House #21: Budget Recap

May 23, 2011 · 19 comments

As of last week, The Leak House rehab is complete and the property is on the market. It was a pretty straight-forward project — other than the burst pipe that we didn’t know about, the rest of the rehab went quickly and smoothly…

If you recall, our original budget goal for this rehab was $20,000, assuming we did a pretty exhaustive rehab (including new cabinets, new roof, etc). While we’re normally pretty good about hitting our budgets these days, this one ended up going over. While we only went $1500 above our budget target, we didn’t replace the roof, so that means we were actually off by about $5000 (the roof would have been about $3500, but our roofer said it was in great shape other than that one leak we repaired, so we opted not to do it).

Below is a side-by-side analysis of the projected budget versus the final budget:

Total Final Budget

The bulk of the overages were just laziness in estimating. There were several things I completely missed in the original budget, including a few new windows, some hardwood flooring replacement, water heater replacement, replacing a shower door, etc. On top of that, we had a few unforeseen issues, including the burst pipe, replacing the jacuzzi tub hardware (that required us to cut into the fiberglass tub and then have to repair the fiberglass) and my accidentally destroying the mailbox (which is custom to the subdivision and cost $220 to replace).

Lastly, the company that supplies our dumpsters apparently destroyed our neighbor’s mailbox when hauling the dumpster away. They didn’t take responsibility for it (and there were no witnesses), but we’re fairly sure it was them; so we replaced our neighbor’s mailbox as well. At least we got a two-for-one discount on the mailboxes! 🙂

19 responses to “House #21: Budget Recap”

  1. Joe says:

    I have been spending the last few days reading, reading and reading your website. I retired from a regular job a little over a year ago and have been wanting to get into flipping houses. I have learned a ton, but still have a long way to go. I hope you don’t mind the occasional simple question from time to time. Thanks for putting all of your info out for the world to see.

    I haven’t run across any information about how you went about finding your REO deals before your wife was a Realtor and you had access to MLS. Would you mind sharing that info?

    Also, on your above post, I don’t follow the math. sorry.. It seems your left row lists Estimated Interior Costs in the first matrix and then you added that total to the Exterior Total Costs, for a 20K total? Why do you add Estimated Interior Total to Exterior Labor Cost? And then in the right column you have added Interior Actual Costs to Exterior Materials, which I don’t understand either.

  2. Joe says:

    EDIT: Nevermind, I think I figured it out. You just listed the bottom columns as Labor / Materials and you probably meant Estimated / Actual

  3. J Scott says:

    Joe –

    To answer your second question first, that was just a couple typos in my spreadsheet…sorry about that! If you notice, I’ve revised the grid, and you’ll see that the entire left hand column is the “Estimated” costs and the entire right hand column is the “Actual” cost (split interior and exterior). Hope that makes more sense…

    As for your first question about where we found our deals before my wife got her license, the answer is that we found a couple agents and wholesalers in the area who helped us find deals. House #1 came from a wholesaler and Houses #2, #3 and #4 came through an agent (they were REOs listed on the MLS).

  4. Where do you get your cabinets? They’re really nice. I noticed $135 for the guest bath vanity. That is not the price for the one in the picture is it? (I know you mentioned the pics are from the other house)


  5. J Scott says:

    Hey Danny,

    Yes, that’s the price for the one you see in the bottom picture (it’s a pic from a previous house, but the cabinets/countertops were exactly the same in both houses). The price is for the cabinet, not the countertop; that’s included in the countertop price. It’s probably about $180 installed for the whole thing.

    We get our cabinets from a local supplier for a manufacturer called Liberty Cabinets. Their prices are fantastic, and the quality is amazing for the price point. My wife and I always say that when we sell our personal residence (which is several hundred thousand dollars higher in price point), we’ll install these same exact cabinets in our house.

    I’ll try to dig up some contact info for Liberty Cabinets and perhaps you can find a supplier in your area…

  6. Ryan O says:

    J Scott,

    Thank you for your detailed analysis and the sharing your experiences. I think many of us appreciate your site and the the valuable insights you provide. One question for you: How can some of the folks like myself help you in your business or with your goals? Just an idea – thanks again for your willingness to be a positive resource for others in the business and those getting started.

  7. J Scott says:

    Ryan –

    That’s very thoughtful and sincerely appreciate it!

    Actually, the best thing anyone who reads this blog can do is to recommend it to others that they know. What keeps me motivated to keep writing and sharing is the fact that my readership seems to be continuing to grow and as long as I’m able to help more and more people, I’m happy to keep going…

    Thanks again!

  8. Thanks, J. I’d appreciate that.


  9. Steven B. says:

    J, please feel free to use this comment in any of your future publications:
    I have been in the same business since the mid 1990s. What is truly amazing is your honest and sharing nature about how these rehabs really go in real life and the level of detail you openly describe to new comers.
    I’ve seen many investors come and go over the years and the ones who succeed possess what you have; an ego-free way of creating a home that is worth the price you are asking after it has been completed. There is no glamour in this business.
    I didn’t read your site content; I studied it.
    I have never staged residential project. We have multiple properties in some stage of the acquisition, rehab. and sales phase as I write this. I just made several phone calls to begin staging ALL of our homes. Even the rentals.
    I’m picking my jaw up from my desk over what your wife can make a home look like for a few grand.
    You have succeeded in creating both equity and value to all parties involved. That, my friend, is real success.
    You should wake up every morning, look in the mirror, and feel very good about what you are doing for your family, the banking industry, your community and families who need good, in expensive homes where they will most likely achieve a higher return over time than you have.

  10. J Scott says:

    Steven –

    First, I hope you don’t mind…you started by calling me “Joe” and I changed it to “J” (not a big deal, but didn’t think you’d mind!)…

    Second, I can’t tell you how much I (and my wife who read this as well) appreciate your comments. As I pointed out to Ryan earlier today, it’s things like that that keep us motivated to keep writing and working with others in this business. You really made our day…which says a lot, as it was a pretty annoying day, business wise… 🙂

    Sincerely, thank you again…

  11. Josh says:

    Hi J,
    After reading a few of your posts I’ve decided to change the way I do some of my rehabs. instead of going strictly through Lowes I’m going to start looking for flooring and cabinet wholesalers/installers.

    One question, what do you use for countertops?

    Thanks, I really enjoy reading about your business. It has pushed me to rethink how I run mine.


  12. J Scott says:

    Hey Josh –

    Re-evaluating your business practices is always a good thing. Not a day goes by that I don’t try to optimize a process or figure out a way to cut a long-term expense (without adding additional work). So, congrats on that attitude!

    As for cabinets, we get our cabinets from a local supplier for a manufacturer called Liberty Cabinets. Their prices are fantastic, and the quality is amazing for the price point. My wife and I always say that when we sell our personal residence (which is several hundred thousand dollars higher in price point), we’ll install these same exact cabinets in our house.

    I’ll try to dig up some contact info for Liberty Cabinets and perhaps you can find a supplier in your area…

  13. Josh says:

    Thanks J,
    How about countertops, are you going granite or the cheaper laminate slabs (about $100 for a 10 ft. piece at Lowes) or is there something in between?

  14. Don Hines says:

    I am glad you explained the mailboxes. I thought you may have bought them at the Government toilet seat store. 🙂
    I learned a few things about doing my own inspection. My project had a lot of visable water damage which didn’t concern me because it was obvious it came from the shower stall. The roof looked new (neighbors confirm) and there were no signs of it leaking. But, who ever replaced the shingles did not replace the rotten decking. I don’t know how they got nails to hold in it. I don’t think they even replaced the underlay. So, I am over about $3000 too. Except for the appliances coming in $1000 less. Thanks for the tip on BP.

  15. Mark in Fl says:

    There’s an old saying that’s roofers tell the new hires who try to slow down jobs to repair something: F@%* it, nail it!

  16. G Mac says:

    Hey J,

    I’ve been following your site for a few weeks and I absolutely love it. I’ve been reading books about flipping houses for years and nothing has been nearly as informative. Thank you.

    I’ve check out your “education” and “resources” tabs. But I wouldn’t even have thought about most of these things before I read them. How and what did you do to learn about the necessary information before you did your first flip? I’m a math teacher currently which means I’m not afraid of numbers and I have little money. But I really want to flip houses. Any insight you can provide is appreciated. Thanks.

  17. Hey, great site! I’ll add you to my blogroll. I’m an investor myself and do get some investor readers, so I’m sure they would be interested in some of the great stuff you’ve posted here. Thanks!

  18. Stephanie says:

    Do you have any information for liberty cabinets. I have tried to find a supplier in NC and have not been able to find anything. Thanks for your help!!!!

  19. J Scott says:

    Hi Stephanie –

    I talked to my supplier last week, and unfortunately, Liberty Cabinets is local to Georgia and they don’t have suppliers outside the state. I wish that weren’t the case, as I’d highly recommend them to everyone…

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