Table of Contents
Fix and flipping a home means you need to know the do’s and don’ts of rehab work to accurately estimate costs before you make an offer.
If you estimate a fix and flip too low, you will lose out on profit. If you estimate too high, another real estate investor will swipe the deal from under you. Essentially, you need to walk the property like a pro.
Use these tips, do’s and don’ts and estimated costs for rehabbing a property in the Houston area.
Foundation Work on an Investment Property
Hire a structural engineer for a foundation inspection and document what must be done.
An independent structural engineer can give you an unbiased evaluation, along with advising you where to put beams, how many, etc. He or she is getting paid for the evaluation and has no incentive on repairs, whereas a foundation company or contractor may have.
Look for cracks in the actual brick, which can indicate settling and foundation problems that could be costly. Also factor in any interior work related to foundation problems, such as replacing uneven flooring or doors.
Foundation Problem Indicators
- Cracks going through slab.
- Cracks in brick.
- Doors not closing properly.
- Cracks in drywall.
- Look for uneven spots for signs of bad decking, which means a roof needs replaced.
- If shingles are stained, pay to have them cleaned at a cost of $400 - $600.
- The estimated cost of a 2,000-square-foot roof replacement is roughly $7,000 at $3.50 - $4 per square foot. The price on a 2-story home may increase due to numerous angles.
- Make sure vents are changed out when having a roof replaced.
- To pass inspection, have all branches cut away.
- In older homes, make sure the roof is not asbestos.
- Compare the costs to repaint vs. replace siding based on condition, comps and profit potential.
- Cost to repaint is typically $1.50 - $2 per square foot, compared to Hardi siding at about $3.50 - $4.50 per square foot to install turnkey.
- If a buy and hold, the costs for Hardi and new gutters are typically worthwhile.
- Paint and repair soffit and fascia where needed for instant curb appeal.
- For windows, know your comps and let that be your guide on what to do. They are expensive at $350 - $500 per standard window.
- Sidewalks, aprons and concrete can be very expensive. Don’t change the apron and sidewalk unless required.
Moving a Wall
- Do not do unless you deem it essential to attract buyers.
- Must determine if wall is load bearing.
- Need a header for opening on a load-bearing wall.
- Make sure plumbing and electrical are not in the wall.
- Hire a trusted contractor who understands house flipping and property investing.
- Run water when you walk the property to test pressure in multiple areas.
- Look for stains anywhere. Rust or corrosion?
- Consider a sewer line camera inspection for blockage, tree roots, etc.
- Typically cheaper and easier on wood frame/pier and beam homes to replace or move plumbing. Plumbing work in brick homes on a slab will be costly.
- Replacing a hot water heater is about $1,200.
- Replacing all pipes is around $2.50 - $4 a square foot.
Types of Good Plumbing
- Copper (expensive to repair)
- Pex (Great!)
Types of Bad Plumbing
- Check out breaker box; look for breakers that are loose and/or rusted.
- Lower than a 100 AMP service and/or breaker needs an upgrade.
- Modern appliances, HVAC and modern lighting often require new box.
- Rewiring the entire house runs $2.50 - $4 square foot.
- Use an outlet tester or receptacle tester to verify that an AC wall outlet is wired properly.
- Don’t use interior box on the exterior.
- For repair work, always use a licensed electrician.
- If possible, test or have HVAC units inspected. If not, look at it and make a decision.
- Cost can range from $3,500 - $7,000 depending on size. A 1,500-square-foot home typically needs 3 ton unit.
- For an exterior unit, clean exterior coils and grill to make sure the outside of the unit looks good.
- Homes near the ocean need specially designed units.
- Make sure to cage unit it if in a bad neighborhood or a rental.
- Use the comps to determine if you need to upgrade or replace doors.
- Changing out the hardware is an inexpensive way to make the house look updated.
- Paint can make a big difference.
- Basic front door replacement can cost $500 - $700; much more for high-end flips.
- Base your changes on the comps.
- Try to paint cabinets or consider look-alikes, such as a modern granite look-alike. New cabinets are expensive at $80 - $145 per linear foot.
- Prefab is less expensive than solid wood site-built cabinets.
- Level 3 granite is $28 - $35 square foot. Cost could be $50+ if level 1.
- Secondary bath is not as important as the main bathroom that guests would use.
- In older homes, raise the height of shower head.
- Stick with cabinets if you can as new vanity could get expensive with plumbing work.
- Tub replacement may require tile work. Look at resurfacing tub to cut costs and list as “updated.”
- A nice mirror with lots of lighting can make a big difference.
- Typically $4,000 - $5,000 for two bathroom remodels.
- Almost always paint the interior of the house for immediate inside appeal.
- Paint costs about $1.25 - $1.75 per square foot.
- Drywall repairs are about $45 - $50 per sheet.
- Avoid painting ceiling if possible to cut costs.
- Popcorn ceiling texture can be expensive to remove. Check your comps before removing.
- Look at comps to determine what you need.
- Tile cost $2.50 - $4 per square foot turnkey
- Carpet runs about $1.75 - $2 per square foot.
- Wood is highly desirable and runs about $1.75 - $2.50 per square foot.
- If a rental, avoid carpet and hardwood if possible. Use tile laminate or vinyl plank.
- Try not to put tile next to other tile.
Landscaping & Final Touches
- Landscaping adds immediate curb appeal. Let the comps be your guide on how much to do.
- Landscaping can range from $250 to a few thousand dollars depending on size.
- Make sure plants/flowers are season appropriate and durable. Plant last for best chance of survival.
- Set a watering schedule to keep curb appeal.
- Power wash the house and driveway/sidewalk for a polished look.
- For final cleanup, dumpster removal, etc., assume $550 - $1,500 depending on the size of the rehab.
Job Sequencing for a Fix and Flip
Once you close on a fix and flip home, job sequencing can be extremely important to your potential profitability.
Proper job sequencing can prevent increased costs. For example, if electrical work is done after paint, then you may need to cut a hole in the wall and redo drywall and paint. Use these steps as a guideline to job scheduling when flipping real estate.
Rehab Scheduling Guideline
- Exterior Repairs
- Wall Movement
- Bathroom/Kitchen Remodels
- Interior Paint/Drywall
- Flooring (Carpet absolute last)
- Touch Up Paint
Catalyst Funding is a hard money lender that helps build real estate investment portfolios. With a background in fix and flip projects, we provide resources and guidance to help you through the entire process. Contact Catalyst Funding today. 832.648.3626