Rehab Quote

Rehabbing & House Flipping
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Rehab Quote

Tim C.
Atlanta, GA · Member since 2013 · 47 posts · 2 votes

Hi guys,

First of all thank you to everyone for posting such great info no this forum I've spent literally the last 48 hours searching threads on my area of interest and reading everything.

Just wanted to get everyones opinion on a rehab quote I"m currently getting. I'm a foreigner investing in Atlanta trying to handle everything remotely so I realize I WON'T be getting the best price on rehab quotes I'm merely trying to ensure I'm not paying a ridiculous 50% mark up or anything. I've crosschecked quotes with redbeacon.com and I'm OK with my quotes. What does everything think of what I'm getting quoted is it reasonable?

Reno of a 4 bedroom 1400 square townhouse. $11490 USD total. Mainly cosmetic repairs nothing structural.

I understand buying is only the first part of the equation in US I'm a buy and hold investor not a flipper want to ensure my places can rent well so I tend to want to renovate well so no issues renting.

KITCHEN: INSTALL NEW HANDLES ON CABINETS. INSTALL NEW BLACK REFRIGERATOR, ELECTRIC STOVE, DISHWASHER AND MICRO HOOD: $2325.00
PAINTING: PREPARE & PAINT ALL WALL SURFACES IN THE HOME. TOUCH UP THE TRIM AS NEEDED. PAINT EXTERIOR OF NEW FRONT DOOR: $2250.00
REPAIRS: INSTALL TWO NEW LOCKSETS ON THE EXTERIOR DOORS. INSTALL NEW FRONT DOOR (LOCK AREA DAMAGED). INSTALL 8 NEW WINDOW BLINDS. INSTALL 2 MISSING SHOWER CURTAINS & RODS. REPLACE ALL 3 WHITE ROUND TOILET SEATS. INSTALL 2 TP HOLDERS. INSTALL A TOWEL RING. REPLACE MISSING GFI COVER ON BACK EXTERIOR OUTLET: $1655.00
SYSTEMS: TEST THE PLUMBING SYSTEM & HOT WATER SYSTEM. REPLACE ELEMENTS & THERMOSTATS ON WATER HEATER. TEST THE ELECTRICAL SYSTEM. INSTALL A SECURITY CAGE ON THE EXTERIOR HEAT PUMP. HAVE THE HVAC SYSTEM SERVICED FOR PROPER OPERATION: $675.00
FLOORING: REMOVE THE CARPET FROM THE ENTIRE HOUSE. INSTALL NEW CLICK LOCK FLOORING ON THE MAIN LEVEL (EXCEPT THE BATHROOM). INSTALL NEW SHOE MOLDING & PAINT TO MATCH. INSTALL NEW CARPET & PAD ON THE STAIRS & UPSTAIRS LEVEL: $4085.00
CLEANING: HAVE THE HOUSE PROFESSIONALLY CLEANED TO LEAVE THE PROPERTY IN “SHOWROOM READY” CONDITION: $270.00 MISCELLANEOUS: INSTALL MISSING DOOR STOPS. REPAIR/REPLACE SMOKE DETECTORS. REPLACE MISSING LIGHT BULBS. INSTALL MULCH IN THE SMALL FRONT FLOWER BED:

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Jon Klaus
Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
13y

Just ask the contractor for references. If he's reputable he should give you a few. Call them and ask about their experience and opinion of value received.

How are you handling property management?

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  • Jon Klaus
    Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
    13y

    Repairs might be high, but it seems reasonable overall. Have you checked references on the contractor?

    0Reply
  • Tim C.
    OP
    Atlanta, GA · Member since 2013 · 47 posts · 2 votes
    13y

    Hi Jon,

    Thanks for your response. I'm using a wholesaler who is organizing all the repairs for me through an external contractor as I'm located offshore.

    This may be a stupid question but how do I check references on the contractor?

    I basically went through each item and compared to quotes on redbeacon.com and also got my girlfriend to call up the renovator and pretend to put a quote in for a similar apartment and it came in roughly inline with what he quoted.

    Thanks.

    0Reply
  • Jon Klaus
    Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
    13y

    Just ask the contractor for references. If he's reputable he should give you a few. Call them and ask about their experience and opinion of value received.

    How are you handling property management?

    1Reply
  • Andrea M.
    Real Estate Investor · Hampton, VA · Member since 2012 · 562 posts · 109 votes
    13y

    You can probably Google the contractor company name and in some states you check the state licensing website to ensure the contractor is licensed and in good standing, letter of reference with a contact number to verify.
    Since you are not local to the property,communication(weekly updates with before and after pictures) through out the entire process would be a main factor for me. Also, you may want to get a few quotes to compare pricing and materials that will be used.

    1Reply
  • Tim C.
    OP
    Atlanta, GA · Member since 2013 · 47 posts · 2 votes
    13y

    Again outsourced to the wholesaler i bought through. they also run and partner up with a local realtor.

    I've spent a lot of time doing due diligence on them i'm sure i've paid more what a local investor would in rehabs + purchase price but i plan to work with a few vendors long term put up the capital and have relatively hassle free rental properties as i'm located offshore.

    i'm flying to atlanta personally in 2 weeks to meet some people on the ground i'm also going to meet a few rental managers as a backup in case the guys i'm dealing with pack up shop and go home.

    any recommendations on property managers? i've mainly gone on the internet and done research off there looking at reviews i.e.

    http://www.kudzu.com/categoryMain.jsp?N=1132
    http://www.zillow.com/directory/Atlanta-GA/real-estate-agents/
    http://local.yahoo.com/GA/Atlanta/Real+Estate/Property+Management

    0Reply
  • Jon Klaus
    Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
    13y

    Maybe reach out to some of the Atlanta investors here at BP. Buy them lunch when you visit. A trust relationship in Atlanta will be very valuable to you. Have you looked at any of the turn key vendors?

    1Reply
  • Tim C.
    OP
    Atlanta, GA · Member since 2013 · 47 posts · 2 votes
    13y

    Unfortunately I only came across this forum after I bought. I'm open to new ideas but being an overseas I'm naturally cautious about turnkey operators.

    A lot of them marketing to overseas investors esp. in Australia. They buy properties, "renovate" them and market them to overseas investors after 50-100% increase from purchase price. This is pretty easy to check based on zilllow / records.

    It's quite difficult for an overseas investor to get good info about investing in USA, lots of spruikers out there. I'm recommending this forum to most of my friends who are looking to invest I found by far it's the best source of info as most of the contributors are investors themselves who was based locally.

    Cheers

    Tim

    0Reply
  • Prashant P.
    Real Estate Investor · Philadelphia, PA · Member since 2010 · 283 posts · 81 votes
    13y

    Some of these costs seem very high. I would try to contact a local handyman and see if he can help you bring down your costs. Since you are not local, you can try to contacting some members on BP. You could also use a service like Angies List, Superpages or the Better Business (BBB) to find a handyman.

    For example, your appliances for $2300 is very high. I think that can be done for around $1700 or less.

    1Reply
  • Aaron McGinnis
    Contractor · Atlanta, GA · Member since 2008 · 978 posts · 985 votes
    13y

    If the company you're buying through starts with Net and ends with Orth, you need to be very careful about their contractor recommendations. I've had no less than 4 investors come to me in the past month having screaming breakdowns because the contractor referred by that company did them dirty.

    Atlanta has a pretty great community. Check into Georgia REIA and Atlanta REIA, and if you're in town go to the Haves and Wants meeting on Thursday at 1:30 at the 5 Seasons at the Prado (I285 and Roswell road)

    Georgia has some interesting laws about contractors. Look your contractor up here -
    https://secure.sos.state.ga.us/myverification/

    In order to do work as a general contractor, the person needs to be licensed by the state of Georgia and carry insurance and a bond. If they say they are licensed, ask them for their license number and cross-check against the website above. If they will not provide you with a license or their information does not check out, RUN because they are already lying to you.

    Get a list of their active jobs and have someone local who is not involved in the deal drive by the jobs to see what they look like. Get phone numbers for past and current clients and CALL THEM. Make sure you get a copy of their liability with you named as the additional insured.

    Make sure that the contractor is going to pull the necessary permits. Make sure that the contractor isn't going to ask YOU to pull permits (Some contractors try this, despite the fact that it is very illegal in Georgia for a homeowner to pull permits unless they are an owner occupant, and even then there are often local restrictions as to what kind of work they can perform)

    Get quotes from 3 different contractors that WEREN'T recommended to you by the wholesaler. This isn't hard to do, and there are plenty of good, decent, reliable contractors in Atlanta who are easily google-able or referred by the local REIA groups. If you aren't doing this, then you aren't doing your due diligence. DO NOT trust ANY "Turn key" operation who claims to be doing your diligence for you.

    1Reply
  • Scott W.
    Real Estate Investor · chicago, IL · Member since 2012 · 1k+ posts · 231 votes
    13y

    $1655? that stuff i could do and i'm not handy at all. if he's replaceing the front door with the frame, i could see that costing a little extra but the rest should be no where near all of that IMO.

    0Reply
  • Mike Jakobczak
    Real Estate Investor · Toronto, Ontario · Member since 2010 · 413 posts · 114 votes
    13y

    I invest in Atlanta and this quote is high. But this is usually the case when you just start investing. Specially when your foreign to the area.

    I'd check the references for sure. Even get a few quotes.

    1Reply
  • Frank Iglesias
    Investor · Atlanta, GA · Member since 2011 · 79 posts · 38 votes
    13y

    Hi Tim. The quote is a bit high yes. I am a rehabber and wholesaler here in Atlanta and would love to meet with you if you come to town. You are welcome to contact me anytime. There are a lot of good people here in town but you do have to do your due diligence for sure especially on contractors. There are several good ones and several questionable ones.

    0Reply
  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
    13y

    Some thoughts on the pricing you received (keep in mind that you should probably add about 15% to the average costs to cover the fact that you're going to need a GC to manage all this for you...I don't include that in the price below):

    >> KITCHEN: INSTALL NEW HANDLES ON CABINETS. INSTALL NEW BLACK REFRIGERATOR, ELECTRIC STOVE, DISHWASHER AND MICRO HOOD: $2325.00

    This is definitely high, by about $500. Materials would be about $1400, and labor to install the appliances and hardware would be about $300 or so...

    >> PAINTING: PREPARE & PAINT ALL WALL SURFACES IN THE HOME. TOUCH UP THE TRIM AS NEEDED. PAINT EXTERIOR OF NEW FRONT DOOR: $2250.00

    Depends on the size of the home, but if this is basically just painting the walls (says just touching up trim), that seems high.

    >> REPAIRS: INSTALL TWO NEW LOCKSETS ON THE EXTERIOR DOORS. INSTALL NEW FRONT DOOR (LOCK AREA DAMAGED). INSTALL 8 NEW WINDOW BLINDS. INSTALL 2 MISSING SHOWER CURTAINS & RODS. REPLACE ALL 3 WHITE ROUND TOILET SEATS. INSTALL 2 TP HOLDERS. INSTALL A TOWEL RING. REPLACE MISSING GFI COVER ON BACK EXTERIOR OUTLET: $1655.00

    About $500 in materials and probably a days worth of work. If you pay your carpenter $25/hour, that's $200 in labor. So, that's high by about $1000.

    >> SYSTEMS: TEST THE PLUMBING SYSTEM & HOT WATER SYSTEM. REPLACE ELEMENTS & THERMOSTATS ON WATER HEATER. TEST THE ELECTRICAL SYSTEM. INSTALL A SECURITY CAGE ON THE EXTERIOR HEAT PUMP. HAVE THE HVAC SYSTEM SERVICED FOR PROPER OPERATION: $675.00

    Seems somewhat reasonable, especially given that a cage can be $200-300 itself. $125 for HVAC maintenance, $100 for water heater work, etc.

    >> FLOORING: REMOVE THE CARPET FROM THE ENTIRE HOUSE. INSTALL NEW CLICK LOCK FLOORING ON THE MAIN LEVEL (EXCEPT THE BATHROOM). INSTALL NEW SHOE MOLDING & PAINT TO MATCH. INSTALL NEW CARPET & PAD ON THE STAIRS & UPSTAIRS LEVEL: $4085.00

    Ridiculous! Demo and hauling maybe $250. Floating wood floors maybe $2.50/sf (unless he's given you something other than basic grade), carpet and pad installed should be less than $1.50/sf, and shoe mold at most should be $1/sf...maybe $1.50 if the paint cost isn't included above. I'll let you do the math, but if this is a typical rental house, I'm guessing you're paying WAY too much.

    >> CLEANING: HAVE THE HOUSE PROFESSIONALLY CLEANED TO LEAVE THE PROPERTY IN "SHOWROOM READY" CONDITION: $270.00

    Definitely a little high...

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  • Steve Babiak
    Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
    13y
    Originally posted by Jon Klaus:
    Just ask the contractor for references. If he's reputable he should give you a few. Call them and ask about their experience and opinion of value received.
    ...

    You do have to look into references. But almost always the contractor will limit those given to you to people who have been pleased with the work that was performed; rarely if ever will you be given the contact info for somebody who had a "negative" experience.

    I would look into whether there are any pending lawsuits (small claims and up) against the contractor. I would check into whether there are any existing convictions or judgments for this contractor, particularly if any were for taking deposits and failing to do any of the work that was paid ("theft by deception" is one of the charges for that). I would consider the parties to this type of lawsuit to be the "negative" references you might be seeking :)

    This part of the lesson you want to learn by reading, not by experiencing ...

    0Reply
  • Steve Babiak
    Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
    13y

    Try to get Aaron McGinnis to give you a quote :)

    0Reply
  • Randy F.
    Contractor · Anchorage, AK · Member since 2012 · 351 posts · 196 votes
    13y

    It just isnt possible to provide an informed opinion because we arent informed. Front door could be a fancy shmancy $1000 door with double side lights where the opening has to be rebuilt and toilet seats with gold inlays.

    If you want to know, ask contractor for a detail on material and labor costs.

    0Reply
  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
    13y
    Originally posted by Randy F.:
    It just isnt possible to provide an informed opinion because we arent informed. Front door could be a fancy shmancy $1000 door with double side lights where the opening has to be rebuilt and toilet seats with gold inlays.

    It's a $12K townhouse in Atlanta that will be held as a rental...we can make some assumptions... :-)

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  • Randy F.
    Contractor · Anchorage, AK · Member since 2012 · 351 posts · 196 votes
    13y
    Originally posted by J Scott:
    Originally posted by Randy F.:
    It just isnt possible to provide an informed opinion because we arent informed. Front door could be a fancy shmancy $1000 door with double side lights where the opening has to be rebuilt and toilet seats with gold inlays.

    It's a $12K townhouse in Atlanta that will be held as a rental...we can make some assumptions... :-)

    It's a $value unknown Townhouse with a $12K rehab. Assume all you like but if we dont get in the habit of asking for sufficient info, we'll continue to offer up opinions that may not be as good as they could be. Just sayin'. :c)

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  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
    13y
    Originally posted by Randy F.:

    It's a $value unknown Townhouse with a $12K rehab. Assume all you like but if we dont get in the habit of asking for sufficient info, we'll continue to offer up opinions that may not be as good as they could be. Just sayin'. :c)

    Ah yes, that's true...

    I think I probably had a bit more information than others. First, the OP specified in a separate thread where the houses are located, and if you're local to Atlanta and know those areas, you'd have a good idea of the houses :).

    Also, he disclosed some additional information about the properties to me in a personal email. Hence the detail of my responses.

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  • Dawn AnastasiPro Member
    Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
    13y

    J Scott would know, he wrote the book on rehabs ... literally!

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  • Tim C.
    OP
    Atlanta, GA · Member since 2013 · 47 posts · 2 votes
    13y

    Guys thanks heaps for all your detailed responses.

    Really appreciate it, I love the returns on the USA market and am more enthusiastic than ever!

    Wish I found this forum earlier so much awesome info out there and lots of assumptions I made offshore I now know are incorrect e.g. I was modelling 30% of expenses I didn't even hear about the 50% rule until I got onto this forum.

    Most guys I deal with model 20% so I thought I was being conservative plugging in 30%!

    0Reply
  • Naga A.
    Investor · Atlanta, GA · Member since 2010 · 186 posts · 14 votes
    13y

    Tim,

    I do not have any more advice to offer after you have got great advice from guys like J Scott and Aaron. I also invest in Atlanta and just wanted to say hi and good luck with your rehab project. You are doing the right thing to check everything rather than trusting in all the things that a turn key seller has to say.

    0Reply
  • Mike D'ArrigoPro Member
    Turn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
    13y

    Tim, if you're already over paying for the acquisition and rehab because you're remote, you may want to strongly consider Jon Klaus's suggestion of working with a turn-key provider. A reputable turn-key provider will do all of the work for you and you may not be paying that much more. It can be a safer route for someone that is out of the country.

    0Reply
  • Tim C.
    OP
    Atlanta, GA · Member since 2013 · 47 posts · 2 votes
    13y

    Thanks I've never really considers it but do u have a reputable one u can recommend?

    0Reply
  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
    13y
    Originally posted by Tim C.:
    Thanks I've never really considers it but do u have a reputable one u can recommend?

    I don't know of too many turnkey providers in Atlanta, but can certainly give you an idea of one or two you should stay away from...

    If you're interested in who those are, shoot me an email...

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