My first flip, detailed adventure

My first flip, detailed adventure

Member since 2009 · 61 posts · 9 votes

Last week I put under contract a real fixer upper. 140 year old all cypress framed ~1250 sq ft. 3/1.

I have it under contract for $16,500. Comparables in the area are selling in the $80-90,000 range, average listing time is ~2 months. However our's has a fireplace which is not normal for this price range, so I feel we will sell quickly.

Here are the pictures.

http://s263.photobucket.com/albums/ii132/bigbadjonv/House%20purchase/

The house had been updated in the early 80's, and is being sold by the same owner. She rented it out to some people who demolished it.

So far, we've already had an inspection, everything came back fine except some outlets are grounded, and some aren't. Also the hot water heater's and furnace's pilot lights aren't turning on.

The furnace has a lot of rust because it hasn't been turned on in two winters. I'm hoping a service person can come out and clean it up and it will magically start working again, if not we are going to have to replace it. The HVAC was put in 1996.

We are closing on this coming Tuesday, we are basically re-dry-walling everything and reflooring as well. I have setup in our budget a "minimum" and "everything" column and we will assess the best option as we go along.

Here is my current budget, it's kind of rough atm.

https://spreadsheets.google.com/ccc?key=0AtKJIUDSMuNCdDJEeWlIeS1hQV9tcDlJNzdIaDNzS3c&hl=en&authkey=CPjViVg

The neighborhood has had sales directly across the street for $150-180,000 but they are larger houses (+2,000 sq ft.). It is a safe family friendly neighborhood in small town America.

I've also posted this on another forum. I look forward to talking about this flip. As long as my wife and I break even, we will be ok as we've wanted to do this for a LONG time.

It also helps that the neighborhood is the same that I grew up in, and I REALLY want to make this a good home that will attract a family that will help retain the value of the neighborhood.

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Contractor · Atlanta, GA · Member since 2008 · 978 posts · 985 votes
15y

I concur that this house looks like a total gut.

Off the top of my head...

I'd plan to replace all the windows. 'Round my parts, that's $179/window or thereabouts for vinyl Low-E.

I'd expect to rewire entirely or significantly to bring the house to code and as a safety factor. Hodgepodge wiring, IMO, is rarely worth saving.

Have you pressurized the plumbing? I'd expect most of the plumbing to simply go kerplunk on you the instant you put pressure on the lines... or at least for the shutoffs to leak horribly. I'd also expect the drain lines to be suspect.

Forget fixing roof leaks. If the roof is old and a-leakin' one place, it's probably systemic. I'd plan for a replacement.

You lack door hardware. New hinges and doorknobs do a lot to spruce up a place like that.

I assume your flooring price is 100% carpet. What about tile in the kitchens and bathrooms? Tile is not $2.39/ft after labor.

Your sheetrock price is pretty low. I figure about $13-15/board, at about $6/board plus mud. But then, I treat labor differently...

Speaking of labor - if you're planning for one sole guy, and maybe his helper, come in and do this job... I estimate that you'll get done before the sun goes supernova. Maybe. You've got an incredible amount of labor just in small things like doors, floors, and sheetrock. To say nothing about plumbing, electrical, roofing, etc.

If I've reverse-engineered your labor number correctly... It looks like you've simply said... 8 weeks of labor, 40 hours a week, at $25 an hour.

Simply put, I'm not sure that you've got nearly enough labor here. Especially not if you're using someone who is general-purpose, and not using specialists for things like electrical and plumbing.

I see in your pictures that there is definitely some carpentry to be done. In a structure that old, you're going to be running into dry-rotted wood, dead superstructure, and other nasty surprises left and right. You need a budget for carpentry, and most importantly you need a carpenter who is competent to work on a building that old.

Photo #5 looks like maybe that's asbestos ceiling tiles. You need to check into it... if that is asbestos, you need to factor for correct removal of the material.

With HVAC closing in on 15 years old, I'd probably plan for replacement. I'd also expect a new water heater to be a requirement.

Back to windows... without seeing them, I'd say you should probably count on, at the very least, reglazing them. Reglazing can turn into an enormously labor-intensive job all by itself. I normally just avoid that issue by replacing the windows.

Doors are the same way. Those are no doubt the awesome, old-school, solid-core 5-panel interior doors made of awesome and badassery.
They're probably also dinged, scraped, and chipped up. Consider the fact that to make them look nice, you or someone you're paying will have to spend HOURS AND HOURS with bondo, wood filler, a palm sander, and then paint to make them look good again. This can turn into a very costly endeavor.

On the flip side, a nice, new, masonite pre-hung door should only run you about $50 (At least, that's what it costs me) and should take a good carpenter approximately 10 minutes to nail in place. It can very easily be cheaper to replace old doors than to fool around with them for hours upon hours trying to make them look good again.

I can't quite tell from the pictures - is there a layer of plywood over the old floors, or is that luan subfloor? In either case, you seriously need to look at the floor from the crawl space and try to determine if someone in years past put that flooring there because the old floor and old joists had started to rot out for some reason.

If the original subfloor and joist are rotting... then hold on to your hat, because the whole thing is going to get seriously expensive in a big hurry and your cosmetic rehab job will have suddenly turned into a structural rehab job.

You need to seriously consider your dumpster cost. A job of this size could pretty quickly turn into more than one dumpster. (Actually, it's hard to do much with just one dumpster. Rarely have I run a job that didn't take at least 2)

Uhh, I guess I'm kinda turning this into a word-wall, so I'll stop now. Needless to say, you've got yourself one heckuva first project! I'll be most interested in your follow-up posts.

See this reply in the discussion

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  • Member since 2009 · 61 posts · 9 votes
    15y

    With that being said, I do have a question in regards to old windows. They are all structurally fine, they do have a bunch of dings and old paint. What is the best way to tackle these things? There are a few storm window panes missing and interior window panes missing but nothing screams "replace me".

    Should we just putty, sand, and paint them all?

  • Investor · CA · Member since 2010 · 150 posts · 40 votes
    15y

    Holy Cow, you're going to have quite a job in front of you.

    Are you doing everything alone? Do you have a team? What's your experience level?

    What's your exit plan? When do you want it done by? I've requested access to the numbers, since you don't have it shared as open.

    Once I see the numbers, it'll make more sense to see what you do.

  • Member since 2009 · 61 posts · 9 votes
    15y

    https://spreadsheets.google.com/ccc?key=0AtKJIUDSMuNCdDJEeWlIeS1hQV9tcDlJNzdIaDNzS3c&hl=en&authkey=CPjViVg

    See if that works, it should be open to anyone, you can't make changes, but you should be able to see #'s and formulas.

    I have zero experience other than personal home renovations.

    I will have a contractor doing everything except possibly some landscaping. The contractor has been a father figure to me for 17 years (since I was 11) and has been doing this for a long, long time.

    From seeing his work, and knowing how much personal renovations have cost me, I know he is affordable and reliable.

    Six months is the timeline I would like to have it completely sold by.

  • Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
    15y
  • Real Estate Investor · Milwaukee, WI · Member since 2008 · 1k+ posts · 671 votes
    15y

    That house should have all new low-e windows for resale. I even put these in my rentals. 130 yr old windows suck and if you are going to spend more than a few bucks on them and they are not part of the character I would get new ones.

    From the pictures the place looks like a total gut. Are you planning to rewire the whole house. It does not look like the wires are up to code (not enough outlets).

    A job this size would cost me about 50-75k depending on the finish. I don't know what the other houses around there look like though.

    Have the mechanicals been updated? Is there a sag in the floors in the middle or is that door just off?

  • Member since 2009 · 61 posts · 9 votes
    15y

    The door is off, it actually fell off the hinges last time we were in there.

    Everything was updated in the early 80's. The roof is about 5-10 years old.

  • Real Estate Investor · Milwaukee, WI · Member since 2008 · 1k+ posts · 671 votes
    15y

    Those windows are not from the 80's?

  • Member since 2009 · 61 posts · 9 votes
    15y

    And there are enough outlets, my wife just happened to not get them all in the pictures.

    As for rewiring, I'm going to go with what the contractor says to do.

    Everything is pretty easily accessible and when they get everything torn out it won't be too bad getting everything redone.

    The electric panel has been upgraded in the last twenty years (I'm guessing when they installed the HVAC) and has enough room for more breakers.

  • Landlord · Seattle, WA · Member since 2010 · 3k+ posts · 1k+ votes
    15y

    Look forward to hearing about your experience. I suspect there will be a number of surprises this being your first rehab, but it sounds like you may have a competent contractor to get you through.

  • Member since 2009 · 61 posts · 9 votes
    15y
    Originally posted by Jeffrey K.:
    Those windows are not from the 80's?

    I'm not sure about the windows, I'm guessing they are much older, they are the kind with ropes on them, so I guess by "everything" I mean "a lot".

  • Real Estate Investor · Milwaukee, WI · Member since 2008 · 1k+ posts · 671 votes
    15y

    Hope it goes well for you. Let us know how your numbers end up.

  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
    15y

    I think I provided my feedback in the other forum, but I'm glad you brought it over here as well...I'm looking forward to following your progress!

  • Investor · Southlake, TX · Member since 2009 · 950 posts · 338 votes
    15y

    140 yrs? Way to jump on in the deep end!

    I've heard cypress is so valuable and durable that they pull old cypress logs out of the swamps and lakes that sunk during logging over a hundred years ago.

    Congrats on your first deal. What area of the country are you in?

  • Member since 2009 · 61 posts · 9 votes
    15y

    I'm in Arkansas

  • Investor · St. Louis, MO · Member since 2009 · 153 posts · 44 votes
    15y

    J Scott: care to post your feedback here as well?

  • Contractor · Atlanta, GA · Member since 2008 · 978 posts · 985 votes
    15y

    I concur that this house looks like a total gut.

    Off the top of my head...

    I'd plan to replace all the windows. 'Round my parts, that's $179/window or thereabouts for vinyl Low-E.

    I'd expect to rewire entirely or significantly to bring the house to code and as a safety factor. Hodgepodge wiring, IMO, is rarely worth saving.

    Have you pressurized the plumbing? I'd expect most of the plumbing to simply go kerplunk on you the instant you put pressure on the lines... or at least for the shutoffs to leak horribly. I'd also expect the drain lines to be suspect.

    Forget fixing roof leaks. If the roof is old and a-leakin' one place, it's probably systemic. I'd plan for a replacement.

    You lack door hardware. New hinges and doorknobs do a lot to spruce up a place like that.

    I assume your flooring price is 100% carpet. What about tile in the kitchens and bathrooms? Tile is not $2.39/ft after labor.

    Your sheetrock price is pretty low. I figure about $13-15/board, at about $6/board plus mud. But then, I treat labor differently...

    Speaking of labor - if you're planning for one sole guy, and maybe his helper, come in and do this job... I estimate that you'll get done before the sun goes supernova. Maybe. You've got an incredible amount of labor just in small things like doors, floors, and sheetrock. To say nothing about plumbing, electrical, roofing, etc.

    If I've reverse-engineered your labor number correctly... It looks like you've simply said... 8 weeks of labor, 40 hours a week, at $25 an hour.

    Simply put, I'm not sure that you've got nearly enough labor here. Especially not if you're using someone who is general-purpose, and not using specialists for things like electrical and plumbing.

    I see in your pictures that there is definitely some carpentry to be done. In a structure that old, you're going to be running into dry-rotted wood, dead superstructure, and other nasty surprises left and right. You need a budget for carpentry, and most importantly you need a carpenter who is competent to work on a building that old.

    Photo #5 looks like maybe that's asbestos ceiling tiles. You need to check into it... if that is asbestos, you need to factor for correct removal of the material.

    With HVAC closing in on 15 years old, I'd probably plan for replacement. I'd also expect a new water heater to be a requirement.

    Back to windows... without seeing them, I'd say you should probably count on, at the very least, reglazing them. Reglazing can turn into an enormously labor-intensive job all by itself. I normally just avoid that issue by replacing the windows.

    Doors are the same way. Those are no doubt the awesome, old-school, solid-core 5-panel interior doors made of awesome and badassery.
    They're probably also dinged, scraped, and chipped up. Consider the fact that to make them look nice, you or someone you're paying will have to spend HOURS AND HOURS with bondo, wood filler, a palm sander, and then paint to make them look good again. This can turn into a very costly endeavor.

    On the flip side, a nice, new, masonite pre-hung door should only run you about $50 (At least, that's what it costs me) and should take a good carpenter approximately 10 minutes to nail in place. It can very easily be cheaper to replace old doors than to fool around with them for hours upon hours trying to make them look good again.

    I can't quite tell from the pictures - is there a layer of plywood over the old floors, or is that luan subfloor? In either case, you seriously need to look at the floor from the crawl space and try to determine if someone in years past put that flooring there because the old floor and old joists had started to rot out for some reason.

    If the original subfloor and joist are rotting... then hold on to your hat, because the whole thing is going to get seriously expensive in a big hurry and your cosmetic rehab job will have suddenly turned into a structural rehab job.

    You need to seriously consider your dumpster cost. A job of this size could pretty quickly turn into more than one dumpster. (Actually, it's hard to do much with just one dumpster. Rarely have I run a job that didn't take at least 2)

    Uhh, I guess I'm kinda turning this into a word-wall, so I'll stop now. Needless to say, you've got yourself one heckuva first project! I'll be most interested in your follow-up posts.

  • Member since 2009 · 61 posts · 9 votes
    15y

    Thanks a lot for the feedback Aaron!

    We are planning on replacing all interior and exterior doors. The roof is in good shape, it's ~5-10 years old, just there is one area in the back where there is a small leak from someone sticking something through the roof.

    Labor is very cheap in this area, including good labor. $1,250 a week will get you 2 workers and the contractor overseeing the project.

    For the skill intensive ones my contractor knows everyone in town and will pick the most cost-efficient, reliable one.

    Flooring is all laminate hardwood, except the kitchen and bathroom, we've already purchased it for $2.39. (After tax) I did not include labor in the $/sq ft as the labor is all done by the contractor and his workers and is done by the week.

    There is a layer of plywood over the old original pine floors. They had put carpet on top of the old floors. It is not rotting.

    Thanks for the rest of the advice.

  • Investor · CA · Member since 2010 · 150 posts · 40 votes
    15y

    Much like stocks, make sure you have your exit strategy prior to your enter strategy.

    It's easy to buy a stock, it's hard to know when to sell it. You want to have that plan for winning / losing scenarios.

    It sounds like you've done your share of the home work, and I'm interested in following your progress.. so make sure you keep us updated.

  • Des Moines, IA · Member since 2010 · 44 posts · 14 votes
    15y

    @Jonnyv88 - I am excited to see how this works out for you. Good luck and keep us all posted.

    It looks like there is a lot to learn from people in this forum!

  • Investor · Little Rock, AR · Member since 2010 · 628 posts · 251 votes
    15y
    Originally posted by Jonnyv88:
    I'm in Arkansas

    Really??
    I have felt like the lone stranger on these forums coming from Arkansas. The local REI club is meeting at Larry's Pizza on Cantrell (Little Rock) tonight @ 6:30. Love to see ya there. Wife and kids are welcome.
    Don

  • Member since 2009 · 61 posts · 9 votes
    15y
    Originally posted by Don Hines:
    Originally posted by Jonnyv88:
    I'm in Arkansas

    Really??
    I have felt like the lone stranger on these forums coming from Arkansas. The local REI club is meeting at Larry's Pizza on Cantrell (Little Rock) tonight @ 6:30. Love to see ya there. Wife and kids are welcome.
    Don

    Hey! I'd love to come but I'm working late until the end of April. (I'm a CPA and it's tax season)

    Do you have a mailing list I can join or anything? I'm definitely interested in joining the group.

  • Member since 2009 · 61 posts · 9 votes
    15y

    I should have pictures later today or tomorrow of demo work. We took plenty, it's just my wife stayed in the town with the demo and camera and I had to come back for work.

    Demo is coming along, line of credit is all setup, and we've got all the plans mapped out. (for now)

    When I post pictures of demo work I'll explain what we are doing to the house.

    We also went and saw the inside of the house here: http://s263.photobucket.com/albums/i...view=slideshow

    We also had the realtor listing that house who is a family friend of my wife's come in and look at ours.

    The comparable had issues getting financed I talked about earlier. One of the issues they'd ran into is peeling paint on windows, and, unfortunately it looks like we are going to have to replace all the windows in our house (~15). (You were right Jeff) So that's going to be another $2500-3000. My contractor can do all the labor so hopefully he can find time to do that in conjunction with other projects.

    The comparable also had really really bad flooring, it looks fine in those pictures, but it's all dinged to hell and very very weak in spots. There is no subfloor either in the comparable. Their carpet is pretty terribad and honestly our's will have 10x the finish when we are done.

    She said our's would sell much faster with the fireplace. Our bedrooms are literally almost 1.5x bigger as well.

    The wife is picking out windows and interior doors/frames/jambs this morning.

  • Full-Time Investor · Charlotte, NC · Member since 2009 · 2k+ posts · 1k+ votes
    15y

    that's a new word for me... i guess terribad = terribly bad..lol...i will use that!

  • Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
    15y
    Originally posted by Jonnyv88:
    ...

    We also went and saw the inside of the house here: http://s263.photobucket.com/albums/i...view=slideshow

    ...

    The website address that you gave, and that I have in the quote, does not work for me ...

  • Member since 2009 · 61 posts · 9 votes
    15y
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