Hi I found a 8 units deal in Dallas and the listing agent said it needs complete renovations to the studs.

The building is built in 1929 ish, the electrical system and interior needs all updates. The roof also needs work.

I have not done such a rehab before and what is your advices, I know people say your first renovation should be just some TLC

not complete renovations. But I am just curious to ask if it is a doable thing, what is your view on it?

Is 30K a unit a reasonable cost to complete a unit? Thank you.

You are hoping for 240k total budget. Depending what needs to be done it could be much higher once the walls get opened. Also down to the stud can be complex. Although you might have a good set of contactors you will need to manage them well. You want to ensure that it moves forward at a good pace and work is not doubled up. For example the drywaller might cover the wiring before the electrician is done. Also you will want to look at the foundation and plumbing as well.  I would get multiple bids and ensure that you know what they going to do. I have had to go back to the contact and review it with the contractor because they did not think that they needed to repair / replace something that was agreed to previously. You will need to be very detailed oriented from the start. If this is your first deal you might want to talk about this with an experienced investor. 

That sounds like a very difficult project for someone without experience. Single family homes are a good way to work yourself up the rehab learning curve. That way you can build a team and familiarize yourself with costs without loosing too money. It’s impossible for a contractor to accurately quote on this sort of project without taking out the floors and walls. They may quote you and then see what’s underneath and then double the costs.

@Danielle Huang   My thought is anywhere in DFW I would probably be adverse to 1929 building that needs complete rehab.  There could be some good deals somewhere, but that sounds like a big project.   That's not common in Dallas.  Probably everything needs updated, not just systems....think about insulation for example.  Most of these are also wood siding exterior so require more than average paint for example.  Some places like San Francisco or Europe 1929 might be acceptable, here that is the rare exception.

The other consideration here for a building that old, is that it is a building that old....so normally unusually small apartments and small closets and some features you just can't fix.

I would really consider what your rental market is on that.  Who is your target?  What will they pay?   Then do the financials make sense?

@Philip M. @John Dean @Bruce Lynn   Thank you everyone for very valuable advices. I really value all the inputs because I cannot get those answers from people around me. Thank you very much.

So now if we buy something, there is still tenants inside not paying, can we still do renovations? 

How do people handle situation like that because of eviction moratorium.

 

@Danielle Huang    I would reach out to attorney's such as Ronald Rohde or Jared Elhert here on Bigger Pockets and in Texas.  So far we're thinking the eviction moratorium ends Jan 1, but of course could be extended.  It also depends on a lot of factors like what type of loan you have if any.  Also CDC guidelines have some requirements the tenants have to meet.  Many of the guidelines discuss non-payment of rent which is normal reason for eviction here, but some people have been able to evict for other violations.

Does everyone have a lease in place?  You could try raising the rent if they are on month-to-month to encourage them to move.  

Renovations are a balance....even though it is not expressly in most Texas leases, it is implied that tenants have the right to quiet enjoyment.  However you also have the right to reasonable access to their units.   Who knows how that plays out.  Just don't expect all tenants to be happy and cooperative with renovations that disturb their life and raise their rents.

@Danielle Huang    I would reach out to attorney's such as Ronald Rohde or Jared Elhert here on Bigger Pockets and in Texas.  So far we're thinking the eviction moratorium ends Jan 1, but of course could be extended.  It also depends on a lot of factors like what type of loan you have if any.  Also CDC guidelines have some requirements the tenants have to meet.  Many of the guidelines discuss non-payment of rent which is normal reason for eviction here, but some people have been able to evict for other violations.

Does everyone have a lease in place?  You could try raising the rent if they are on month-to-month to encourage them to move.  

Renovations are a balance....even though it is not expressly in most Texas leases, it is implied that tenants have the right to quiet enjoyment.  However you also have the right to reasonable access to their units.   Who knows 

Originally posted by @Danielle Huang :

@Philip M. @John Dean @Bruce Lynn   Thank you everyone for very valuable advices. I really value all the inputs because I cannot get those answers from people around me. Thank you very much.

So now if we buy something, there is still tenants inside not paying, can we still do renovations? 

How do people handle situation like that because of eviction moratorium.

 Typical lawyer response: It depends.

Seriously.  You look at the lease in place.  Sometimes you can move the non-paying T to a different unit to do renovations.  This doesn't have to be a newly renovated unit.  But for a straight up eviction for non-payment - not going to happen until the moratorium is up.  Especially if it is a "covered unit" (there's a list, but basically, if it is a government backed or paid loan).

Next time you see a project that needs work, first, talk to other investors to determine the renovations that give you the best return. It's not always cosmetic, and is usually something functional and/or structural, like a roof, or water heater, then maybe flooring and paint. 

After receiving adequate advice or conducting enough research, make a comprehensive list of the items you would like a contractor to work on. Be specific, but don't get carried away with the renovation.

Next: ask several contractors for a quote and walk them through the property so they can see what they're working with. Get quotes within 30 days that you would like to start work. Asking them 6 months in advance is not advantageous to anyone. It may seem like a good idea to start, but the condition of the unit can be completely different 6 months later, and the quotes will likely be reworked.

Check their referrals, talk to them, see how you feel about them :)

I hope this helps!