A good roofer in the San Fernando Valley for a quote tomorrow?

[Trevor Baker]

I'm considering putting an offer in on a House in Reseda that clearly needs new roof!  I'd like to get a quote on the roofing expense, before I submit a an offer.  Does anyone know of a roofer in the area who could check it out and give me a quote tomorrow, Sunday?  I have to submit offer by Monday!

[Brad S.]

Originally posted by @Trevor Baker:

@Brad S.  Yes, I totally agree!  New roof $12,000+ New kitchen, bathrooms, ceilings, flooring, windows, doors, resurface the back yard cement & pool surround, interior & exterior paint, etc.  That's gotta be $60,000+  Plus commission & selling fees.  Unless they've accepted an offer way over their asking price, I don't see how they made any money on this!  Maybe they even lost money?  What do you think?

Well, I don't think they are going to lose money, but they are working on thin margins at the top of the market, for that area. It looks like the Broker is a principal in the transaction, so they saved 2.5% on the commissions when they bought it and if they used their own cash or investor/partner cash, they save on any financing costs (hard money costs etc). Then they will save 2.5% on the sales commissions, since they are representing their own interests in the sale. Unless the broker just pockets his commissions.

Looks like the Broker is one of the heads of the investment LP that bought it and they do multiple projects. They probably use a combination of investor money and their own money, keeping the financing costs down. Their construction costs are probably relatively low, due to the volume they do and keeping their own crews busy and doing volume purchasing.

I'm finding 10 properties in their name right now, in LA, Orange and San Diego Counties. All recorded within the last 4-5 months. So, with the volume, and possibly the investor money, they need to keep it moving and they don't need the higher margins. They probably do pretty well, using brisk velocity and efficiency.

This project looks like it is going to be just shy of 3 months (assuming a 45 day sale escrow), from beginning to end. Bought on 10/27/2017 for $461k, in escrow on 12/1/2017 with a list price of $585k.

Rehab looks like it was basic cosmetic remodel, including:

paint (ext/int), some exterior facade, windows, roof, cabinets and countertops, appliances, fixtures, recessed lighting, flooring, trim, electrical outlets/switches/covers, HVAC, doors, landscaping, etc.

Their finishes look pretty standard and formula-based - basic fixtures, windows, laminate flooring in main living areas and carpet in bedrooms, about 12 +/- recessed lights (kitchen, family room and bathrooms only), single center ceiling light fixtures in the bedrooms, standard appliances, nicely finished standard cabinets with nice Quartz counters.

It's what I would consider well updated with generally standard to some above standard quality. It looks like they did a good job and efficiently did just what they needed to present a very nice, well-updated home, that feels "upgraded" to the average Buyer in that neighborhood. And compared to other 50's built houses in the neighborhood, is more upgraded.

There is no indication that they upgraded the plumbing or electrical systems and I am not finding any permits, besides for a gas EQ valve, so they might've saved a bit of money foregoing those expenses.

My guess is they put between $40k-$50k into the remodel

purchase - $461k

closing costs - 1% - $4,610

rehab - $40k

total - $505,610

sale price - $585k (guestimate)

sales closing costs (6.5%) -  $38,025

adjusted gross - $546,975

net (after rehab and closing) = $41,365 or ~9% ($41,365/$461k)

Some assumptions: $40k rehab costs, I am assuming the selling broker is taking his 2.5% commission, a $585k full sale price, with no concessions.

There is little room for error in a deal like this. You need no financing expenses, very efficient rehab crew and no construction surprises and a very strong selling market. A recipe for disaster as a small rehab business, but these guys make it work based on volume and efficiency.

Here is an example of a deal that makes more sense 3 block away. They bought it for $395k in 9/2017 and is now in escrow, as of 12/6/2017 with a list price of $579k

My opinion, let those investment companies get the low margin deals and do what they do best and you can cherry pick the profitable ones. Their sales help your sale comps any way.