House #35: Preliminary Budget

June 30, 2012 · 8 comments

We’re getting ready to close on The Rookie House this week. We have a three month deed restriction (we can’t resell for 3 months), so there is no real hurry to finish the rehab, but we’ll be starting as soon as we close. The house is currently torn down to the studs, so it will need a full renovation on the interior. The exterior is in decent shape, so hopefully that work will be quick and inexpensive.

Here are my preliminary budget estimates for this project:

Preliminary Budget

Our goal on this one is to come in under $40K…

8 responses to “House #35: Preliminary Budget”

  1. Ryan Mullin says:

    Do you have software that you use to put budgets together?

  2. J Scott says:

    Hi Ryan –

    I use Excel for everything (and QuickBooks for all financial bookkeeping). I have evolved lots of templates over the past couple years and just stick with what works for me…

  3. Chris Lipumano says:

    Hey J,

    I was wondering how your yellow letter marketing is going? and if you don’t mind sharing what other marketing efforts you are using that are pulling in leads.

    I am saving as much money as I can to start marketing my self and my business. I plan on building a website to capture leads, yellow letter mail, bandit signs and probates. What do you think?

    I love following your website because the information you provide is great and you leave nothing out which helps newbies like me to understand what needs to be considered and calculated.

    Keep up the great work!

  4. J Scott says:

    Hey Chris,

    I’ll post more later in the week, but we’ve sent out about 2000+ letters over the past two weeks and have gotten some very decent short-sale leads from those. I’ll post a lot more details in my next update…

  5. george says:

    just looking at the items that are common, i am amazed that you are getting or think you will get those prices.

    i can’t find anyone that would install an exterior door for less than $175. $600 for tub and shower? that’s a great price. a condenser replacement here is around $1800, yours is $1200. $100 to install appliances? here they’d charge just $75 for the garbage disposal. overall, that’s great if you can get those prices. even better if you have already agreed with contractors to get those prices.

    every time i start with a budget, by the time i am done, i get so frustrated with the whole thing that i dont even update it anymore. i just “throw money” at it just to get it buttoned up. i know it’s not the best way or the correct way, but i can’t stop with an unfinished project no matter if i have gone over the initial budget.

  6. J Scott says:

    Hi George,

    These are the prices I know I can get down here in Atlanta. Just to address a couple of the specific things you mentioned:

    – Installing an exterior door. Find a good carpenter who works by the hour. A great carpenter may charge $25-35/hour, and can install an exterior door in 45 minutes. Even if they charge you a flat rate, it shouldn’t be more than $75. Certainly if you’re using a big company that has a “price list,” you’ll pay more, and $150-175 is pretty typical for those types of companies. But, remember, with them, you’re paying for the overhead — the guy doing the work is just a carpenter getting paid $25/hour…find that guy yourself.

    – Tub/Shower. There’s no reason it should cost more than $200 to install an off-the-shelf tub/shower with surround. This is at most 2 hours worth of work, and a great plumber shouldn’t be charging more than $100/hour. I should be able to get all three tubs installed for $600. Again, if you’re paying the big plumbing company, you’ll pay more because they have overhead. Find a plumber who will charge you by the area or quote you an entire job based on the number of hours he expects to spend.

    – Condenser. Typically, a new 2.5 Ton condenser is $1000 or so in my area. Generally, you’ll need to replace the coil as well, which will take the price to $1800-2000, but I was hoping to get away without having to replace the coil in this case. I should have budgeted $2000, but in this case I got lucky and don’t need to replace anything on the HVAC system, just a tune-up.

    – Appliances. Most of the appliance installation costs are in the other line items. Stove and dishwasher are part of finish plumber, and garbage disposal is part of finish electrical. The $100 is just for extra stuff like the fridge ice-maker line and hanging the microwave, which can generally be done by a good handyman working for $15-20/hour.

    Hope this helps, and perhaps gives you an idea of how you should be thinking about your contractor costs. Finding contractors like this can take some time (especially good ones), but they’re out there, and they want to work with you, as contractors LOVE the idea of repeat business. Remember, the thing most contractors are worst at is marketing, so when you can promise jobs over and over again, they’re going to want to work with you.

  7. george says:

    JS, just getting back to replying to your feedback (much appreciated).

    i agree with you on “how much they should charge” points. but the reality is that the people that i work with does not seem to care for “repeat business” and they act like they would rather look for new business than give me a good price.

    i know that a door takes just two hrs to do. but when “mention” to the contractors that when i divide the $180-$200 quote by 2 (how long it takes), they seem to be making about $100 per hr, they look at me like i stole their lunch.

    the biggest problem is that i work with these guys 2-3 times a year and i am not a big fish for them. if i did that 7/24/265, maybe they’d start to pay some attention to me.

  8. J Scott says:

    George –

    Keep shopping for contractors. It appears you’re getting the guys that are either: 1. more retail focused or 2. trying to take advantage of you. I’d ask around to other investors in your area who they use, and see if you can get bids from their guys. Personally, I love referring my contractors to other investors, as it keeps them busy and ultimately gets me better pricing. Give that a try!

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