We finished the rehab on The Lake House today… (will post AFTER pictures in my next post)
If you recall, our preliminary budget on this project was $12,500, with the first estimate broken down here…
Luckily, there were no major surprises, and we were able to stay on budget, coming in at just over $12,200. Here is the detailed breakdown:
We actually would have come in a few hundred dollars higher, but there were some decent appliances and light fixtures in the house that we removed, and our contractors were happy to give us a discount in exchange for their keeping the old materials (we normally just let our contractors take whatever they want, but in this case, they insisted on the price reduction — who am I to argue! :)).
In addition, our hardwood guy did some repairs on the parquet floors and didn’t charge us (there was no material cost to him, so it was just his time), and the couple little extras we decided to do — removing the old, ugly backsplash in the kitchen, replacing the washer box in the laundry room, and some landscaping — canceled out the discount we got from our contractors.
We’ll spend another $250 to move the staging furniture into the house, which will put us right about $12,500 for our all-in rehab costs (we count moving/delivery as a rehab cost), so even with that, we’re on budget. Hopefully, we’ll have the property staged by the end of the week and on the market for the weekend. That said, during this time of year — and especially given the very cold weather we’re having — we don’t expect much traffic until after the new year.
I’ll post AFTER pictures in my next post and some final STAGING pictures at the end of the week…
What is your philosophy as far as buying houses? How much under market value do you go? I am just starting to look for flip houses, first offer on a hud foreclosure was not accepted. It was listed for 70k, I offered 50k cash. It did need 35-40k in repairs, and would sell anywhere between 135-145K. Do you try and stay in the better parts of town and find houses which need more work that are affordable or stick with the blue collar part of town, which tend to be more affordable.
Bill
Bill –
Take a look at the article in the Education section titled “The Flip Formula.” Basically, any property that we’re able to buy at a price that meets this formula is a candidate for us. On top of this, we look for good, working-class neighborhoods where resale values are under $160K (anything higher priced is difficult to sell in my market).
It sounds like the property you were looking at was a good candidate if you were able to get it for near $50K. This would have allowed you to make about $25-30K in profit, assuming your rehab and resale numbers were correct.
We do look at houses that need a lot of work, as there is less competition for these, and the banks who are selling the properties are more motivated to get rid of them…
I’d agree with J. Those are the basic same criteria we are using to flip houses in Jacksonville, FL. For “retail” deals, we stick mainly to the first-time home buyer neighborhoods and are expecting an avg profit to be about $20k right now, based on the current market. If the property sold for $135k and it needed $40k in repairs, our max offer would be $48k.