Rehab Costs?
I just put an reo property under contract for 171,000. It is a 3 bed/2 bath detached with a 10ksqft lot. It has a finished basement, 1 car garage, and a small concrete patio on the bottom floor in the back (split foyer). The assessed sqft is 1,100, but that doesn't seem right. Do those assessments include the basement?
Its not in that bad of shape. It needs new ac, carpet, appliances, flooring, garage door and needs all the concrete cleaned. I was kind of looking at this as more of a possible rehab + improvement property, but I don't know how realistic my assumptions are. This is my first rehab.
When I go to sale, I have a lender that will do 100% ltv for the buyer, I was going to cover closing, and provide 2k cash back to the buyer at closing. I won't be using a realtor unless I need to.
So, do these numbers look right?
purchase price $171,500.00
closing $3,000.00
ac compressor $1,200.00
kitchen appliances $1,800.00
kitchen improvements $2,500.00
carpet $1,600.00
paint $1,500.00
light fixtures $1,500.00
front door $1,600.00
power wash cement $1,000.00
siding $6,000.00
garage door $1,600.00
mortgage pmts $2,000.00
deck addition $8,000.00
master bath improvements $2,500.00
half bath addition $3,000.00
total costs $210,300.00
improvement costs $35,800.00
sale price $245,000.00
gross profit $34,700.00
closing $3,500.00
cash back to buyer $2,000.00
net profit $29,200.00
Similar improved houses in the neighborhood have sold for 210k 6 months ago, and there are sales in the area up to 500k.
Any suggestions?
heck of a garage door you want! haha.
all your numbers look a bit high for me, but listing a price for what you want to do depends on so much that it'll be hard to guesstimate. like, what do you want to include in an updated master bath? 2500 for heated marble floors - maybe it's low, vinyl tile and a coat of paint, it's high. even tho you listed a lot, it still wasn't very specific. i will tell you tho, that 25k gets me a total rehab - from a shell - here in philly.
go for it tho!
Well, I guess I don't quite have lots of specifics yet. But I'm really just targeting cosmetic improvements, except for the half bath and deck. Like for the kitchen and bathroom improvements, I would be putting in new counter tops, stone or ceremic tile, bigger better sinks, better looking fixtures and mirrors, new toilets and tubs, new cabinet doors, etc... It doesn't really seem like it needs anything else...
I'm just getting cold feet =)
Looks like the only thing that you might be low on was the estimate for the carpet, but I do not know how much carpet you were figuring. As far as the listed square footage, the basement is probably not being counted unless it is considered "finished". The listed square footage is probably just the upstairs. I am interested in knowing if you are planning on doing the repairs or if you will be contracting out the work!!!
Yeah, that must be it then... The basement was recently finished, but not all that well.
It will be a combination of me and family (who are contractors) doing the work, and the some materials will be purchased at contractor auctions.
Does anyone have any opinions on the 2k cash back to buyer idea? Does this do anything to intice a buyer?
Seems like the 2k cash back could just stay in your pocket. A house that nice should sell itself, once your buyer falls in love with it. Maybe spend it on some landscaping instead, to increase curb appeal.
Your assumption of 2k for mortgage payments might be a bit low too - I would assume 4 months of payments at least.
thanks for the advice everyone.
What would you all say is the average profit from rehabs that sell for less than 300?
The numbers seem very generous to me. You could have it all done for 20,000. $600 max for a front door. Garage door too.
You need to be darn sure about the APR of the house. I would call in two realtors that specialize in the area and ask their opinion about what the sales prices would be for the house as-is and what improvement they would suggest.
Call in another rehabber and ask them what they would do.
Then call in an appraiser and ask them what added value is a finished basement, extra 1/2 bath, deck, etc.
Realize that every rehabber over improves his first house. But you are talking not only about rehabbing but also improving. Adding a deck and half bath are very costly and may not get you your money back. Especially a 1/2 bath in a 1,100 sf house 3/2 house. I have heard that finished basements and decks do not add much to the value of the house.
Brenda
Ive done a few rehabs and I'm in your area. It sounds like a 20K job to me. I would not add the deck in my opinion it will not add that much value to the home. one last thing make sure you dont rehab above and beyond what the neighboorhood warrants, i.e. granite counters when you can go with a nice formica that will do the trick. Maybe put th deck money into new windows if the home needs it.
Good Luck
hard to say without seeing it. If you have a camera shoot me a picture of "some" of what you are looking to do.
Garage doors here are installed for under $800 depending on the quality etc.
AN easy way for you to get a real handle on it is to get competitive bids from local contractors then you will have lined up your workforce and know what you should be looking at cost wise.
Best of Luck!
I am a newbie when it comes to rehabs- I now have 3 under my belt. It takes a bit of experience to get the numbers close. My first was an REO and I underestimated a few things (roofing went up because of plywood costs). I all I was about 7k off. This really put me in a bind as my other cash was being used elsewhere. Still, it was a nice 24k profit.
My second I overestimated by quite a bit- 5k. My third came in about right. Always give yourself a cushion in case something turns out worse than you thought.
Go For It.
Ron
Your rehab cost seem very high,I can do this rehab for less than $15,000.00. Even with replacing the kitchen cabinets and appliances this can be done for under $3,000.00. Lowe's and Home Depot sell garage doors for <$500.00 and front doors for <$1,000.00. Rent a pressure washer and clean the concrete yourself including supplies for <$200.00. The master bath should cost <$1,500.00. For $3,000.00 you should be able to add a full bath to the basement including the pump to lift the waste to the sewer line. I agree with the others a deck will not add much to the value.
The appraisal on this property just came in today at 178k. my purchase price is 171k. the appraiser commented that he appraised an identical (fixed up of course) house down the street 2 months ago that sold 1 month ago for 217.
I think I'm pretty safe, but thats some great advice getting another rehaber in to take a look, I will definitely be doing that.
Thanks!
And I've decided to axe the deck (pun intended).
=)