First Flip Buffalo NY: Worried about underestimating repair costs

4 Replies

Looking at flipping this house:

I put the info into the Flip Calculator and here were the basics:

If I offer: $60,000 (It's been on the market for almost a year)

Repairs: $100,000

Holding Expenses (for 6 months) and Real Estate Sales Costs: $32,948

TOTAL expenses: $197,947

ARV/Sale Price: $250,000 (This is a low estimate, it's a great area and lot, great school district and could possibly sell for 50K more if listed at a prime time)

Profit: $52,467

Big things it will probably need:

-New Roof

-New Siding

-New Kitchen

-Updated Baths

-All new interior doors/windows 

-New layout/design to interior

-Possibly turn extension into Garage 

Is this a crazy idea for my first flip?  Is it really possibly to do all of this at around 100k?  (I haven't actually had any contractors give me numbers...but it's such a big job I don't want to start that until I have a general idea that it might work).  Any thoughts or advice?

I have one $100,000 flip under my belt. It was an 1800 SF colonial in much better condition, didn't need new HVAC, but did have a big $25,000 foundation hit.

With that said, what are you carrying for your rehab costs? 

New Roof: Being a 4500 SF house, this is potentially a $12-15,000 roof.

New Siding: I know others get better siding pricing than me, however if I were to plan for siding a 4500 SF house I would probably carry $25-30,000.

New Kitchen: At a bare minimum you are $10-15,000 for cabinets, counters, appliances, etc.

Update Baths: I believe it said 2 baths? Figure $2500-4000 ea. so $8000.

New windows: How many? I imagine there are a lot of them, probably a $10,000 job. New doors, figure $5000, exterior and interior, install, HW, etc..

Design Changes: if you mean structural work, it could be $2000 it could be $10,000.

Turn extension into garage: I would have to see the ins and outs, but maybe $5000 assuming there is a suitable slab below it, and no driveway work needed.

How does the MEP look? Does it need new electrical, plumbing, heat, HW? I ALWAYS carry quite a bit for this work. Even if it doesn't need it, just by doing your changes, updating etc, you will have costs.

What have you carried for Sheetrock, insulation, trim, etc... This could very easily be a $10,000 scope of work. Flooring, this is also probably a $10,000 SOW on such a big house. Could be more. How about painting? Huge houses only cost more for things like painting, etc.

My numbers are very basic, and don't account for anything other than healthy discussion. Personally, $100K seems light. A full Roof, window, siding, near gut renovation I would probably be closer to $150,000...

I would highly recommend partnering with someone who has a construction background for your first flip.  They know how and when to cut costs and someone with a good eye for architecture can look at that floorplan and be like ok this goes here and that goes there.  It would be a good learning experience for you and maybe you make a little cash too!  Although, a lot of the people I talk to don't make very much, break even, or even lose a little on their first flip.  But the eductional aspect is invaluable and will help you make money down the road

Have a contractor walk the property with you and give you a bid.

Always better to get an exact scope of work and be safe rather than sorry!

Thank you for your responses!  Especially Brian--that was super helpful.  I agree that 150k is probably a safer estimate--not sure if I can secure that much funding---so I may end up leaving this to let someone else.  We'll see.   I'll probably still get a contractor to walk through it with me just to see what he/she says.