What's The Worst That Can Happen...?
OK all of you house fixing fiends out there, I would like some school of hard knocks tales of woe about some of your worst mistakes in the fixer business. I am looking at an older house with lots of upside potential (4 plex in a great area, all nice homes/rentals around it, CHEAP, etc.), but it is trashed and vacant for about 5 months now. I have pretty good chops for estimating the costs of "what can be seen." I am way more concerned about what I can't see.
What are the cost estimation areas where, if you dont really do your homework, you experienced guys have gone to your own self-inflicted seminar? Everyone has something resembling a horror story if they have been doing this for very long (Halloween IS coming soon!)....
Couple of other notes, the house is in foreclosure (may even be REO by now - I'm checking that today) and I have a full termite report (lots of dry rot, termite damage, no live infestation, lots of 'fungus' issues).
Have at it Wise Men! And thanks in advance for your posts.
The first rule ini rehabbing is "there's no telling what you will find"Whats worse is what isn't there but should be.
The fixer I'm on now needed a new roof,when the old shingles were removed there wasn't any roof felt.
And the porch lights were wired with speaker wire.
Mike
molotov,
I'm in the same predictament as you, as I'm good with the seen, but not the unseen. This element of risk is something that could definitely turn a property with pcf into a negative nightmare if not considered at the time of making an offer.
Rehab gurus, is there a CYA percentage or other method that you use in your estimations that would help you account for unforeseeable repairs?
Whatever you estimate your rehab cost to be add 20%.
Rehab cost-14k
Unforseen- $2,800
You cannot (for the most part) go wrong with the 20% rule.
Or 5% of what you plan to sell it for.
Hi Molotov,
Great post guys.........the school of hard knocks if very expensive.
While adding various percentages may be one method.....it can also burn a nice size whole in your wallet.
Foundation and or grading issues can eat up 20% and then some.
Sometimes it's best to just have a professional inspect the property for you,
be it electrical, hvac, plumbing, structural etc.
I advise any newbie getting into rehabbing to surround themselves with good subs. Notice I didnt say the cheapest, but good.
I have been in the construction industry since 1978 and I have no problem making a few calls to my trade subs that can advise (often for free because of repeat business) me on areas that just dont quit look right. (rely on your instincts). I have even had fellow inspectors go behind me to make sure I didn't miss anything.
Obviously you can not see behind walls however the majority of the time the signs are there.
I had a list somewhere on this site to the problems that I most noted on inspections I have done.....but the number one problem I consistently see is moisture.....usually due to grading issues or roofing.
In my opinion start with easy rehabs (cosmetic in nature) and work your way to the more difficult ones until you can get a good network of subs and experience under your belt.
NC_Yank