Determining scope of rehab on first flip. Rebuild original porch?

[Sean Youngberg]

Hello flippers! I have begun rehab on my first deal. I'm partnered with a contractor and we are having a hard time with a few major decisions on rehab scope about exactly what should be done. He has the instinct to go in a fix everything in order to make it right. Meanwhile I'm worried about  spending money in areas that aren't going to give us a return. We had an consult from a designer/investor that got us thinking we were trying to do too much to rehab and flip this house.

It was an REO Purchase through hubzu. 3100 SqFt, 2-story, 1920 craftsman. Situated in a nice historical zoned area. Houses on these few blocks are selling much higher/sqft than than the surrounding neighborhoods. Pretty major rehab effort.

The numbers I settled on before the purchase:

• Purchase: 65K
• Rehab Est: 75K
• ARV: 190K

 I'm looking for some opinions on some of these rehab decisions. And maybe some more general advice on how you make these kind of decisions on older houses. Things like major changes to floor plan or expansion, structural issues, dealing with parking, updating major systems (HVAC/elec/plumbing) vs patching them if they are still functional and safe. Do you try to leave most of these things as-is as long as they are up to code and put your money into level of finish instead?

Some specific questions

1. Rebuilding front porch - It was enclosed at some point 40+ years ago to make a huge 22x22 LR. Looks terrible from the street, just like the side of a house. It would cost probably ~15-20K to do what we hoped to do to restore the front wrap-around porch and new front entryway that opens into the hall instead of LR. It would take ~250 sqft out of the LR. Even if we don't do the porch, the huge LR ceiling joists are sagging about 10 inches and will need to add support posts and beams and replace joists and drywall.

2. Wiring - We have already replaced the fuse box but all of the wiring in the house is not grounded. It is safe and working. All existing outlets are 3-prong even though there is no ground. Do we re-wire everything or just replace circuits as needed when we are working with the floor plan?

3. Back of house - There isn't a pleasant situation in the back of the house either. An alley runs behind our house between two streets. There is no covered parking, patio, porch, gable. Just nothing really. A portion of the property has been paved adjacent to alley that neighbors try to park in. No place to even put a mower and lawn stuff. A lot of the comps have detached garages or carports. Should we build one?

How can I calculate the return on these additions? There are really only 40 or so houses that I can use for comps, so it is difficult for me to estimate the value of porch vs no porch, etc.

There have been some more listings in our area that make me think we underestimated our ARV. A similar comp just got listed for 260, more than 70K over our ARV. So I guess I'm trying to figure out if we should go all out with our "wish-list" of renovations and shoot for a better ARV.

Other rehab scope that we are already pretty well decided on:

1. Replace fuse panel with new breaker. Have service moved from back door to side and add service disconnect.
2. Convert two downstairs bedrooms to deluxe master suite w/ walk-in closet and large bath.
3. New flooring throughout downstairs. Still deciding between hardwood or engineered hw.
4. New deluxe eat-in kitchen (already gutted)

Google Street View

Front

Rear

Front Porch Concept

Proposed Floor Plan with porch