House #2: Scope of Work

The Bulge House is now officially mine, and in anticipation of the closing, I put together both a Scope of Work and a materials list for the rehab of this property. Compared to the other two houses, this one is in pretty good condition. While the other two houses need a lot of cosmetic work, The Bulge House mostly needs work on the major systems (air conditioning, furnace, etc), the roof, and then a real good cleaning.

I’ve decided that this house will be kept as a rental (our first rental property), and I even have a tenant ready for this one. I’ll have more to say on the subject later in the week, but suffice it to say, my tenant will be a family member, so I will be doing a little bit more work to clean this one up than I otherwise would if it were a standard rental. For example, I plan to install all new appliance, new fixtures, and paint the exterior along with the interior.

That said, here is my Scope of Work for this house, along with the anticipated worst-case cost of each (not including materials):

– Replace Air Conditioner and Furnace ($3000)
– Replace Hot Water Heater ($700)
– Replace Roof and Repair Rafters ($4500)
– Repair Fascia/Soffit/Trim ($500)
– Paint Interior ($1000)
– Paint Exterior ($1000)
– Steam Clean Rugs ($250)
– Deep Clean Whole House ($250)
– Cut Grass/Landscaping ($100)
– General Contractor for Two Days ($400)

Total Cost of Labor: $11,700

The General Contractor will be responsible for the following tasks:

– Install New Appliances
– Replace Fixtures
– Repair Kitchen Cabinets
– Replace Shower Hardware
– Replace Window Treatments
– Replace Door Hardware

The materials for this project will include:

– New Appliances ($1800)
– Paint ($350)
– New Fixtures ($250)
– Door/Cabinet Hardware ($250)
– Bathroom Upgrades ($350)

Tax: $200

Total Cost of Materials: $3,200

So, the total cost of this renovation to prepare for my tenant will be about $14,900. Subtracting the $2500 credit I received from the bank as part of my purchase agreement, my out of pocket rehab costs for this project will be about $12,400.

This is about $2400 more than I had originally budgeted, but the overage is directly attributable to the fact that I’m doing upgrades for my specific tenant (again, a member of my family) that I otherwise would not be doing. And, I hadn’t been expecting that $2500 credit at closing, so I’ll consider it a wash…