Get Ready to make an Offer - Rehab Considerations
Ok…so you have a home in mind and a contractor lined up (yes you already discussed license and insurance with your contractor). As stated last week, you need to get the home Off The Market asap. Here are the steps/thoughts on how to get started:
- Work with your Realtor® to go see the home and get ready to Make An Offer. Note that an Offer doesn’t mean you will 100% buy it. If your Realtor® knows their stuff, then you should be able to back out if you find something major wrong with the home.
- Review all the Details on what it needs for improvements (make a basic list). Examples:
- Take carpet out and put Laminate down (prices I have seen are from $4/sqft to $6.50/sqft…depends on labor, choice of flooring, trim/padding). This project I selected ahigher end Laminate thus on the higher side on square foot costs. 800 sq ft = $5000 or so.
- Demolish old items/flooring – Low end labor and Disposal fee. It all depend on how much work is needed…..mine was $1000 so far, w/ 3 rooms of old carpet and tearing out 2 walls and wall cabinets, kitchen cabinets, etc.
- Plumbing – New fixtures, sinks, etc. Any unknowns out there…yes…always plan for some. In my case an extra $500 to get old iron drain pipe removed (cut through slab and jack hammer needed….no crawlspace so something to think about). Generally put $1500-$2500 in initial budget
- Electric – We initially planned for $2500 (I added $500 as I figured we needed more, so $3000). We are still over budget on Electric….over $4000 now. When tearing out walls, you need to consider rewiring switches and outlets. Also, review ALL the details of the electric like:
- Has the Electric Box been updated Ever.? If not, then add a lot more to the electric budget (get professional electrician involved to get a better idea on total cost).
- Does the home have 3 Prong “Grounded” sockets everywhere? Remember, we live in an Old City/Community, so it is very common to have old 2 Prong outlets, or even in my case, we had 3 Prong outlets, but they were Not Grounded.
- Does the home have the necessary GFCI (Ground Fault Circuit Interrupt) outlets in the bathrooms, kitchen….? If you see them installed, it doesn’t always mean they are operational, so use your own tester or get electrician involved.
- Light fixtures – we totally overlooked this part. Our contractor clued us in after we realized a lot of the lights were Old and in need of updating. Also the lights were sometimes installed wrong, so best to start over and get it done now/right.
- Does the home need common upgrades like Cat 5 cable and Electric to wall mount areas where Flat screen TVs go, office area, kitchen, etc.? If so, add another $350 or so to the budget. Yes wireless technology has come a long way, but nothing beats the Cat 5 hard wire.
- How is the HVAC (Heating, Ventilation and Air Conditioning)..? If the HVAC was installed before 1990, you should consider replacing the whole system. The whole system requires the old Ducting/Venting to be removed from Attic (or crawlspace), old AC Unit and Heater/Blower replaced. This can hit your budget hard. My initial quote was for $6000 or so. This did Not include getting new ducting. Once we were in the attic, we made the decision to replace it all and get the home setup for the next 30 years. Budget at least $10,000 (I heard others suggest $15,000+, so shop around). Do you really need that Expensive Brand Name model…? I decided on a 90% efficient system that was rated pretty well. Time will tell if I made the right decision.
- How old is the Roof..? You may be able to get 20 Years out of a Roof if maintained well. Add $5,000-$10,000 for starters if a new roof is need (again it all depends….size, quality). We were lucky so far and no new roof is needed today (maybe 8-10 yrs down the road though).
- Foundation check –Foundation Repair companies do foundation repair daily/weekly. Find a reputable company and get quotes from them on any issues (cracks or sags, etc). Minor issues you can budget on the low side around $3000-$5000. Bigger projects can go way up from there. We were not in need of any foundation repairs, so far.
- Kitchen Rehab – this is usually the best place to start. Cabinets can cost anywhere from $3500 to well over $10,000. We are at $8,000 for the cabinets (this included a dry bar cabinet). We also had to plan for new Counter Tops. In this case we have 3 areas of counter tops. We went to the “yard” where our vendor had the slabs of Granite/Marble, etc. We had to use 2 Sheets and we chose Marble. We really wanted the lighter color for the kitchen as our cabinets were Dark. Add ~$5000 for them. They have a 15 year Dupont sealer for the marble, and they say that marble is just as strong as the granite. We could not find a light colored granite.
These are the basics to consider. There are many more things to think about, but remember this is a Blog and we don’t want to write a book. If you add up all the items above you can see that it very easily can cost over $50,000. In this case above, the plan is to Live There for at least 3 years. If your plan is to Flip It, then of course you would scale it back a bit on overall work and upgrades.
Gary Buchanan/Realtor® w/AgentOwned Realty - firstname.lastname@example.org 843-647-7743