Over budget by 40,000. What?!

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Hi everyone, 

I'm currently under contract on a property I thought was a great deal. This is a standard 3/1 SFH with 1,200 SQ FT built in the 1950s. I got a bid from a contractor who has done over 600 rehabs. The estimate came at around 55,000 which was perfectly fine since it meet my budget.

Today I received a call from an experienced contractor who happens to be licensed in this particular suburban area and has done plenty of flips for other major companies. After looking at the house, he told me I would be looking at a rehab north of 100,000. He explained that the city would probably make me update everything inside the house, electrical, plumbing etc. 

I spoke to the city inspector and unfortunately they don't conduct point of sale inspections. They would only visit the property until I submit drawings. The inspector told me I would probably need to bring plumbing up to code once I start kitchen and bathroom renovations. But that they probably won't ask me to replace everything as the last contractor told me. This is a 1,200 sq ft home on slab with no basement. I just can't see how I would spend almost 100,000 on a simple SFH renovation.

How would you approach the situation? I'm going to be cold calling investors and bringing more gcs, electricians and plumbers. But other than that, I'm not really sure how to proceed. We are schedule to close in 2 weeks.