How to Quickly Estimate a Rehab: 13 Items to Note on a Property’s Interior

14

In my previous post, I discussed what to examine on the outside of a property to estimate your rehab costs. In this post I want to move inside. The inside is usually a lot more complex and thus has more components to inspect. You also have to think about how you want to repair them. How you repair items will often be based upon your intent for the property. Will the property be a retail flip or a buy and hold rental? Obviously, you may go a bit more towards the high end with a retail flip, thus increasing your rehab costs.

Examining the inside of a property is much like conducting a home inspection for a retail buyer. You are going to go through and look at all of the various components that make up the property. Remember to use your checklist so you do not miss or overlook anything. Here is a sample of the spreadsheet checklist I use.

Yes No Cost Comments
  HVAC

Remember also that some of the components of the property may not be on or functioning. This is especially true with foreclosed properties, as the banks usually will turn the utilities off to save on the holding costs. So you have to be especially vigilant and know what to look for since you will not be able to test the lights, so to speak.

Here is what you should be looking at as you walk through your next potential deal.

The 20 Best Books for Aspiring Real Estate Investors!

Here at BiggerPockets, we believe that self-education is one of the most critical parts of long-term success, in business and in life, of course. This list, compiled by the real estate experts at BiggerPockets, contains 20 of the best books to help you jumpstart your real estate career.

Click Here For Your Free eBook

13 Items to Note on a Property’s Interior

Electrical System

The electrical system is one of the major systems of any building and consists of many differing components. Part of it is on the outside, but most is located on the inside. On the outside, take a quick look at the service, the weatherhead and meter box. Are the wires old, frayed and small? Does the entire system look dated? If so, you may need new or upgraded service, especially if you are planning to add things like a HVAC system.

On the inside the main thing to look at is the electric panel. Is it breakers of fuses? People freak out about fuses nowadays. Are there enough breakers to handle a modern load? Are the breakers old? What brand are they? There have been reported problems with Federal Pacific Breakers, for example. Take a look the outlets — do they have two or three holes? Two holes mean no ground wire and may be a problem when you go to resell. All of this sounds expensive, right? Well, it can be. A new electric service can run between $1,000 and $2,000, and a new breaker panel can double that.

Plumbing System

This is another very important system. First check if the system exists, as copper is very likely to disappear these days. Don’t assume those pipes are there. Look for them. If the water is on, try every faucet and fixture. Does it leak? Flush toilets and let water run, then stop and listen. Hear anything, like drips or splashes? It should not be dripping, and it should be draining smoothly. If not, assume there are leaks and/or blockages.

Related: How I Bought, Rehabbed, Rented and Refinanced 14 Properties at Once

Look for mold or rotten wood, as these are also evidence of leaks. Keep in mind your examination of the outside for dips and green spots in the yard. You may have leaking or blocked up sewer and water lines. Also find the water heater. How old is it? Is it working? Is it vented properly?

contractor

HVAC

Is the system operable and in place? Is it old and in need of replacement? Are the ducts in place? Turn the system on. Can you feel air coming out of all of the ducts? Is the air cool or warm as it should be? Replacing or installing a new HVAC system is not cheap. Smaller sizes can be $3,500 or more, with larger, five-ton systems costing over $6,000 for a complete install.

Kitchen

Is it ’70s avocado green? Is it obsolete and in need of a complete redesign? Remember that kitchens (along with bathrooms) will often sell the property to both buyers and renters. So a clean, sleek, bright and well designed kitchen is a good place to invest some money. Kitchens can be really expensive, going for over $30,000 in higher end retail flips. However, a few thousand in a smaller rental can really go a long way.

Appliances

Are they in place? Are they dated? If you are going for the retail sale, you are simply going to have to put in new appliances. In a rental, you can get away with nicer used equipment.

Bathrooms

Are they pink, yellow or blue? If so, it is time to modernize. A nice bathroom can be done for less than $1,500 to $2,000, and I am talking about a complete gut job with new tub, sink, tile, faucets, everything. Do not be stingy here, however. Upgrade a bit if you can. A nice bathroom can really help sell the place.

rehabbing-materials

Walls

Do they need repair? Are they full of holes or mold? If so, they will have to come down and be replaced. Look for the proper trim work as well. Every deal is also going to need paint — lots of it. Be sure and budget accordingly.

Floors

Look under that old carpet. Perhaps there are wonderful hardwood floors that simply need to be refinished. Will you need new tile in the kitchen or in other areas? What about carpet or perhaps installing hardwood? You will have a wide range of choices with floors. Do something nice that will stand the test of time in terms of both fashion and durability, and it will be hard to go wrong.

Door/Locks

Will you need security doors on the exterior? Are all the doors and knobs in place on the inside? What about the locks on the windows? Are they there? Are they painted over? These little things can be easy to miss, but can also add up quickly.

Fixtures

Do you need new light fixtures or ceiling fans? What about bath and kitchen fixtures? Make a note of anything that is dated, missing or unusable, and budget accordingly.

Related: The Simple Step-by-Step Guide For Rehabbing Your First Rental

Basement

Take a walk down into the basement. Does it smell moldy? If so, there is likely a water problem. Take a flashlight and shine it all around. Look for evidence of water along the floor, and look at all the joists you can see. Do you see any mold or evidence of termites?

basement

Attic

Go up in the attic. You may have to look at HVAC equipment, but if not, go up there anyway. Look for insulation and look at roof joists. Also look for any weird wiring. Old knob and tube wiring, for example, while perfectly functional, is another thing that freaks people out.

Other

This is a catch-all category for things not found elsewhere that may be unique to the particular property you are looking at. It could be window treatments or a particular molding, for example. Be sure to add an “oops” factor and if you can’t find an item, look for it. They have hidden it somewhere. Search.

As I stated in my previous post, being able to quickly and accurately estimate a rehab is one of the skills every real estate investor should have. Deals come and go very quickly, and you have to be ready to move quickly. Use these posts to develop your own rehab checklist so you can be ready when a deal comes along.

Investors: What items would you add to this list?

Let me know with a comment!

About Author

Kevin Perk

Kevin Perk is co-founder of Kevron Properties, LLC with his wife Terron and has been involved in real estate investing for 10 years. Kevin invests in and manages rental properties in Memphis, TN and is a past president and vice-president of the local REIA group, the Memphis Investors Group.

14 Comments

  1. Wendy Hoechstetter

    Where on earth do you come up with numbers like $1,500 – $2,000 for a bathroom upgrade, let alone a full gut rehab?

    A modest vanity that will hold up over time (not crap low end junk) will cost $1,000 or so – at the lower end. Bathtubs can run $5,000 without getting into high end territory, and tile work can easily run at least that much without even getting into high end materials or detailed patterns. Fixtures and fittings aren’t cheap, either, if you’re going to install decent ones that will hold up over time. And then you’ll still have to paint and maybe even replace a window, piping, fans, ductwork, vents…

    In short, there is no way in hell to do a gut rehab for less than around $10,000 at minimum, unless you buy crap or already own the materials, and do all the work yourself.

    You could possibly refinish a tub, *glue* up some new tile (which is pretty much guaranteed to fail and result in water damage behind it), replace the vanity with one of this all-in-one pieces of junk finished in paper, put in cheap vinyl flooring, and paint for around that, but that’s nowhere even remotely near a “full gut” rehab.

    It really irks me to see such utterly unrealistic numbers bandied around on these sites.

    • Blake C.

      I have done full bathroom upgrades in every one of my rentals. I use all the normal builder grade stuff from Home Depot or lowes and usually spend around $800-1000 in materials, and a little more than that same price for labor. No it’s not high end, but can be done if you hire your own subs and handy men to do the work. This won’t be the contractors that buy there own material, drive a fancy truck or advertise, but with a little supervision they can do a solid instal that will last. This is where you have to ask around to other investors to fix out who are the right guys to hire and who isn’t. In my market, you wouldn’t be profitable spending more than 4k on a complete bathroom for a class b rental. It might be different in different areas or class a homes, but these numbers are spot on.

      I would also say that rookies or those less savvy with remodels will end up spending more or using truly cheap materials that don’t last. Expensive materials don’t always mean quality. In fact the $119 Aloha bathtub from Home Depot is just as strong as the more expensive ones, the main different is that is has less insulation and will not keep tub water hot as long and makes more noise when water hits it. We go with the least expensive model here every time. You can also find porcelain tile for less than $1 a foot, plus thin set and backer board. Here a decent tile guy will do the shower for $450 and the floor for $2.25 a foot. Vanities in the $100-200 range are particle board but will last 10-15 years depending on the tenant. So it can be done, and done with a decent amount of quality.

      • PG Henderford

        +1 w @Blake C. Bath rehab for $10k??!?!! (faints away)
        Working some with contractor and some piecemeal, rehab for a 10×8 bath in 1940 duplex came in at $5k. Replaced rotten subfloor, drywall (damaged from leak w repair covered by home warranty), toilet (HD), 18″ ceramic floor tile (Habitat ReStore), replaced bath/shower fixtures (Amazon.com, open box), retiled bath/shower (white tile, accent trim leftover from primary home remodel [OK, I take her point here] on backerboard, not the crappy greenboard stuff), vanity (HD), mirror (HD or Lowes), vanity light (Lowe’s) and paint. I defy anyone to call the end result a crap job. PM me for photos bc I can’t figure how to post here.
        I listened very carefully in meeting with each of 3 contractors. Received bids for $15k, $8k and $6k. Accepted middle bid, but only after significant revisions to exclude what my handyman or other painter could do for less with excellent results *and* what materials I could source/transport myself (but I neither demo’d nor labor’d). Job took 2 weeks. Rented 1,285 sf, 3/1 unit for $1300 (market rate).
        Fwiw, if I thought $10k was the norm for a bath rehab meant to achieve a “simple, clean, sturdy” result…I’d be irked (sad) too.

        • PG Henderford

          Forgot to add that I had the (original) cast iron tub refinished for about $350, which I included within the $5k. Yup.
          (American Standard 1-pc toilet, nickel-finished fixtures incl. Moen lavatory faucet, and so on, etc.)

      • Brad Klock

        I use the same bathtub in my rentals! And it works perfect! If I did a 10K rehab on my bathrooms I would be broke!!! Guess it depends on the area you’re investing in though. I’ll stick with the middle of the road items from the Home Depot though!

    • Kevin Perk

      Wendy,

      Thanks for reading and for taking the time to comment. I do appreciate it.

      I have done many a bathroom in my dozen years or so for under $2,000 bucks. Now, was it for a high end retail sale? No. It was for a rental property. Were the materials I used low end? Did I glue tile to the walls and floors? Nope. After having my contractors rip out all of the old tiles and fixtures and put up wonderboard I like to use the classic look of subway tiles with black highlights on the walls and white octagonal tiles on the floor. With a new toilet, tub, vanity and fixtures from my plumbing supply house It all ends up looking really nice. Plus it stands the test of time.

      Could I spend $10,000 on a bath? Yes, and I have done so with some of the retail flips I have done. But at that point you are taking marble tiles, high end fixtures, walk in showers and soaker tubs along with the glass shower doors to make it super cool.

      So I guess it depends on what your intent for the property is. Are you doing a retail flip or a buy and hold? Either way if you are spending $10,000+ every time you should take a serious look at that. Perhaps what you are being sold is a bit unrealistic. But perhaps it is what works in your market.

      Again thanks for reading and commenting,

      Kevin

Leave A Reply

Pair a profile with your post!

Create a Free Account

Or,


Log In Here

css.php