Posted by Bill K. (AZ) on November 29, 1999 at 23:40:02:
Tobe,
Costs for each of the rehabs listed in my post were:
- $7,500
- $13,000
- $6,000
Bill K. (AZ)
Rehabs - Posted by Rick - PA
Posted by Rick - PA on November 29, 1999 at 14:01:34:
For those investors experienced in rehab properties, do most of you do the rehab work yourselves, or hire contractors? How long between buying-rehabbing-selling does this process usually take?
I realize the last question probably varies depending upon a lot of circumstances. Any input is appreciated.
Re: Rehabs - Posted by Jim IL
Posted by Jim IL on November 30, 1999 at 20:09:30:
Rick,
I am not an experienced rehabber, but have had my fair share of “projects”.
In fact, we are workong on one now.
When it comes to rehabs, or homes needing repairs, I look at each one differently.
It really boils down to what ever I have on my plate at the time.
Right now, I have plenty of time, and little funds.
So, the deals we are willing to actually get into and work on ourselves, we will do.
If the home is newer (as in less than 15 years old) then in all likelyhood, the repairs needed are going to be cosmetic in nature. (although, we have seen some homes that were less than 5 years old and needed MAJOR repairs as well.)
If the home is older, we try to use contractors, simply because, as someone else stated her earlier, as the contractor works on one problem, they will ALWAYS find 5 more.
Then, we prioritize.
Which problems NEED to be addressed NOW? Which problems can I leave in place and still sell the home?
And, what will it cost to have it fixed, and will leaving it create any future problems?
Example:
We have a duplex now that had 18 city code violations.
All of them minor.
It needed things like electric outlet cover plates (that was 10 of the “Code violations” right there), smoke detectors, and 2 new faucets.
These are all things I can and have done before.
I went ahead and did these repairs, and spent less than $200 in supplies. (the majority of which was new MOEN faucets, gotta like the warranty on those Õ¿Õ)
But, we also found that EVERY single storm window on the place was either cracked, missing a pane, or loose.
We knew the city inspector missed them the first time, but I can guaruntee that she will not on the next inspection.
So, we set out to replace the windows and/or broken glass.
I started out putting in replacement glass, and screwing in the frames.
This is when I found out that all the window frames, (the wood part under the aluminum storm frames) was rotting, and needed to be replaced.
Not a bad job for me, but time consuming.
So, I found 10, 1 yeard old ,thermopane windows in the newspaper yesterday, and bought them for $150. ($15/window, not bad in my book).
I then hired a local “handyman” who has done work for me in the past, and he will install ALL the new windows this weekend, for $150, and a six pack of beer.
(Which he’ll get AFTER the job is done, and HAVE to share with me.)
I could have saved the $150 that I’m paying him, and done the job myself, BUT, this weekend, I am “on the hunt” for that next deal. I expect to make a little more than the $150, so it really is worth paying him to do it.
PLUS, whenever this guy does a job for me, he will always do followup for FREE if we encounter any problems or things left undone.
If you are looking for good quality people to do your work for you, check with other investors, rehabbers in your area. (check your local REI club).
Also, try to goto a construction site, and pass out business cards, and ask for contractors/workers, who will do “side jobs”. Then, when you find them, have them come out and take a look at your project and give you an estimate. Perhaps even take bids, and have all the contractors there at the same time. Then, take the best bid, which is NOT always the lowest. (if someone will cost me an extra $200 on a job, but get it done in HALF the time of the others, then he is my guy.)
As you hire these people, get in writing what they are to do, and by when. Have in the agreement that IF they fail to meet the timeline, then the pay gets reduced.
Do NOT pay for all of it upfront. Perhaps materials, and some labor, and the rest upon completion.
These guys can usually do the work for less, and often times can even help you secure supplies at discounted rates. (just do not ask “where” they get them…I do not. Õ¿Õ)
“Hey, Bob, that nice new single car garage door you got me for $125, where did you get that?”
“Jim, I cannot get anymore, so do NOT ask!”
(maybe thats why there was no warranty card enclosed?)
Another good source for cheap labor is cops, and firefighters. They often work there “normal jobs” and have plenty of extra time to do construction.
I have a local firefighter and cop that team up and do painting for me on occassion. They are good, and cheap.
I buy the paint, and they paint on there off days.
Takes a little longer as compared to the full time painters, but for half the price, I’ll wait an extra week.
And, since it is Christmas time, you will find plenty of people looking for “Extra” income, and they WILL get it done quicker, cause they want the money to buy gifts BEFORE the holiday.
One other thing I just thought of.
Check with the local warehouse stores for supplies.
You can often find “discontinued” or “returned” items at a major discount.
For my duplex, we needed 4 out door light fixtures. They are usually only about $5/piece.
We found 6 that had been ordered by a builder and returned because they were the wrong color. (they were white, the new homeowner wanted “Beige”.)
We got all 6 of them for $8.83, and they even came with light bulbs. (I installed those myself).
We also got a screen door for the one unit that had a small dent in the vinyl on the inner side of it.
It was normally priced at $69.95, we paid, $29.95.
According to the store, it was a defect. (I could hardly see the dent, and the tenants were just happy to have a screendoor that closes and does not have broken glass in it.)
So, shop around for all your needs, labor and supplies.
There are deals out there, you only need to look for them.
And, since I’m broke and have PLENTY of time, I can and will find them, so can you.
You may also consider making space in your garage or shed for “Extra stuff”.
I have a tool shed in my back yard filled with extra things, like switch plate covers, window panes, screening, door closures, cabinet door knobs, and whatever else I come accross cheap or free.
I just put all new knobs on the kitchen cabinets in my own home, from abox of them we FOUND in the basement of a newly aquired deal. (they were brand new, and still in the wrapper.)
I hope this helps a little,
Jim Il
Re: Rehabs - Posted by Miloneco
Posted by Miloneco on November 29, 1999 at 19:28:12:
A few suggestions for you on rehabs.It is important that either you are handy or have a good realationship with your contractor.He or she may be someone that you use over and over agian,They can save you thousands of dollars .Remember on older houses digging into one problem can result in uncovering many others. Rehabing is not for the weak hearted.
We do our own rehab work and sweat equity comes to play.I am also surronded by a good core of subs people I use repeatedly for the work that requires liscences.
Obviously your best rehabs are heavy cosmetics paint and flooring ,maybe start with one like this.Good luck.
Re: Rehabs - Posted by Mark Mallen
Posted by Mark Mallen on November 29, 1999 at 18:09:28:
I started doing rehabs years ago to keep my maintenance people busy. You have a lot of flexibility if you keep some long term rentals and have your maintenance people doing rehabs in between work.
If you are just starting, I would recommend finding a reliable contractor to do all your work. Ask around and find at least 3 contractors to bid your first job. Let them know you are planning to do more work in the future. I would not automatically decide to sell once you are done. You may be better off lease optioning the property or renting and refinancing to pull your money out. I just did a deal using the latter technique and put $20,000 tax deferred dollars in my pocket. It all depends on your market and personal circumstances.
Re: Rehabs - Posted by Carmen
Posted by Carmen on November 29, 1999 at 15:12:57:
We did our first 2 rehabs ourselves (mainly), since we couldn’t afford to hire anyone else (except for the roof, of course). We spent over 5 weeks on each of them, weekends, evenings, you name it. Just putting in new doors took all day. Finding an L/O tenant took about a week.
As we get into our third, however, we realized that it’s a matter of time vs. money. The first 2, we had more time than money, so we did it ourselves. It took a long time. Now, we’re about even, so we’ll hire out most of the work, but still keep a hand in it to keep costs down (be our own manager). This one should take about 3 1/2 weeks total (including the holiday weekend). Then we’ll have to sell it - since we’re heading into Christmas, I’m not sure how long that will take.
After this one, we will definitely hire out - we’ll be able to afford it, and it will take much less time for the pros to do it than it does for us. We’re also looking for a “general manager” who will supervise the work so we don’t have to be there constantly. Plus, we’re really getting itchy to go BUY some more, make some more deals. Impossible to keep the momentum of the business going when you’re hammering and nailing.
Amazing how an experienced carpenter can rebuild an entire room in less than one day - a room one fifth the size took us 3 days on the last house. And it takes a plumber 10 minutes to figure out something we’d been puzzling over for hours. Not to mention having to purchase/rent the necessary tools - and the injuries we’ve inflicted on ourselves (backs, thumbs, knees).
So, the question is - in the beginning, can you afford to have someone else do it? In time, the question becomes - can you afford NOT to have someone else do it (counted in lost deals)?
Saludos,
Carmen
My Experience - Posted by Bill K. (AZ)
Posted by Bill K. (AZ) on November 29, 1999 at 14:17:24:
Rick,
My partner and I hire contractors to do the work. The length of time it takes depends on the amount of work and the size of the home. Here’s an example of what we’ve been experiencing:
-
A 4/2, 1150sf home required building a new interior wall, interior/exterior paint, replaster pool, minor termite work, new flooring throughout, new appliances and fixtures, and it took 3 weeks to complete.
-
A 3/2, 2000sf home required a few new windows, new A/C compressor, destruction of carport conversion, interior/exterior paint, minor plumbing repairs, minor electrical work, minor roof work, new flooring throughout, new appliances and fixtures, and it took 7 weeks to complete.
-
A 3/2, 1450sf condo required interior paint, moderate plumbing repairs, new flooring throughout, new appliances and fixtures, and it took 2 weeks to complete.
I hope this helps.
Bill K. (AZ)
Re: Rehabs - Posted by Bert G
Posted by Bert G on November 30, 1999 at 11:53:15:
I’ve always prided myself on being able to do just about any kind of home repair. I have the tools and ability, and know when to call a pro when something is out of my league.
I was working on my latest accquisition, and injured my shoulder. Couldn’t do squat for over a month, and still can only stand to put in only about 4 hours a day. After 2 mortgage payments, the place is still a long way from completion. If I’d have had a contractor to line up, it would have been done and probably occupied by now.
Next time - - -
BG
Re: My Experience - Posted by Tobe
Posted by Tobe on November 29, 1999 at 22:56:37:
How much did your repairs cost individually for 1,2, and 3(if you don’t mind me asking)?
Tobe