In my last post I discussed how I went through and assessed what I needed to do to get the property rehabbed by using my Property Inspection Sheet.
These are the repairs that I wanted done:
- A New Roof with some Decking
- Exterior Painting with some Rotten Wood Replacement
- Yard Cleanup
- Interior Painting
- Interior Wood Floors Refinished
- Kitchen Remodel
- Bath Remodel
- HVAC Tune Up
- Storm Windows.
Now, knowing what I needed done, it was time to figure out what it was going to cost. Putting a cost to some of these items was easy. I know what they are going to cost. Storm windows for example are about $120 each installed. So just multiply that by the number of windows.
Other items like yard clean up and HVAC tune up just costs what it costs. It can take a crew of two or three guys several hours to cut the grass, trim hedges and bushes and pick up layers of leaves. For the HVAC, parts may be needed. I have used the same grass and HVAC companies for years now and their rates are competitive (Yep, I shop around every once in a while.). So whatever it takes to get the place heating and cooling and looking clean is just going to cost what it costs.
Other items I can guesstimate but I like to get a couple of quotes before proceeding. This would include items such as the new roof along with the exterior and interior painting. I like to have professionals look at these jobs because they can see things I might miss.
Kitchens and baths are the most important part of a rental property. These two rooms are the ones that can make or break a deal. Make them look nice and you can get better tenants and likely more rent. Cheap them out and you will end up paying for it later on. That said, I like to work with my contractor here on picking out tile, cabinets, counters and other fixtures. So while I may have a cost idea in my head, it may move a bit as materials are finalized.
Finally, in any rehab budget there is a need for what I call an “oops” factor. This “oops” factor is extra money placed into the rehab budget for unforeseen items or ad ons, and trust me, there are always unforeseen items or add ons. One never knows what they might find once things start getting ripped up. Plus, as work progresses, if I know I have a little wiggle room in the budget I can make changes that will create a better finished project in the end.
Next time I will talk about the process of hiring contractors to get the job done, done right and on time.
