All Forum Posts by: Shannon Mogilinski

Hi Jane--I'm a GC by trade who turned to flipping 3 years ago...

Here is the skinny--it depends on these things.  I'll give you info and what i pay in Chicagoland area:

How far is the span you are removing?  

An architect or structural engineer needs to provide you with load-bearing plans for permit with the city or confirm the wall is NOT load-bearing. ($1300 for plans if only a wall--I pay $3500 for a site visit by them and close to full gut of kitchen/baths/door moves/wall removals)  Do not skip the permit!!!!  

In general, load-bearing spans on two-story houses up to 13' will need LVLs (similar) and bearing posts.  If you mount the new beam below the ceiling $1500 material labor...if you put it up into the floor joists above $2500-3000 (meaning so you can't see the new beam once the ceiling on the drywall is repaired)  Figure another $65-70 per sheet of drywall needed for repairs.  (That is not in the framing cost I gave you.)  

Spans more than 13' may need a steel I-beam and bearing posts.  Sometimes these posts have to have sit on new footers poured in the basement. $5000-$6000 labor, beam/beam delivery, posts, concrete

Is there HVAC in the wall?  Usually can be and those have to be re-run $1500--$5000--I pay $375 a run (meaning you may have both supply and returns that must be accommodated elsewhere in the house)

Is there electrical in the wall?  Outlets/switches may need to be moved or can possibly be eliminated.  To move plan $500 for #4

If you have a non-loading bearing wall it is always worth it in my view if the layout is improved.  That said, I have yet to buy a home where I have not removed 3-4 walls.  My signature is homes updated for today's modern families and how they live--so yeah, I take down a lot of walls!!

Hi Deborah--Hands down understanding that EVERY house has a ceiling on value.  You can't charge more because you did more;  more updates/upgrades do not necessarily translate to a higher sales price.  As a GC by trade, I have subs every week pushing to do more in a certain area saying 'You can just charge more for the house.'  Your construction team does not always get what you are doing.  They are tradesmen not investors so remember that when they dole out advice.  My guide is asking this question..."is this a deal breaker for a buyer?  Is this weird?"  Best of luck

Hi David--I flip full time in the burbs and I have been a GC for 15 years--now only working for myself.  I'll DM you if you want to chat.  

Hi William--I can only speak to what I do...

I have an LLC that holds the property titles to my flips. I fund that LLC to complete all the purchases and transactions related to the purchases. I have another LLC because I am also a GC and all my renovation activities go under that business. Separate checking accounts for each business. Personally, I like this and have had some good counsel on using two LLCs--one for holding and another for renovations. I use HELOCs or savings etc so the bank where I have these accounts is the same as my checking account for the HOLDING LLC. This allows me to transfer money into the checking easily in preparation for a wire.

Credit Cards--so you are now an industry professional.  Before you charge anything, reach out and get your discounts.  And those can be hefty compared to retail...Houzz, Home Depot, Ferguson, etc.  Lowes--lets talk Lowes for a minute--if you order about $2500 at a time you can get great discounts but you need to go through the PRO reps (this is relatively new as they are aggressively going after the pro market).  Plus you can get the 5% off cc there.  Mine is on speed dial.  In my area I pay $20 for delivery.  Wayfair--every time I fill my cart online I reach out to the rep and ask for added discounts on top of the pro discount I already get.  As a GC I can advise try to retain control of your finishing material orders (anything where you need to make a choice ((tile, flooring, lites, faucets, tubs)) vs. construction materials (2x4s, mortar, shingles)) because we get those discounts on the finishing items and we keep them!

Do what makes sense for kickbacks on your cards (hollar Amazon) but I have two main cc with great bonus plans that I use for most materials.  I just shopped Amazon Prime today and saved $100 on my door hardware. 

This is a bit of a backward answer because I'd first get counsel on how best to set yourself up for liability protection then the accounts will follow.  This counsel is not necessarily the lawyer who does your closings--look for expertise in company structure and litigation all with knowledge focused on real estate or development.  If you go on to do multiples at a time, consider series LLCs for liability protection.  Good luck!!

Hi Travis--I so totally get it.  I'm a GC who now only flips.  Here are two thoughts:

I don't know you're price point or the ARVs in your area but is the $10k going to dissuade offers? On a $95k home yes--on a $350K home no. That said, sometimes $10k takes you to another price point where you can lose buyers. Someone interested in the home will offer and you can counter. Many real estate agents (and I so appreciate mine) are not investors. You are the investor. The real crux is that putting a cost to a renovated home is not easy. You/Me need to become the absolute experts on this--its your blood sweat & tears. I now track my final sales cost against my original estimated ARV against what the best/closest comp was when I first did my ARVs. I have it down to a percentage now that i can use as needed.

I temper this with a very early lesson learned--every home has a ceiling... a ceiling on price.  Just because we do more doesn't mean we can always charge more. It seems I tell all my subs that at least once a week! If you list higher, have a plan of when and how much to drop pricing--then stick to it.  That's what I do and I've only dropped the price on 2 out of the last 10 deals. Best of luck!!

Hey Rajagopalaroa--Agreed--I don't use the 75% rule. Mainly because if I used that metric alone I would not have done my last 10 successful flips. I analyze intensely the ARV price points in my target markets for at least 9 months before I buy. Good neighborhoods, excellent schools, and literally--where does the house I want sit in the actual neighborhood...I say does it look like a $650K house area when I'm done? for eg.  I'll look at 40-65 homes a month when I am buying.  I do low ball don't get me wrong.  But I do not buy bottom barrel properties in bad locations (busy roads, crime, eye-sore views) instead I focus on making a property one that the average modern family will want.  We design our homes.  We move fast and we permit.  Yes we ask towards the top of the market, but I anticipate my holding times (which are in line as the short supply in my area is able to work for me) and build that in.  Flipping well requires pivoting and agility.  That's a glimpse of how I do it.  Good neighborhoods & good products.  Stong homes=Strong buyers.   Maybe it will work for others.  Let me know how you do it!!

Hi April--Seasoned GC who now only does my own real estate investments here--ABSOLUTELY have a GC or contractors walk the property and give you an estimate.  To do that however, you need to give them a list of what you are looking to accomplish (assuming you do not yet have any type of plan) and here is why...the scope of work will greatly vary the pricing and you will not be able to have an apples to apples comparison.  AND this is crazy important because--guessing, presuming, and assuming are not how you get to reliable numbers for a renovation.  If you do not have someone you can call to perform the work at that estimated cost, it will be a struggle to meet your budget.  I still work this way myself even as a 15 year veteran.  Also, they know things about where you are working...

Keep in mind that your municipality will have codes and regulations as well that can be hidden costs.  For example, do you need a permit to swap out windows (lead renovation EPA requirements for the age of home or do you need tempered or fall protection) all the way to a city that has $3,000 permit fees.  On that note, I highly recommend do not ever skip the permit process and always check in with the city;  Not doing so can quickly tank any deal. Permits are a pain but liability for a poor renovation is brutal.  The city is your first line of defense.  Best of luck

Patrick happy to talk--15 year GC veteran outside chicago  630-677-2924

That is so awesome of you!  Currently I have a spreadsheet that is very intense tracking all expenses by trade/vendor and it also shows my budget with another column for under/over budget too...let us know how it turns out...agreed so needed!!