. You either find a handy-man to fix as you wish, or break the budget and replace the roof.

    Mechanicals might be the same. You see a decent furnace/boiler and think it needs clean and some repair, yet a licensed HVAC company will not work on a 25 year old item, and will only replace. In these cases, you may have to either rethink your strategy, or lower budgets elsewhere to overcome these needs.

    Here is my thought. Take a few hours and write complete, room by room scope of work. Be exact. Ex:

    Bedroom:

    Remove carpet, tack strips, and fasteners, and dispose.

    Remove padding and any glue residue and dispose.

    Remove existing doors, hinges, strikes and locksets. locksets and hinges to be reused, dispose of doors.

    Remove existing light fixtures, outlets and switches and dispose.

    Patch all wall/ceiling dings, dents and imperfections.

    Sand patches, prime one coat and paint two coats on all walls.

    Sand patches, prime one coat and paint two coats on ceilings.

    Prep, prime and 2 coats paint all window jambs, sills and trim.

    Prep, prime and 2 coats paint all door jambs, and trim.

    Prep, prime and 2 coats paint base moulding.

    Furnish, paint and install interior, H.C. doors at closet and bed to hallway. Furnish and install brushed nickel passage set at closet and privacy set at door to hall. F&I hinges. Cost savings to reuse existing handles and hinges removed during demo.

    Furnish and install 3 prong white outlets and covers at all existing boxes. Including proper grounding to code.

    Furnish and install white light switch at existing box.

    Furnish and install flush mount, brushed nickel two bulb light fixture at existing light fixture location. Provide bulbs.

    Furnish and install carpet, 8lb pad, and all tack strips throughout bedroom and closet. Carpet shall be of Xxx quality, and color chosen by owner.

    Vacuum carpet, clean windows and general wipe down of room once completed.

    This list above looks anal, and it very well is. However, if I were paying someone to complete an entire project for me, I would be absolutely clear on what I want done. I would have included and excluded check boxes and ask for explanations of what's not included and why. I would be open to cost savings ideas from them (using cheaper items others may not see, left over items he may have, reusing items in the house etc.) and discuss this up front. What this does is level the G.C.s and has you driving the bus in regards to what you foresee happening. Its also a tool if a later change order comes up. You come back to this list (the list also turns into your contract) and if its shown and included, you have more leverage that he owned what he owned.

    Sorry to be long winded, however I think you can revamp your wants/needs, and cut your proposals down some by doing this.

  • Real Estate Consultant · Bloomfield, NJ · Member since 2010 · 2k+ posts · 1k+ votes
    10y
    Originally posted by @Manolo D.:

    I don't think the 70k is much, given the scope and given the fact that it is a foreclosure. I have walked a foreclosure more than 10 times, it is all the same dirt grade interior, just next to a newly cleaned hoarder house. I don't know anything about NJ contractor prices, but I would assume using J Scott's book will help on this. Normally in CA 80-100/sf is an average price for those foreclosures, BUT, that is CA, other states you could build a house for 70/sf. The OP didn't say anything how big the house is, it could be 600 sf or it could be 3000 sf, i think the advice on the thread regarding pricing is inaccurate.
    To the OP, read the book, it will help you. If you go too cheap, 20-40% from what 3 contractors gave you, you might throw in the towel after your first flip, two things could happen, either you will have a nightmare during day time at site until you finish, or you will have to pay twice for the same job, this means you need another contractor to finish the first one. Either way, you'll end up with that 70k or maybe more.
    Hiring subs is not the right time for you right now, not on a foreclosure, if it were cosmetics or light, then that's ok. Hire a GC (or a mentor/partner rehabber) and see how he works, then maybe on your next you could be independent.
    You might break even on this one, maybe up to 10k, but at least you'll gain knowledge, and that's important.
    Good luck.

     I see you're in CA. Have you ever flipped one in NJ?

  • New York City, NY · Member since 2015 · 18 posts · 0 votes
    10y

    Hi guys, I am a new investor in NYC and would love to shadow someone's next flip to learn the in and outs of flipping a house. I am willing to help you out for free on projects in exchange for shadowing. Please let me know if anybody is interested. Thanks!!!

  • Contractor · Los Angeles, CA · Member since 2015 · 4k+ posts · 1k+ votes
    10y

    @Ibrahim Hughes No, it is part of my disclosed statement. "I don't know anything about NJ contractor prices". When I made my comment, the house size is not being disclosed, it could be a 600 sf house, or a 10,000 sf house. Did you know then? 

    Have you flipped a foreclosure? How much was the mold remediation fee? Did it test positive for lead or asbestos?

  • Investor · Naperville, IL · Member since 2010 · 105 posts · 52 votes
    10y

    @Alex T. - we are from NJ originally (mostly Union, Middlesex and North Plainfield/Somerset Co.) and I agree that $70k sounds a bit high and on the other hand--if the contractors are busy or they smell inexperience--they'll push up the price.  Especially if they think you don't actually know how to do these things and can then further drive up the costs.

    Roselle's housing stock is widely varied in age.  I think your contingency fund should be commensurate with the age of the place.  And definitely test for mold.

    Agreed that you and some buddies could bang out the painting pretty well on your own.  Do that before the flooring in case you make a mess.

    I'm not sure I'd bother tiling the basement unless the basement is finished and you can't do carpet (and I'd do a softer indoor/outdoor down there)

    As for the kitchen--do you really need new cabinets or can they be salvaged?  I've paid to have cabinets painted to save myself a couple thousand dollars.  Also, if you're set on granite--go look for that first and ask what they're looking to unload at the cheapest prices.  From there, you can build the color scheme around that.  We pretty much always look for the cheap granite first and see if it's do-able and if it's not heinous--we work the kitchen design around that.  

    Same for the bathroom tiling--is it just ugly or is it broken?  If it's ugly, I would sooner have it painted and I hear the kits are actually pretty good, but it depends on the setup there and what you really need/what the situation is.

    It might be cheaper to carpet the stairs than to restain them and get them to match the rest of the flooring.

    Lumber Liquidators runs crazy deals on laminate and it is NOT HARD to learn how to do.  Seriously.  And it goes pretty quick.  Just be sure to calculate it with waste.  But it doesn't require much in the way of materials.

    Hope this helps!  My family lived in Roselle from the early 1900s through the 1980s.  I attended Kindergarten there.  :)

  • Real Estate Consultant · Bloomfield, NJ · Member since 2010 · 2k+ posts · 1k+ votes
    10y
    Originally posted by @Manolo D.:

    @Ibrahim Hughes No, it is part of my disclosed statement. "I don't know anything about NJ contractor prices". When I made my comment, the house size is not being disclosed, it could be a 600 sf house, or a 10,000 sf house. Did you know then? 

    Have you flipped a foreclosure? How much was the mold remediation fee? Did it test positive for lead or asbestos?

     1. I know Roselle. Its rare to find a 3k or a 10k sq ft single family house in roselle . It's likely either a cape or colonial.

    2.flipped many foreclosures in my 15 years. All in NJ so I'm pretty knowledgeable about the rehab prices. 

    3. And 4. We can only go off of what info the OP gave us as a result if the bids he received. If the contractor told him 70k, and he doesn't mention to us anything about mold, lead or asbestos yet he still gives us a list of repairs to be made them I'm thinking it's pretty safe to assume that none of those repairs include the aforementioned environmental issues you're now asking about. 

    I asked you about having flipped in New Jersey since you felt that the rehab prices he was quoted was not high and the pricing advice from northeast and NJ investors was inaccurate.  I know that California prices are pretty up there. From what I've seen posted by other investors, your prices are higher then new jerseys. So 70 K may seem decent in California, but for a house in Roselle given a list of repairs quoted to us by the OP.... They are extremely high and it's pretty obvious that the contractors smell new and fresh blood and are going in for the kill.

  • Monmouth County, NJ · Member since 2015 · 65 posts · 7 votes
    10y

    Love these posts. As a contractor that is flipping and has flipped many homes throughout all of NJ for many many years for myself and investors the best advice I can offer is get as many estimates from as many contractors you can as quickly as you can... Holding costs eat up profits. The longest flip I have ever worked on lasted 11 weeks from when I was handed keys until It was cleared of all permits and inspections and put up for sale. That project added a total second floor of 3 br's and 1 1/2 baths. Most projects last 3-6 weeks. If the GC is legit he has his team in place and can run you through the project via time lines (including what if's). Provide incentives for work completed on time and apply penalties for missed deadlines at different levels of the project. If deadlines are not met give yourself an out at the same token do not be cheap or deceitful as nothing p-sses of a contractor working with dishonest clients. Have realistic expectations for what you pay for... I have seen many beautiful pieces of granite installed like crap. Wood floors uneven and buckled and hvac systems installed that were not sized properly. The finished project ultimately is a reflection of you not the contractor once u turn over the keys to a buyer or tenant.    Best of luck!

  • Monmouth County, NJ · Member since 2015 · 65 posts · 7 votes
    10y

    uh ohhhh full disclosure: I have taken more than 11 weeks on mixed use and commercial flips. 

    Thx.

  • James MasottiPro Member
    Rental Property Investor · Washington Township, NJ · Member since 2015 · 1k+ posts · 976 votes
    10y

    Great post here! I'm submitting an offer today in South Jersey and ...my scope of work is a bit different than yours but I'm budgeting 50k for renovations. 

    3 bed 1.5 bath rancher

    New Roof

    Full mold remediation in one bedroom

    Full basement demo

    Add 4th bedroom and full bath to basement

    Finish rest of basement, including can lighting

    Refinish hardwood floors on main level

    New carpet in bedrooms.

    New Kitchen

    New Appliances

    Full renovation of full bath 

    Replace a few windows

    Replace several interior doors

    Clean pool 

    Basic landscaping

    Remove old shed and add a new one.

    If I am able to go under contract I will need to bring contractors through the house to validate all of my pricing during my inspection period, but I built my cost models by reading J Scott's book and then spending a few hours at Lowe's and Home Depot researching material prices at the low, medium, and high end. 

    I've bounced the numbers on this deal (as well as a few others I've looked at and done simulations on) by experienced investors and contractors and have said it feels like I'm in the right ballpark. I'm also building in a pretty decent time buffer and profit margin, so that i have some space in the event that my numbers end up being incorrect, I wont go completely broke on the deal. Hopefully this helps provide a bit another example.

     I would love feedback from others here on BP as well :)

  • Professional · Parsippany, NJ · Member since 2013 · 384 posts · 262 votes
    10y
    Originally posted by @Ibrahim Hughes:
    Originally posted by @Manolo D.:

    @Ibrahim Hughes No, it is part of my disclosed statement. "I don't know anything about NJ contractor prices". When I made my comment, the house size is not being disclosed, it could be a 600 sf house, or a 10,000 sf house. Did you know then? 

    Have you flipped a foreclosure? How much was the mold remediation fee? Did it test positive for lead or asbestos?

     1. I know Roselle. Its rare to find a 3k or a 10k sq ft single family house in roselle . It's likely either a cape or colonial.

    2.flipped many foreclosures in my 15 years. All in NJ so I'm pretty knowledgeable about the rehab prices. 

    3. And 4. We can only go off of what info the OP gave us as a result if the bids he received. If the contractor told him 70k, and he doesn't mention to us anything about mold, lead or asbestos yet he still gives us a list of repairs to be made them I'm thinking it's pretty safe to assume that none of those repairs include the aforementioned environmental issues you're now asking about. 

    I asked you about having flipped in New Jersey since you felt that the rehab prices he was quoted was not high and the pricing advice from northeast and NJ investors was inaccurate.  I know that California prices are pretty up there. From what I've seen posted by other investors, your prices are higher then new jerseys. So 70 K may seem decent in California, but for a house in Roselle given a list of repairs quoted to us by the OP.... They are extremely high and it's pretty obvious that the contractors smell new and fresh blood and are going in for the kill.

  • Professional · Parsippany, NJ · Member since 2013 · 384 posts · 262 votes
    10y

    I agree with @Ibrahim Hughesabout this. Somebody from CALI knows NOTHING about Roselle market area and construction here. House should be in the 40K range maybe 50k

  • Contractor · Los Angeles, CA · Member since 2015 · 4k+ posts · 1k+ votes
    10y

    @Ibrahim Hughes All is true, hence, we did not know how large the house is, it is not safe to assume. As a contractor, I do bid the same, whether the person is their first flip, or did 1,000 during that year, it will not matter to me, a job is a job and costs are costs, however, if I sense that the person soliciting the bid does not know what they want, then it simply means i have to up my contingency so I don't have to ask for change orders too many times and make the individual feel that he is getting robbed by change orders, which would make me look bad. For experienced individuals, I don't have to, If they specify that their floor tile will be a 24x24 at $1.29/sf, then i know how to price it. The original problem was, even with scope, it doesn't lay out enough information.

    @Angelo Mart Who says I don't know about construction in NJ? I renovated 300 hotel rooms, landscape, and exterior there. What I said was I did not flip there. Construction is construction, doesn't matter where you are. A scope has hours, you can compute it from there. CA has too many taxes, 15.15% for employer taxes, plus 45% workers comp for carpenters, I'm not even touching the profit and contingency yet. In NJ setting, maybe it is half, maybe it's more. If you can hire someone average on what they do at 10/hr in NJ, then good! I doubt that will finish the project, though.

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