6 Things That Will Balloon Your Rehab Budget
You probably own a car, or truck.
And, if you own a car or truck, then you’ve probably had to have it repaired.
There’s nothing worse than knowing you have something wrong with your vehicle, but not knowing how much it’s going to cost to fix it.
Whenever we have something wrong with one of our cars, my wife and I like to play the “how much it will it cost?” game. It’s kind of like the game show The Price is Right, only more depressing because no matter which one of us wins, we lose.
The Big 6
Houses are a lot like cars. When stuff breaks, or needs to be replaced, it’s difficult to predict the cost, especially when you’re talking about these six things:
The price for a new roof will depend on the style of the home, and height. It cost us $24,000 to put a new roof on this Victorian home in Wauwatosa, Wisconsin. The home was three levels high and had a lot of steep angles to traverse.
On average, we typically spend between $8,000 and $10,000. Most asphalt shingle roofs last 12-15 years so we replace them if they’re at the end of their useful life.
A standard size window cost about $250, and most general contractors charge $100-$150 each to install them. One of the first things I do when walking through a prospective fix and flip is count the windows.
This cute little bungalow in Milwaukee has 38 windows and they all had to be replaced. The line item on our budget was $10,000.
If you’re buying a house that’s more than 40 years old then chances are all the plumbing will need to be upgraded. We buy a lot of old houses in Wisconsin and I typically budget $5,000 for a house with one bathroom.
Like plumbing, many older homes need to be rewired. I’ve seen it all, including knob and tube wiring and fuse boxes.
A simple panel upgrade will run $1,500 - $2,000. Like plumbing, I assume a minimum of $5,000 for a home built in 1950 or earlier.
If you’re rehabbing a house that has an older unit (more than 15 years old), then all that will be required is purchasing a new system. We typically pay $4,000 for a unit that will heat and cool a 2,000 square foot home.
However, many of the properties we fix and flip in Wisconsin have radiant heat boilers. This means there’s no ductwork in the house. The same goes for the houses in Phoenix that we expand and reconfigure. New ductwork must be added.
We added over 1,000 square feet to this 1,000 square foot home in Phoenix. Between the units and ductwork we spent $10,000.
Curb appeal is everything. But what if you can’t even see the curb?
See all the trees in this picture? There’s actually a house behind it. It cost us $4,000 to have them all removed.
If you’re rehabbing a house that has a lot of tall trees surrounding it you better budget at least $1,000, per tree, for removal.
The Don’t Fix 6 Rule
As a rule of thumb, I don’t like to buy a property that needs more than 3-4 of these big-ticket items repaired or replaced.
Because it takes extra time to get all of this work done. And time is money.
Check out the before and after transformation video we put together of the house hidden behind all those trees…
It took us almost 16 weeks to complete the rehab because I didn’t follow the don’t fix 6 rule. The only thing we didn’t have to replace was the roof.
And while we still earned a decent profit, the return on investment was disappointing because of the time and money we had into the project.
In the end, it felt like a trip to the auto repair shop.