Calculating Rehab Costs for Duplex

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Calculating Rehab Costs for Duplex

Erica Larence-Penna
Attorney · RI · Member since 2019 · 157 posts · 93 votes

I am looking at purchasing a duplex in Cranston, RI. ARV is about $270,000 to $280,000 and the seller is willing to sell it at $150,000. I am struggling with calculating rehab costs, however. I did have a contractor come out and take a look, but he is going to need a week to give me a ballpark figure. It does need quite a bit of work - kitchens need to be redone, bathrooms need to be redone, hardwoods will need to be refinished and I plan to rip out the linoleum, tile, and carpet in any remaining rooms and replace it with LVP, I'd like to take the wood paneling down and then repaint the walls. The house settled and the porch is slanted and some of the floors are a bit uneven so that is also going to need to be fixed. One of the boilers is brand new. Roof is nearing the end of it's life, but probably still has a few more years left. It's not in bad shape. House is about 1,620 sq. ft. I currently have a four-unit that we are househacking, so once we actually get in it we plan to BRRRR over the next couple of years.. Here's what I'm thinking, but this would be my first complete BRRRR, so I could be way off. I also included photos.

Refinish hardwoods: $5000

Renovate bathrooms (shower insert, vanity, fixtures, flooring, toilet): $10,000

Renovate kitchens (cabinets, countertops, flooring, appliances): $20,000

Paint/cosmetics: $3000 (plan to paint most on my own, so this may be cheaper, but I'm going to budget for contractor doing it anyways)

Again, I'm new to this, so please be easy on me if I am completely off!

Thanks!

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  • Joe Timko
    Real Estate Broker · Glendora, CA · Member since 2017 · 51 posts · 14 votes
    6y

    @Erica Larence. Erica, the prices you have appear reasonable but you didn’t mention the slopping floors/porch. Are the underlying foundation issues that will also need to be repaired? The property appears older maybe 50’s what is the condition of the plumbing and electrical? Most likely walls are plaster. Sometimes people install paneling over old plaster because it is damaged. Just do a good inspection so you know what you are getting into.

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  • John Collins
    Investor · Tx, GA · Member since 2019 · 313 posts · 337 votes
    6y

    How much rent do you project you'll be getting / month? That factors into the type of flooring I get, the quality of kitchen and bath renovations for me. There are certain things you can do that save you money (like resurfacing shower tiles and rubs instead of ripping them out and putting in new ones) and certain things you want to have brand new. with countertops you may want non porous quartz that's a little more expensive than the lowest grade of granite, or you may just want to put in a lower grade of granite and let it sit there for 15 years. So it does come down to your design decisions which for me is based on expected monthly return, the neighborhood it's in and what draws people to that area. 

    The kitchen cabinets look fine, I would not replace them unless there is rotting wood or mold on the inside. 

    LVP is a great flooring choice for this price point, you can put it everywhere (even the bathrooms). 

    I would replace the toilets/flooring in the bathrooms, add a new vanity, and just fix and resurface the tile and tub for showers along with new fixtures. 

    Is the wood side paneling real wood or some kind of plastic replicate? If it's real I would leave it on and just sand/recondition/restain it. 

    For paint I recommend using a smell and stain blocking primer wherever the walls were previously dirty or any side paneling you take down. Also, I like using higher quality paints as they cover more area and give the place a better look when finished. 

    IMO you can easily come under the budgeted amount if you are a little more picky with what the contractor does as opposed to "have at it". 

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  • Erica Larence-Penna
    OP
    Attorney · RI · Member since 2019 · 157 posts · 93 votes
    6y

    @Joe Timko I forgot about that! Thanks for pointing it out! Contractor came back today with an estimate of $40k-$45k, but I’m going to add a little on to that to be safe.

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  • Erica Larence-Penna
    OP
    Attorney · RI · Member since 2019 · 157 posts · 93 votes
    6y

    @John Collins thank you! Market rents in the area are about $1,200, so we expect to get $2,400, but cash flow around $700.

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  • John Collins
    Investor · Tx, GA · Member since 2019 · 313 posts · 337 votes
    6y
    Originally posted by @Erica Larence-Penna:

    @John Collins thank you! Market rents in the area are about $1,200, so we expect to get $2,400, but cash flow around $700.

    OK, so depending on whether you are doing some of the reno as opposed to contractor doing all , a couple places where you can save thousands:

    1. Redoing the kitchen cabinets instead of new ones. Sand, prime, sand, paint, sand, paint with a spray gun and premium paint. Soft close drawer hinges aren't expensive either. 

    2. Google "refinish tub and tile" and see if you have any good reviews in your area. It's an amazing job but you have to tell your tenants not to use bleach when cleaning afterwards. However if there's any kind of mold then I would redo it from scratch. 

    3. Don't think it's worth $5,000 refinishing these hardwoods as opposed to getting new LVP (waterproof everywhere) or engineered wood (not waterproof, need tile in water areas). They don't look that great, and there are plenty of places that sell flooring and installation for a better price than buying separate. I have put in premium engineered in upscale places with install for $4.5-5 sq/ft with a discount as inventory was close to finished. LVP is cheaper and better for rentals where tenant isn't that diligent. 

    For the counters, I would do a grade 1 to 3 (it goes up to grade 8) granite, cost effective and last forever. 

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