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.

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  • Member since 2009 · 61 posts · 9 votes
    15y
  • Real Estate Broker · Fort Pierce, FL · Member since 2009 · 221 posts · 95 votes
    15y

    That looks like an episode of "This Old House"!

    Definately keep up posted.

  • Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
    15y

    OOPS, doesn't look like ANY lead safe practices are being followed here ...

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

    I have not seen too many guys doing any of that stuff. At my local HD all of the Vacs are on clearance for $50 (less than a good ridgid). They were priced at over $600 to start.

    People can't follow all of those rules and still make a living.

  • Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
    15y

    Jeffrey,

    You're in WI - supposedly, that is the state with the STRICTEST set of rules, far exceeding the EPA rules (from what I was just told yesterday by some training outfit that has supposedly prepared training materials for use there). So, you have the EPA, plus your state DEP, to go about enforcement.

    I agree it is a PITA ... but so is staying below the speed limit sometimes ...

  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    15y

    Oh people will come into compliance when they start getting hit with heavy fines.The FED is starting to hand off enforcement duties to the states.

    The fines are very high.

    I looked at the pics and please don't tell me you are keeping those crappy kitchen cabinets. Those really need to go.Painting and replacing knobs many buyers these days are keen on that trick and it's been used up.

    Also looking underneath the foundation it looked like one of the columns needed shoring up and the brickwork was deteriorating and would need some repair as well.

    I would totally redo the tubs and the kitchen.Kitchen and Baths sell a home and you don't want to give a retail buyer a negative as to why NOT to buy it. (Refaced old tub,refaced old kitchen cabinets)

  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    15y

    You sure picked a doosy for a first but I guess all the other ones will be cake from now on!! LOL

  • Investor · Key West, FL · Member since 2011 · 127 posts · 29 votes
    15y
    Originally posted by Jonnyv88:
    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

    Wow what an incredible purchase price!! Unfortunately those prices are unheard of in my area :(

  • Member since 2009 · 61 posts · 9 votes
    15y
    Originally posted by Joel Owens:
    Oh people will come into compliance when they start getting hit with heavy fines.The FED is starting to hand off enforcement duties to the states.

    The fines are very high.

    I looked at the pics and please don't tell me you are keeping those crappy kitchen cabinets. Those really need to go.Painting and replacing knobs many buyers these days are keen on that trick and it's been used up.

    Also looking underneath the foundation it looked like one of the columns needed shoring up and the brickwork was deteriorating and would need some repair as well.

    I would totally redo the tubs and the kitchen.Kitchen and Baths sell a home and you don't want to give a retail buyer a negative as to why NOT to buy it. (Refaced old tub,refaced old kitchen cabinets)

    We are gutting the kitchen and the bathroom, everything will be new.

    Here is a picture of everything gutted in living/dining/kitchen

    Here is what the kitchen will look like. (This isn't final but somewhat like this)

    We aren't sure of the layout, we are thinking between these two ideas:

    Anyways, that's where we are. All the underneath stuff will be taken care of as well. The budget has definitely ballooned "a bit". My wife and I have said since the beginning that if we break even we will be happy as we've wanted to do this for a long time.

    Keep the comments coming.

    If anyone has a vote on which kitchen layout to do, let me know, we are having problems deciding.

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

    I can't really read the dimensions on your sketch, but I will say this - center the island to the space and create the open-galley style kitchen. Putting the island on one side or the other would be painfully 1990's.

    The other option would be to make a horseshoe layout, which would have far and away the most cabinets but also be the most expensive and a bit out of "builder style"

    Put the sink in the island and the stove on the wall. Lose the window.

    OR, if you're really feeling spendy - put the sink on the wall and use a hanging island range hood and a slide-in stove on the island. We've done this before, but the hanging island range hoods are really expensive compared to a standard microhood or even a basic wall-hood.

    Another option would be to make you island a bit smaller and have the cabinetry run along the wall that doesn't have the window - have a short run stemming off a corner lazy susan and put your refrigerator there and a pantry unit on the back wall in the left corner.

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

    Thanks for the ideas. We can't run things on the wall w/o the window (the right if you are looking at the picture) as that has the only entry to the back foyer/mudroom/laundry room.

    I don't have exact dimensions on hand but I believe the wall is about 14-16 ft' wide.

    http://i263.photobucket.com/albums/ii132/bigbadjonv/outlineofhouse.png

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

    Here's the progress to date with pics of before, during renovation, and current; three months in, another month to go.

    http://s263.photobucket.com/albums/ii132/bigbadjonv/new%20and%20old/?albumview=slideshow

  • Real Estate Investor · Springfield, MA · Member since 2009 · 142 posts · 103 votes
    15y

    Looks like it's coming along nicely.

  • Real Estate Investor · Cincinnati, OH · Member since 2011 · 119 posts · 59 votes
    15y

    So how do you think you've done looking at your original plans and numbers? Any surprises? How much did it really cost you for the windows?

  • Member since 2009 · 61 posts · 9 votes
    15y
    Originally posted by Jim Stardust:
    So how do you think you've done looking at your original plans and numbers? Any surprises? How much did it really cost you for the windows?

    Original plans = pretty much gone.

    We spent more in these areas than we initially thought:
    -Open floor plan redesign
    -House rewiring
    -Windows
    -roof leak

    However I did make one good mistake. And that was under-pricing the house. It's going to turn out much nicer than we expected (from what we can tell) and the sales price should be about 5k higher than our first estimate.

    All in all, we initially thought, best case scenario:
    Purchase Price = $16,500
    Renovation (labor materials etc)= $30,000
    Holding Costs = $3,000
    Total = $49,500

    Turns out it's looking closer to:
    Purchase Price = $16,500
    Renovation = $37,500
    Holding Costs = $7,000
    Total = $61,000

    Or 23% over budget total.

    That doesn't include a realtor fee or closing costs for buyer.

    Sales price will likely be in the 75-80k range.

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