Great question.
Knowing how long a rehab project will take will really help you on determining an offer amount.
Here is my estimation that I use when making offers. If you stick with these 5 cosmetic items, the rehab project should only take a crew of 3 to 4 people about 2 to 3 weeks to complete.
- Painting
- Carpeting / Flooring (Tile, Laminate, wood flooring)
- Light Fixtures
- Kitchens / Bathroom (not complete remodeling, just updating and cleaning)
- Electrical (Light switches and electrical plugs only)
Doing these 5 basic cosmetic fixes will increase the value of your property, and won't take you long at all to get finished. Hope this helps.
Happy Investing!
Take into account the number of weeks it takes to get permits pulled. Here, minimum wait times are 2 weeks if the contractor has an 'in' with the city and/or county. Some permits take up to a month to pull in certain cities here, and even longer! So, find that out BEFORE putting in your offer.
Sometimes its about the politics of a city, and they can really get in the way! Account for that in your holding costs!
When I started my 2nd remodel, I figured I was much more experienced and would be able to get it done faster having learned so much from the first one. It was a big job, but I had all the contractors and workers in place. Then the electrical took forever and a day! Had to get permits first, then they had to repair a bunch of wires that had been cut (vandalized) and of course nothing else can happen without electricity. Then you have to wait for the city to come and inspect. All in all for a big job, complete remodel, new kitchen, flooring, paint, electrical and plumbing and everything you can think of....I should have been able to do it in a couple of months, but in reality it took 4 months.
I understand once you are established and can keep the contractors busy, you can ask them not to take other jobs and only do yours....however I'm just starting out and don't have that type of power yet.
the unexpected when getting a permit. I did a rehab and added another bedroom with closet and new wall. When getting building permit we had to add outlets and switches to new code. Then we got electrical permit. But building inspector also made us rewire the rest of the existing bedrooms because outlets were not grounded. Other bedrooms were up to code but not new construction code. They wanted all outlets to be grounded up to new code. Extra big expense I did not count on. Some inspectors can make life tough. Always have that buffer in your rehab budget for the unexpected.
I have my contractor(s) sign a General conditions, bidding instructions and scope of work contract that explains how they must perform if they are going to work with me.
1. How they prepare their estimate, man hours, subcontractor costs, material costs. Total cost extension for each line item and work task
2. Matters concerning change orders. You better have a good reason for ANY price increase or you eat it (basically)
3. Submittals. Show all work to be done as bid on, prior to starting
4. Cleanliness, Organization, Final construction clean up.
5. Standard of workmanship
6. Contractor warranty
7. Construction schedule, day by day from start to finish
8. All Licenses needed
9. Payment and schedule of values (when and how I pay for the work being done)
10. Lein Release with each payment made
11. How any dispute is handled (private arbitration)
12. The actual scope of work to be done.
I have encountered many contractors that would not sign my agreement! If they won't sign I don't what them anyway.
IT IS A MUST that you the investor CONTROL your contractor from the start or they will run all over you. I don't care if they have 50 projects going they WILL adhere to the schedule. After all I have it on a day to day basis in writing in ADVANCE. I know where they are to be daily and so do they!!!
The penalties are steep for every day they are late. No excuses for missing something in their estimate. This insures a very compete estimate to begin with. Contractors like to bid low to get the job, then jack up the costs after they get started. Not with my contract!! I control them 100%. This is a critical aspect of doing a successful fix/flip. Every bit as critical as the buy price!!
Michael Mangham
MD Home Acquisitions LLC
__________________
Knowledge is power, but execution trumps knowledge. Tony Robbins
My rehabs have taken about 3-4 weeks to complete (and include maintaining the yard during construction); I ask for an estimate, and ask them to write the completion date on the contract; we both sign the contract. I pay half at the beginning, and the other half at completion.
If they finish early, it's to their advantage; they still get paid the whole amount and can start another job...
wishing you success,
Valerie
__________________
Valerie
“And will you succeed? Yes indeed, yes indeed! Ninety-eight and three-quarters percent guaranteed!” ― Dr. Seuss
"I believe in angels, the kind that heaven sends; I am surrounded by angels, but I call them friends" - Unknown
Offline
Some investors try to be in and out of a home in 2-4 weeks. The timeline really depends on what type of work needs to be done.
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Thanks.
Great question.
Knowing how long a rehab project will take will really help you on determining an offer amount.
Here is my estimation that I use when making offers. If you stick with these 5 cosmetic items, the rehab project should only take a crew of 3 to 4 people about 2 to 3 weeks to complete.
- Painting
- Carpeting / Flooring (Tile, Laminate, wood flooring)
- Light Fixtures
- Kitchens / Bathroom (not complete remodeling, just updating and cleaning)
- Electrical (Light switches and electrical plugs only)
Doing these 5 basic cosmetic fixes will increase the value of your property, and won't take you long at all to get finished. Hope this helps.
Happy Investing!
Take into account the number of weeks it takes to get permits pulled. Here, minimum wait times are 2 weeks if the contractor has an 'in' with the city and/or county. Some permits take up to a month to pull in certain cities here, and even longer! So, find that out BEFORE putting in your offer.
Sometimes its about the politics of a city, and they can really get in the way! Account for that in your holding costs!
When I started my 2nd remodel, I figured I was much more experienced and would be able to get it done faster having learned so much from the first one. It was a big job, but I had all the contractors and workers in place. Then the electrical took forever and a day! Had to get permits first, then they had to repair a bunch of wires that had been cut (vandalized) and of course nothing else can happen without electricity. Then you have to wait for the city to come and inspect. All in all for a big job, complete remodel, new kitchen, flooring, paint, electrical and plumbing and everything you can think of....I should have been able to do it in a couple of months, but in reality it took 4 months.
I understand once you are established and can keep the contractors busy, you can ask them not to take other jobs and only do yours....however I'm just starting out and don't have that type of power yet.
Good Luck!
the unexpected when getting a permit. I did a rehab and added another bedroom with closet and new wall. When getting building permit we had to add outlets and switches to new code. Then we got electrical permit. But building inspector also made us rewire the rest of the existing bedrooms because outlets were not grounded. Other bedrooms were up to code but not new construction code. They wanted all outlets to be grounded up to new code. Extra big expense I did not count on. Some inspectors can make life tough. Always have that buffer in your rehab budget for the unexpected.
I have my contractor(s) sign a General conditions, bidding instructions and scope of work contract that explains how they must perform if they are going to work with me.
1. How they prepare their estimate, man hours, subcontractor costs, material costs. Total cost extension for each line item and work task
2. Matters concerning change orders. You better have a good reason for ANY price increase or you eat it (basically)
3. Submittals. Show all work to be done as bid on, prior to starting
4. Cleanliness, Organization, Final construction clean up.
5. Standard of workmanship
6. Contractor warranty
7. Construction schedule, day by day from start to finish
8. All Licenses needed
9. Payment and schedule of values (when and how I pay for the work being done)
10. Lein Release with each payment made
11. How any dispute is handled (private arbitration)
12. The actual scope of work to be done.
I have encountered many contractors that would not sign my agreement! If they won't sign I don't what them anyway.
IT IS A MUST that you the investor CONTROL your contractor from the start or they will run all over you. I don't care if they have 50 projects going they WILL adhere to the schedule. After all I have it on a day to day basis in writing in ADVANCE. I know where they are to be daily and so do they!!!
The penalties are steep for every day they are late. No excuses for missing something in their estimate. This insures a very compete estimate to begin with. Contractors like to bid low to get the job, then jack up the costs after they get started. Not with my contract!! I control them 100%. This is a critical aspect of doing a successful fix/flip. Every bit as critical as the buy price!!
Michael Mangham
MD Home Acquisitions LLC
Knowledge is power, but execution trumps knowledge. Tony Robbins
http://www.mdhomeacquisitions.com Seller site
http://www.mdhomeacquisitionsbargainhouses.com Buyer site
http://www.mdhomeacquisitionshousehunter.com Bird Dog Site
http://www.mdlodeals.com Tenant/Buyer site
not by the hour...
My rehabs have taken about 3-4 weeks to complete (and include maintaining the yard during construction); I ask for an estimate, and ask them to write the completion date on the contract; we both sign the contract. I pay half at the beginning, and the other half at completion.
If they finish early, it's to their advantage; they still get paid the whole amount and can start another job...
wishing you success,
Valerie
Valerie
“And will you succeed? Yes indeed, yes indeed! Ninety-eight and three-quarters percent guaranteed!” ― Dr. Seuss
"I believe in angels, the kind that heaven sends; I am surrounded by angels, but I call them friends" - Unknown
My journal: http://www.deangraziosi.com/real-estate-forums/investing-journals/59110/...