Austin, TX - Contractor for light flip
Hello all,
I'm a newbie investor (I currently own one triplex) living in Austin, TX. I am under contract for a live-in flip in Austin. It's a relatively "light" flip which is what I was seeking as my first attempt at flipping. My plan is to try to do some of the work myself so I can learn, and then outsource some of the work (knocking down a couple walls) so that I can get some experience managing contractors and ensure the larger projects are done properly. My plan is to hold the property and live in it for 2 years before selling. I'm looking for any advice in managing through this and recommendations of contractors in Austin, TX.
Here's some more numbers:
I'm purchasing the property for $524k (3bd, 3 bath, 2100 sqft, built in 1985 in the NW Austin area)
Estimated repairs: $30k (open one kitchen wall up, new appliances, new man made countertops painted cabinets, new vinyl flooring throughout, new paint throughout, remove popcorn ceilings.)
ARV: 585k
Thanks all!
Congrats! Where are you getting your estimate for repairs? Make sure you get to know your contractors. Labor is going to be your issue followed by finding and managing the right tenant.
Thanks @Nina Hayden! The estimate is very rough... I just used photos and discussed with an out of state contractor I’ve worked with on my out of state triplex, so very rough!
Our next step is to bring in a few contractors to firm up our estimates. The reason I was comfortable doing this after the option period is that I’ll be using this place as my primary residence for a couple years before selling, so it’s not solely intended to be an investment.
thanks for your insight!
Ok, makes sense as interest rates are low. I do like that you’re going to be hands on so that you can stay on top of it all. Who manages your tenants on your other ones? If you need someone wort me know.
Removing popcorn might be a good skill to start a diy skill set. If Empty house no good floors. It isn't difficult unless it has been painted with gloss paint. flat paint can make it easier as the paint film holds it together. gloss paint and you have to knock the tips off the peaks and drench it to get it wet enough to remove. garden hose even. There are plenty of directions online. I use a pump sprayer and water. I did buy popcorn remover for a really heavily painted ceiling once but it wasn't worth it...and I didn't use it. Wet. Use a drywall blade to remove. Wet again if it doesnt lift off. be careful not to remove or squeeze out the mud on the paper tape on the ceiling/wall inside corner joint. I always paint that joint with peel stop primer afterwards to glue it in place just in case. You'll save $1 foot and remove it in a day. I always fill the fastener indentions as it is easy. If the ceilings look good you can just pole sand, prime and paint. If you need to skim coat you may want to get a painter or drywall guy to bid, especially if some joints look bad or there is damage but you'd be surprised how good primer and a couple coats of flat paint makes a ceiling look. I thin mud and roll it on and use a squeegie made for skim coating to get a flat ceiling. But you may not have time.
@Marian Smith wow, thank you so much for your help. Really insightful!
Check out porch.com for contractor quotes. Haven't had the chance to use it myself yet as it was just highly recommended to me by a friend/mentor from the Austin TX market.
As for being your own general contractor the experience I have to pull from is in the software development world. A saying I like to keep in mind is an Italian saying... "The owners eye makes a fat calf."
i.e. Be in a position to observe everything, and that will knock off a lot of rough spots for the process. Great job finding a solid deal, and best of luck/focus in the reno process.
@Aaron Smothers great advice! I’ll check out porch.com and certainly keep a close eye throughout the project. I’m reading J Scott’s book on estimated rehab costs and just the detail on writing a detailed Scope of Work has been really insightful. Thanks again!
Let me know if you need a contractor, I'd be happy to pass along the team that I use. I've been working with the same crew for close to 18 years.
@Paul Sedillo that would be fantastic, thank you so much! I’ll send you a direct message.
Hi @Brandon Harrison! I don't have a specific contractor recommendation, but are you on the Facebook Investor Underground group? It's Austin-based RE investors and posting there may lead to some suggestions.
Congrats!
@Brandon Harrison I don't see how your math is going to work, unless you're a licensed realtor and saving 3% BA commissions on buying and 3% listing commission on selling.
Your resale costs are usually about 7-7.5% with 6% realtor commission and 1-1.5% in typical seller expenses on closing costs, title policy, possibly a survey, HWS insurance, lender required repairs, etc. That's some $40K+ in sale expenses.
With $30K in remodeling + resale costs, your total costs are $70K+. Your gross margin is only $60K at today's ARV. I.e., you're presently negative on your project.
Are you counting on a significant appreciation? Nothing wrong with that, but your flip doesn't have financial merits to stand on its own based on today's ARV of the home. Unless you're doing for experience only.
In general you'd want to shoot for a better margin to work with to make a decent return on your money/time/efforts.
@Erin Deann Martin thanks for the recommendation! I just requested to join the group. Thanks again
@Alex G. no doubt the selling costs will need to be accounted for. I by no means think this property is going to make me wealthy, and I didn’t purchase it with the sole intent being an investment. I’m planning to live in this property for 2-3 years and learn some renovation basics while not losing a bunch of money in the process. I’m hoping appreciation will help us here!