8 unit vacant for 12 years - Rehab question

[Yiftach Ilyov]

Hope all here are doing ok and stay safe!

I am looking at an 8 unit property, 10,000sqft,  that is vacant for 12 years. 

property is in Cleveland, was vandalized and will need everything done - plumbing, roof, electrical , mechanical, windows and of course everything cosmetics.

I was hoping to get some insights from anyone who did such a project mostly in regard to cost.

Seller is VERY motivated and basically selling it for cents on the dollar, rents in the area can be VERY high and im very confident in the underwriting of the transaction - only thing that is missing for me is the rehab cost.
im scheduled to speak with contractors next week that specialized in this kind of projects but wanted to hear personal experiences before.

absolutely not looking to get an exact number - just a feel of what should i expect.
I figured if I'll send 37.5k per unit(300k rehab budget) I have a really good deal.
If I'll spend 20k per unit(200k Rehab budget) or close im knocking the ball out of the park.

How far fetched  are those numbers? How optimistic/pessimistic am I here?

Any constructive opinion will be much appreciated !
Thank you

[Scott Mac]

Hi Yiftach,

If I were considering this, I'd come at it kind of backwards.

Meaning I'd come up with a per door max I could spend in rehab and still hit my intended numbers.

I'd also take into account the length of time each unit will be down (best and worst case scenario) and figure that into the numbers.

Then I'd come up with a "Package" (how I want each unit to be to make it "Competitively rentable"), appliances, floor covering, faucets, doors, hardware, HVAC, modern required electric, etc... and Hard price that package for each unit, estimating the price increase over time as all units will not be done day one.

Then get bids on the labor required to do the work.

I'd split labor from parts so to speak, to control the parts purchases as much as possible because I know exactly what I want down to the part number. Some don't care and just spec "A White Vanity that fits". That's your choice.

Then I'd talk to a Landscape Architect and have the person come up with some curb appeal ideas, and then get bids on that.

If the total cost comes in below the per door cost to move forward then it "MIGHT BE" a go.

I believe looking at each unit as one job to be completed is more intuitive than looking at the whole complex as a job to be completed. 

If you don't have good sub-contractors in your Rolodex that YOU know and trust, that will add risk to the deal---in terms of construction lags, and cost over runs, so going with a General Contractor "MIGHT BE" safer, but even then with construction--there are no guarantees re time or cost over-runs on small projects like this... 

Just my 2 cents.