Contractors: Estimating a complete "gutting" and renovation

10 Replies

Situation:

There is a home in my neighborhood that has been unoccupied for approx 7-8 years but has been maintained (landscaping, taxes paid, etc) minimally and so is not noticeably so. The next door neighbors are friends of ours and knew the previous occupant, the elderly mother of the son (lives out of state) who now owns the property and have been informal 'stewards' of the property since. They have been inside the property several times in the last few years and have noticed burst water pipes and accompanying damage, mold, pests, etc. 

My question is does the likelihood of a complete tear out (down to the studs, new wiring, plumbing, drywall, flooring, windows, appliances, etc) make the project easier to estimate for a GC? My thought is that this situation does away with the nuances of a typical rehab, like determining what can stay or be fixed versus what must be replaced or refinished. Would simply having the square footage, floorplan/bedroom and bathroom count be sufficient to get a reasonable estimate sight unseen? I have been in contact with the owner and believe I have a chance at acquiring the property from him, but I have no idea how much a rehab on this scale would cost and thus have no idea what a fair offer would be to effectively BRRRR this property. We all know how difficult it is to get a GC to show up for a newbie investor who doesn't own the property!

Thoughts? Experiences?

@Matthew Krickeberg yes you can get a rough idea of cost over the phone based on size, bedrooms etc. An experienced GC or other investor can tell you that. However you will not be able to get a guaranteed price until they visit the property as a GC will see things you do not.

@Greg Dickerson

That makes sense, but if I go into it assuming a complete "tear-out" then by definition there is nothing (or very little left) to miss. No?

(As I write this it occurs to me that foundation or serious structural issues wouldn't be included in an estimate like that...)

Originally posted by @Matthew Krickeberg :

@Greg Dickerson

That makes sense, but if I go into it assuming a complete "tear-out" then by definition there is nothing (or very little left) to miss. No?

(As I write this it occurs to me that foundation or serious structural issues wouldn't be included in an estimate like that...)

That’s correct. The only unknowns would be what’s actually behind the walls once you open them up. You could have structural issues and electrical and plumbing issues you can’t see until you got the place. 

The full demo with new walls, insulation, electrical, plumbing, and drywall is one of the most expensive parts of rehab in a home. Are you planning on redoing the entire home or just where there is water damage? GCs can say whatever they want over the phone but you won't get a legit price until they come out to the site. 

If it's a tear down you should just call a demo company and ask them for pricing. In terms of GC's, you can call and ask what is the $/sf cost for the house you're building. There's also manufactured homes that could be eligible depending on the quality you're looking for which you can get from the manufacturer. 

I would tread lightly, I know that this seems like a great opportunity but I would consider partnering with someone on this if this came to fruition as your lack of experience could be a detriment to the project. 

One note that is important is do not give the address of the property to anyone - the city, GCs, agents, etc - until you have secured it yourself. Why wouldn't they go they it themselves and x you out of the deal? Thats just reality unfortunately. 

@Matthew Krickeberg

There’s no such thing as an accurate estimate that is ‘unseen’. There are too many variables even if you know it’s a lot of work and a complete gut job there will always be something that can pop up and change an estimate. That’s why they call it an estimate because even the best contractor knows that anything unexpected can happen.

Get multiple quotes from GC’s if you don’t have one already and walk through the place with them. Anything else is a gamble.

Nobody has x-ray vision. So until it is down to the studs surprises can still be hidden.

Think carefully about if you NEED to do this or just WANT to take it down to the studs. If not really needed it will only increase your rehab cost significantly and not provide much benefit to the value of the property. Find a way to not take it all down to the studs. Maybe just the reas needed. You be better $$ for it IMHO.

@Lien Vuong

Thanks for the insight, I hadn't actually been considering a tear DOWN, but its something to think about. A project on the scale of what I may have here is definitely beyond my comfort zone. I'll be attending my first local REIA meeting in the next week and hopefully I can get a few names of reliable GCs, flippers/rehabbers and lenders to help me assess what I may have here.

And I've been careful to keep the address and names out of the conversations!

@Tony Gunter

No doubt, as I said I'm just planning for the worst. I wouldn't do anymore than is necessary to make it safe and profitable for the long term.

Sure, it would be easier to estimate, but no one will give you a sight unseen bid.

I personally think a gut makes all sorts of things simpler. It can also add a huge amount of unnecessary expense.

Only way to figure it all out is to go there and figure it all out.

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