Does anyone have experience with gut renovations in NYC?

Question

I came across a 2-family property in East new York in need of a full gut renovation. It's in pretty rough shape.

The agent mentioned construction costs for a full reno would be in the $100k-$130k range. Does this seem in the right ballpark?

I'm looking to get smarter on the topic (I'm in middle of J Scott's rehab costs book) and intend to get 3 formal estimates.

But I was curious to know - for folks that have been through full gut renovations, what did these cost in total?

Scott K. · Answer

@Sue Hough thank you for taking the time to write such a thoughtful reply. I really appreciate the detail and pointers.

It makes perfect sense that the term gut renovation is far too vague!

Sue Hough · Answer

@Scott Krause good morning and great questions! There is no way to determine what the construction budget is on a “gut rehab”.  That term, in itself, is too broad and does not encapsulate a specific scope of work.  For example does all electric need to be replaced including the panel and new service?  Or; is there structural damage to framing members which need to be replaced?  Is there rodent/insect damage to be dealt with?  The definition of “gut rehab” is specific to every property and therefore there is no number which can be placed on it without due diligence.

You will need to get a bid or two from a good contractor.  One flaw to this is contractors are not keen on working with investors and you will have a hard time continuing this pattern for each property you are “considering”.  It takes time to property bid a project, from a contractors standpoint, and investors are typically using contractors as their budgeting resource.  Since investors evaluate many projects which don’t work out for the contractor, the contractors usually become very reluctant to serve as your budgeting agent.

I recommend finding one contractor you trust well and keep working with him/her.  This way you can establish a strong relationship and work together as a team.  The truth of the matter is; just because someone provides you with a bid does not mean they are qualified to determine every aspect of your project or are they able to complete the project for the price.  Unfortunately, there are a small percentage of contractors who underbid projects just to get the job and are unable to finish the task for the amount stated.

Lastly, many investors are looking for the least expensive bid. If that is your strategy keep in mind you are paying for quality and accuracy, and if you are willing to sacrifice the integrity of those items go with the lowest price.  There are different levels of contractors, just as there are different levels of restaurants.  If you agree to a McDonalds budget don’t expect St. Elmo’s Steak House.  Not every contractor posses the same skills and their price will reflect that, it’s not bad just the truth.

Keep confident in yourself and know you will learn construction along the way! Before you know it you will be able to spot a faulty copper-galvanized connection from across the room and know it needs a dielectric fitting!  This just takes time and experience, I still learn something new every day.

Good luck!