The DIY House was supposed to close this week, but the title company just got clean title back today, and the seller is requesting 5 days to review the entire closing package before they will be ready to sign the closing papers. So, it looks like we’ll be well into next week before we close on this one and get the rehab underway.
I spent the day with my brother putting together a final Scope of Work (see here) and budget for this project, and things are going to be super tight. We originally planned to do some/much of the work on this one ourselves (hence the name of the house), but with other projects likely to come along very soon, we’re not going to have enough time to devote to doing this ourselves.
In order to sell the house at our desired price-point and still make our desired profit, we’ll need to cap our budget on this project at $35K. Normally, I wouldn’t be concerned about hitting that budget for a house in this condition, but a couple things are contributing to what may make this difficult to achieve in this case:
- First, we had a roof inspection today, and it turns out that replacing the roof is really the only reasonable option at this point; while we could do some patching (my original plan), it’s likely that the next buyer won’t have more than a year or two of life left in the roof, and I refuse to sell a house like that. So, we’re going to have to eat the extra $4-5K needed to replace the roof;
- There are a number of double-pane windows in the house (eleven!) that have broken seals, and where moisture has seeped between the panes and clouded the glass. I believe my only option is to replace these windows, and while I don’t yet have a quote, I’m fearing they could be $300+ a piece for replacement windows if these aren’t standard sizes;
- I haven’t yet had a termite inspection on this house, and I have a feeling there is or was a termite infestation. If so, hopefully there isn’t much damage (my inspector didn’t find much), and worst case, it will be an extra $1000 or so for treatment;
- I severely underestimated the cost of replacing gutters. I thought I had previously been told it’s on the order of $1-2 per linear foot, but haven’t had any gutter work done before, so I didn’t know for certain. In reality, I think it’s closer to $4-6 per linear foot, adding an extra $1000 to the budget that I hadn’t previously planned;
- I haven’t yet figured in any “surprise” budget into my numbers, and I’ve yet to have a project that didn’t eat into the 10% extra I always allocate for surprises.
Doing a rough estimate of the budget based on the Scope of Work, I have a feeling this project could easily reach $40-43K (not including any surprises that come up). Given that I want to hit $35K max for the rehab, we’re going to have to negotiate my contractors very hard, do some of the work ourselves and/or cut the scope of the rehab when and where possible. It’s going to be a challenge to shave $5-8K off initial estimate, but that’s an important part of this business.
So, in summary, my budget on this one is $35K (wish me luck!) and I’m going to plan on 8 weeks for the rehab, putting us somewhere around mid- to late-March to have the project complete…