How much can $20,000 in rehab can you complete in your area?

Question

Im from canada and ive been emailing another investor in the U.S and she was telling me my $15000 rehab costs were too low. 15k for her would be paint and carpets. Thats it. For me 20 grand would be 2 bed rooms, half bath and kitchen.

How far can you rehab with 15-20 thousand in your area?

Lam N. · Answer

We spent $13k to renovate the entire house, including gut jobs for kitchen and bathroom. We bought the property for 84k. Spent 13k total to renovate. And we're talking about a brand new central AC, brand new 40 gallon water heater, brand new ceiling fans, brand new wood and porcelain flooring, brand new bath tub and toilet, etc. We just sold it for 162k.

Christopher K. · Answer

If they were referring to literally just paint and carpet alone, and nothing else, then yes .. $15k is probably high (unless it's a huge house, in which case it might be about right with labor and materials on paint and good quality carpet and pad). And certainly, the price range of the house or neighborhood you're dealing in should dictate the level of fit and finish, and so material costs can vary immensely. I can spend $15k - $20k a whole lot more easily on a $125k ARV house compared to a $350k-$500k one.

However, my guess is when the other person said 'paint and carpet', they probably meant what I do when I say paint and carpet in the context of a rehab. Some people call it fluff 'n stuff, lipstick on a pig, or they oversimplify and just say 'paint and carpet'.

When I refer to a property as a paint and carpet house, I'm usually saying that there's nothing note-worthy/major that needs to addressed with structural (foundation, roof, windows, etc), siding, mechanical (HVAC), electrical, or plumbing. It would typically also mean I'm not having to address things like insulation or building permits, or contend with higher ticket items like replacing the kitchen cabinets or gutting bathrooms and the like.

With all of that said - having completed several dozen flips/rehabs and doing it as a full time job, I haven't run across many (any) houses that only needed strictly paint and carpet and nothing else. Minimally, every single rehab I do gets new light fixtures, switch and outlet covers, and basic or 'front facing' plumbing fixtures (faucets, valves, usually toilets, etc) and some sort of sprucing up on the landscaping. Also, even if the HVAC system is nearly new or recent, I still have a licensed HVAC contractor come out and do a thorough system clean/tune-up and give me a nice letter saying everything is good to go..that's another $400. Very rarely do I not replace the kitchen countertops or swap out vanities and mirrors in the baths. How about interior doors or trim? Gutters? Appliances? Even if it's a purely cosmetic reno, demo can add at least a few hundred, if not several hundred, to the job by the time you fill up a dumpster or three. Thermostats, towel bars and other bath accessories, doorbells, mailboxes, house numbers, pull chains, closet shelving, garbage disposals, light bulbs, final cleaning, and all of the other little details can all start to add up on you if you don't plan for them. I could keep going listing off potential costs but I won't.

It's very much about context as well. So if I were to say paint and carpet and I was talking about a rehab for a rental property (aka buy and hold), it could very possibly be much closer to purely paint and carpet, not including the inevitable punch list type of items. As my focus then isn't so much on maximizing its immediate value and minimizing DOM, but is more on making the place nice, clean, and livable, while at the same time trying to minimize expenses and maximize my cash flow/ROI. But even on a buy and hold, it's still almost never solely carpet and paint.

I could be doing any or all of the various items mentioned above, maybe more, and still refer to it as a paint and carpet house. Obviously people can mean a variety of things when they use industry terms like these but for anyone not super seasoned out there, I figured it was probably worth mentioning that when I think of a house as paint and carpet - it speaks more to what I'm NOT doing to a house versus what I am, if that makes sense. And most of my colleagues I know in the business often use the term in a similar manner.

It's also a lot easier to forecast or 'theoretically' spend $15k - $20k on a house up front, either in your head or on paper (before you've started a project, by missing some or many of the myriad of details, all of which can really add up) - than it is to actually spend $15k - $20k on a house (when you're at the end of a project looking back at every dollar you ended up spending on the whole project).

I bet I could look at any given investor's Scope of Work at the beginning of a project or before they've started the job, and know in less than 3 minutes whether they've ever actually flipped a house before, or if they've only ever done one or two from start to finish. As anyone versed at all in project management can tell you - the plan is the thing.

Which is why I try to encourage new investors to more often refer to a rehab as a 'project', rather than a 'deal'. The terminology might seem subtle but I think it helps begin to gear your mind and expectations more towards reality, especially during the early or planning stages of a flip. Don't get me wrong, the deal part matters. It matters a whole lot. The numbers have to be there and be as accurate as possible. But a big (and prob. most commonly overlooked) component of competently analyzing the #'s and dealing in reality, is knowing about how much an entire rehab project is really going to cost you (and then don't forget to add 15% to that).

So long story long, for me $15k or $20k can evaporate really fast these days even on the basic rehabs (a la paint & carpet).

Short answer is that if I'm flipping, and the house is A) under 1,400 - 1,500 square feet ; B) the ARV is towards the more economical side of the market ; and C) it's either been built within the last 10 - 20 years and/or it's been maintained impeccably - it's possible for me to spend around $20k. But I run across very few properties that meet all of those criteria AND have decent #'s/margins. At least in my area.

Arianne L. · Answer

Let's pretend it's a 1200 sqft house in FL with an ARV of less than 200k. I can remodel the kitchen (new cabinets, countertops, appliances 8k), interior paint (2.4k), flooring (3.6k), spruce up the bathrooms with new vanities (500), rent a dumpster (500) for a total of $15k

Will Barnard · Answer

As others eluded to, this question is so broad that the answers will be even more broad and essentially worth little to nothing. What I can do here in Los Angeles is different than what you can do in Los Angeles, itbis different than what I can do in Tx, or Vegas, or etc etc. On top of that, the size of the house and the price point (which determines the quality and price of materials needed) ranges greatly.

I suggest you format your question with more precision and an actual case study to get better results in these answers.

Patrick Philip · Answer

$15,000 is paint and carpets? What planet does she live on?

Jessie Huffey · Answer

We did mid-grade new cabinets, quartz counter tops and backsplash, and paint for our kitchen sized 15ft by 15ft for 10k (already had appliances) and a gut job on our standard size bathroom for 5k with tile surround on the tub/shower combo. We didn't pay any labor fees as my contractor husband did all the labor. You could probably add 25%- 30% to those costs if you were paying for the install.

Nicholas W. · Answer

The thing is you're going to get answers all over the place.

What impacts the cost of a rehab, more so than geographic location, is the quality. You can buy really cheap stock cabinets, laminate counter tops, and 79 cent per square vinyl and do a smaller kitchen for a few thousand dollars. If you opt for quality cabinets, stone counters, tile backsplash, under cabinet lighting, and $5 per square tile floors where you'll spend $15k on the kitchen alone regardless of the area you're in.

Christopher Phillips · Answer

@Lee Cruz

Small bathroom (tub/sink/toilet) full gut around $9,000. $15,000 for a large bathroom. Depends on the tile job needed and the materials used.

$10,000 to $15,000 for a small kitchen job. Modest materials. $35,000 plus for a large kitchen with custom cabinets and high-end counter tops and appliances.

$15,000 would be paint and carpet and some other cosmetic items.

How much can $20,000 in rehab can you complete in your area?

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