House #3: Rehab Estimates

September 24, 2008 · 0 comments

We finally got The Second Chance House underway yesterday (no comment on whether we actually own it or not), and I’m really looking forward to this project. I expect that house will turn out to be one of the nicest in its 200 property subdivision, and hopefully it will be able to attract some buyers, even in this tough market. I realized that I haven’t posted my financial plan or schedule for this rehab, and considering that I’m using this blog to track my successes and failures (and hopefully learn from them), it seems reasonable that I should lay out my rehab plan before we really get this project underway, so I can later come back and assess my progress and my ultimate outcome.

Let’s start with the financials…

The property was purchased though a “rehab loan” that provides me the cash for both the purchase of the property and the rehab costs. I’ve requested $36,000 for rehab costs, broken down into labor ($23,000) and materials ($13,000). While I have much more detailed breakdowns for each renovation area, I won’t bore everyone with the details here.

I expect much of the labor costs (about $20K) to go right to my GC and his crew, who will be completing the bulk of the renovation work. I’ve left a few thousand dollars aside for things such as professional landscaping, potentially adding a fence to the backyard, and any other “surprises” that might come up.

As for the materials costs, I did a second pass through the house yesterday to create another materials list (to make sure I didn’t miss anything the first time around), and to update some of the materials pricing based on what I’ve learned from my first major rehab (and because Home Depot changes some of their inventory every few months). I under-estimated some materials costs the first time around (flooring and paint were the two biggies), and over-estimated some others (countertops and light fixtures, for example). The $13K materials budget doesn’t leave much room for error, but because we’re replacing almost all of the finishings in the house, I don’t think there’s much I could have missed; and I’m getting pretty confident on my pricing.

As for schedule…

After some discussions with my GC, I’m fairly confident this one can be completed in 5 weeks. The first week will primarily be devoted to demo and exterior work; the second week to framing and rough plumbing/electrical; the third week to sheetrock, trim work, and final plumbing/electrical; the fourth week to painting and flooring; and the fifth week is a buffer to accommodate final tasks such as appliances, finishing details, and my punch list.

To be safe, I’m going to set my schedule on this one to five and half weeks, and that puts the completion date on or about October 31. I should probably build in more than a couple day buffer, but I’d really like to get this on the market the first week of November, and we’ll need a few days for staging. So, I’ll be pushing the guys hard to get this one done on schedule.

Well, there it is: My goal is to complete this rehab for $36,000 and within five and a half weeks. If I can do that, this one should make us some decent money…

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