How much should I plan for rehab costs

Question

Investing in the Detroit area, looking to buy and do complete renovations. Was thinking it will take about $20-$30k for interior and exterior work for a 1500-2000sq/ft house. Has anyone done work in the area and know if this is a correct estimation.

Jerryll Noorden · Answer

I am not in detroit.. BUT

that seems like a SUPER skinny budget.

A kitchen full rehab should be about 17K to 20K for a nice kitchen (for a house ARV of about 200K to 300K) and over 25K for a kitchen worth being in a $400K+ house.

Sanding and refinishing wood floors. About 3 dollars/sq ft and staining another 3/sq ft.

So about 6 dollars/sqft so lets take 6K sqft.. that will be 12K. (JUST LABOR). You still need to buy the floors. (say 3 to 5 dollars /sq ft)

So that alone took over 30K of your budget.

Now lets say you needed to paint the interior.

For a 2K sqft home that should be around 5K to 10K.

Bathroom, between 3K and 7K depending how extravagant you are going with it.

Then new appliances. ..

etc. etc.

Then we didnt even look at the exterior. Siding.. om gosh, what 7 to 12?

Roof.. 6 to 8K

a 20K budget to remodel a home will really just get you a maid service to clean it, and maybe a new kitchen.

Go here:

https://www.homeadvisor.com/cost/

and see what other people have paid for similar projects in your area

Dylan Tanaka · Answer

@Madison Loftis after rehabbing in Metro Detroit the past 17 years I think you’re coming to the right conclusion.

I usually budget $30/ft in the suburbs for nice rehabs.

The biggest mistake people make is overpaying/underestimating rehab costs.

On your roofs I’d say $4-5/sq ft depending on the pitch, how many peaks, etc.

Learn all that you can about the city/township you plan on working in and how strict they are.

Feel free to reach out anytime.

Brandon Sturgill · Answer

@Madison Loftis I think you are taking the right approach here...ask lots of questions and read all you can...this is a really big challenge for a new investor. It's something you need to work your way up to...you'll learn along the way.

Or...I can save you years of trouble and say...rehabbing houses is a passion...its a love for the industry and construction...its a job...very few can make it work passively. Focus on buy-and-hold real estate.

How many full-time house flippers do you know? The truth is that the goal in flipping is to conquor the technique and then sell what you know to other folks that actually believe flipping houses is a good idea.

You can make your future with buy-and-hold real estate.

Braden Smith · Answer

@Madison Loftis The rehabs I do typically run about $45-55/sf at cost in my area, and a full gut rehab runs about $75-85/sf. My last complete rehab was about $150k! That was a full gut to the studs, with a new roof and all new everything along with a lot of framing work due to extensive termite damage.

Madison Loftis · Answer

@Braden Smith

Those were great articles. I’m currently reading flipping houses by j Scott (great read), the cost of rehab one is on the way! I had talked to a few contractors and that was the number they all came up with. They didn’t mention pricing by sq/ft which should’ve been a red flag, I think they just pulled that number out of there butts. Thank goodness for forums so I can rethink my budget! Now That I’m reading about it it’s looking more of $25-$30 per sq ft!

Braden Smith · Answer

@Madison Loftis That typically would not include foundation work. In my area leveling a slab house runs about $18/sf , and raised houses are priced per pier. Either way it is not cheap.

See here: Fix & Flip Project Costs: Purchase, Sale, & Holding

And here: Rehabbers! Know ALL the Costs to Flip that House

I highly recommend this also:  Flipping and Estimating Bundle

Just curious, where did you get the 20-30k number?

Madison Loftis · Answer

@Braden Smith

Thank you! Full rehab meaning, foundation, roofing, plumbing, electric, appliances and cosmetic work?

Madison Loftis · Answer

@Brandon Sturgill

Thank you! That’s good to know, I have been searching around and have seen many different answers.

Another question: new roofs about $4 per sq/ft? Depending on materials. Not wood

Braden Smith · Answer

It varies depending on the area and market, but 20-30k doesn't go very far these days. Contact a reliable and knowledgeable local contractor and they can give you a better idea on actual rehab costs. In my area, a full rehab of a 1500 sq ft house would run about 65-85k at cost with no contractor markup...

Brandon Sturgill · Answer

@Madison Loftis It's a moving target dependent on many variables....but I would say you are 30-50% low on your estimate. We see renovation costs for make ready on liveable C-class properties in the Midwest (heavy cosmetic) at $9-10 ft. for interior. Far from a complete reno...