Property Condition Report: Cost Estimates?

Question

I'm assessing a HUD property (my first investment prop) and am trying narrow my estimate on the cost of rehab on a house.

I was able to pull up a PCR on the property (a brick ranch) and here are some key things:

Cooling/AC - Damaged

Heating/Furnace - Damaged

HVAC Duct - Damaged

Plumbing:

- Sink: Damaged

- Pressure Test: Fail

The property is a 1,500 sq ft ranch home that seems like a good opportunity provided I don't overshoot the cost of these items. Which is why I'm here.

My best guess is that, worst case scenario, a new A/C or heat pump would cost about $4k (I had one installed in my own residence last year). I assume some portion of the plumbing / piping needs repaired so I'll say $6k to be safe. The duct work seems like a big variable so let's say $8k as well.

That's $18k in rehab costs before any minor things like flooring / painting / fixtures.

Do these numbers seem egregiously off?

Alex Huang · Answer

Thanks for the reply.

I definitely feel like my estimates are on the high-side, but I'm trying to be ULTRA conservative when it comes to estimates only because it's my first ever project.

J Scott · Answer

I don't know what prices in your area look like, specifically, and I don't know what types of contractors you'd be using...I also don't know the extent of the work that you need to complete...

That said, $4K for a HVAC replacement sounds reasonable for a 1500 sf house.  For $6K, you should be able to replace all the supply lines in the house, plus some of the drain lines.  Unless you're overhauling the plumbing, this estimate is going to be very high.  As for ducts, you should be able to replace all the duct-work in the house for much less than $8K.  Perhaps $2K or less if the contractor doesn't have to rip open walls or get into any tight spaces.

So, if this were my project in a comparable area, this is what I'd budget:

- $4K to replace furnace/condenser

- $4K to replace all plumbing

- $2K to replace all ductwork

- Whatever the cost is to fix/replace the damaged sheetrock needed to get to the plumbing/ducts.

If the Scope of Work is less, the cost should be as well...