Help with Rehab Estimate

[Dave Zarcone]

Hello all,

My wife and I are working on finding the right fix and flip project in the Inland Empire in California. We got into flipping last year when we renovated and sold a family home and realized a decent profit. Our goal is to flip a few homes and then reinvest all the profit into building a rental portfolio over the next few years.
 

We have visited a few dozen homes and seriously analyzed 3 or 4 potential flip candidates. We have also visited numerous properties currently for sale that have been flipped to see the material and labor quality standards for the area. The material quality and crafstmanship are both mid to low grade. We do not want to get into a business of cheaply flipping homes and providing low-quality housing to buyers... but we also want to realize a profit. So, this brings me to my question... I have run a few potential flip projects by my GC to get an estimate on the scope of work. We use that estimate and the BP Fix and Flip calculator to find our max offer but it always comes in much lower than what other investors offer. For instance, the last calculation I ran was for a 3 bed 2 bath home with an ARV of $360k, repair estimate $40k, profit requirement $20k, for a max offer of $258k. We made the offer and found out that another investor had an offer in for $280k.

I am worried that we are simply way over-estimating our rehab cost by running through a GC. Or, we are rehabbing items that are not necessary. I have listed below the basics of our rehab and am hoping you all can let me know if this is competitive and fair. Meanwhile, I am going to send the same scope of work to other local contractors to get an estimate.  I really appreciate your help. BP Rocks!

Single Story 3 bed 2 bath 1585 sqft

Paint Interior - 1585 sq ft - $1.9/sq ft = $3,000

Scrape popcorn ceiling, texture, and paint - 1350 sq ft - $3.1/sq ft = $4,185

Remove old carpet and install vinyl plank flooring - 1175 sqft - $5/sqft = $5,875

Replace carpet with new carpet - 410 sq ft - $2.2/sqft = $910

Remove dead grass and install sod - 1850 sqft - $2.1/sq ft = $3,850

New two car garage door/opener/track and installation = $1,500

New window and installation = $250 each

Bathroom remodel - vanity, mirror, light, toilet, demo and build back new tub or shower with ceramic tile - $4,500

Kitchen remodel - 30sqft quartz, 12ft upper cabinets, 12ft lower, backsplash, sink/garbage disposal, $9k

There are many more items to be repaired/replaced but I realize this is turning into a long post so I will stop there. Please let me know what you think or if you have any advice. 

[Andrew Kerr]

@Dave Zarcone - as I am not familiar with your area, I won't comment on specific pricing. But here are some thoughts

-The market is a lot tougher nowadays, and people are making less on deal.

-You don't know who the other investor is, and what advantage he might have. I lost a deal last year to a GC. He can do the reno cheaper than I could simply because he is a contractor. I have seen flippers that have all their own cash, no hard money financing, be more competitive because they don't have the higher carry costs as others.

-A more experienced investor might have better pricing on labor and materials because of the volume they do.

-The other investor could have overpaid. Or overestimated the ARV.

-You could also be too conservative on your ARV.