Feedback sought for contractor estimate

[Dave H.]

Hi everyone,

we just received these costs from our contractor in MI and it’s the first time we’ve gave him a chance to estimate. The house is 1000sqft. This is for a retail flip.

Some of the items aren’t detailed enough yet, I’ve asked for more info and will update when I get it.

What do you think of the costs so far?

Furnace New furnace installed 1 4,800.00 4,800.00

Water Heater Install new water heater 1 1000.00 1000.00

Flooring Per sq' installed 1,000 6.75 6,750.00

Drywall Repair damages, cracks and holes and prep for paint 1 800.00 800.00

Subfloor repairs Repair damaged subflooring 70 10.00 700.00

Painting Paint walls, ceilings and trim 1,100 3.50 3,850.00

Kitchen New uppers and base cabinets w/preformed Formica counter tops, new stainless steel sink and new faucet. 1 4,750.00 4,750.00

Bathroom Replace vanity/sink/faucet, tile floor 1 1,400.00 1,400.00

Deep sink Replace/install 1 400.00 400.00

Exterior Door Replace kitchen door 1 425.00 425.00

Gutter and Downspouts NOT ASKED TO QUOTE (RECOMMENDED) 1 400.00 400.00

Paint Exterior NOT ASKED TO QUOTE (RECOMMENDED) Per sq' 300 4.00 1200.00

Miscellaneous Permits, fees, added materials, added costs 1,500 1.00 1,500.00

TOTAL $27,975.00

Thanks

Dave

[Brian Pulaski]

Without seeing the house, none of these costs seem massively out of line. The flooring I would want to know what they plan to use for material.

[J Scott]

There are too many variables to know if this is a good price or not. 

For example, you don't say what brand of furnace, what power output, what efficiency, etc. You don't say what kind of flooring. You don't say how big of a water heater. You don't say what kind of cabinets. What kind of doors? What kind of paint? Etc.

Are the contractor's license and insured? Are they pulling permits?  What level of quality can you expect? Have you seen other projects they've done?

I would get more detail on the quote, and get at least one or two other bids to compare. Also, make sure you check references and you see previous work that they've done. Finally, make sure they are licensed, and insured.

[Dave H.]

@J Scott

Once I’ve got that info I’ll post.

I also want to know....

Why Formica in Kitchen? How much extra is Granite?

Are you replacing any trim, it looks like it needs replaced.

Are the Windows ok?

You don’t mention anything about blinds.

What about the yard and driveway, does it require any work?

What about front and back doors?

Kitchen / Laundry appliances?

Roof need any work?

Thanks

Dave

[J Scott]

Originally posted by @Dave H.:

@J Scott

Once I’ve got that info I’ll post.

I also want to know....

Why Formica in Kitchen? How much extra is Granite?

Are you replacing any trim, it looks like it needs replaced.

Are the Windows ok?

You don’t mention anything about blinds.

What about the yard and driveway, does it require any work?

What about front and back doors?

Kitchen / Laundry appliances?

Roof need any work?

Thanks

Dave

Sounds like you are letting the contractor make renovation and design decisions for you.  That's not the way to do it.

You should be creating a Scope of Work that very specifically calls out exactly what needs to be done, what materials to use, etc.  Then you give that Scope of Work to the contractor(s) and they give you a price for doing that specific work with those specific materials (or you purchase the materials yourself and they give you a labor bid).

You shouldn't be asking the contractor, "Why formica in the kitchen?"  You should be TELLING the contractor what type of materials to use for the countertop (and everything else).  This is YOUR flip, not the contractor's flip. 

In terms of how to decide which materials to use, you figured out the ARV on the property, right? What level of finishes did that ARV assume? Did it assume granite, hardwoods, upgraded cabinets, etc? Or did it assume formica, carpet and builder-grade cabinets? And you should be doing this for EVERY aspect of the property. The contractor shouldn't be making ANY of these decisions.

Happy to answer more questions, but if anything I wrote above isn't obvious to you, I would recommend reading these ASAP:

www.biggerpockets.com/flipping...

[Dave H.]

@J Scott

I completely agree, however I’m in Australia and relying on the agent and the contractor communicating effectively between each other. I’m facilitating some of that Comms but I’m having to trust the agent and the contractor to some degree.

I know it’s far from ideal, it’s not the best way and I’ve definitely taken onboard your suggestions. I’ll try to be more involved in the future. I suppose I’m kind of figuring this out as I go along. I’m visiting the states in April so will be able to see for myself the specifications of on market retail rehabs with my own eyes. If I can see the competition this will give me a great insight as to what helps to sell a house in a certain area.

I’m reading those books right now, I’m up to the strategies for finding a property. It’s a good read and very helpful so far. I haven’t started the flip book yet.

Thanks again.

Dave

[Ryan Schultz]

Hi Dave, 

I'm a contractor from Wisconsin maybe I can further shed some light.

I agree with @Brian Pulaski at a glance none of the costs seem out of line.

  "Without seeing the house, none of these costs seem massively out of line. The flooring I would want to know what they plan to use for material."

@J Scott gives outlines how the work is typically contracted out and is 1000% correct on the need to take charge on the project.

"Sounds like you are letting the contractor make renovation and design decisions for you. That's not the way to do it.

You should be creating a Scope of Work that very specifically calls out exactly what needs to be done, what materials to use, etc. Then you give that Scope of Work to the contractor(s) and they give you a price for doing that specific work with those specific materials (or you purchase the materials yourself and they give you a labor bid).

You shouldn't be asking the contractor, "Why formica in the kitchen?" You should be TELLING the contractor what type of materials to use for the countertop (and everything else). This is YOUR flip, not the contractor's flip.

In terms of how to decide which materials to use, you figured out the ARV on the property, right? What level of finishes did that ARV assume? Did it assume granite, hardwoods, upgraded cabinets, etc? Or did it assume formica, carpet and builder-grade cabinets? And you should be doing this for EVERY aspect of the property. The contractor shouldn't be making ANY of these decisions."

It all comes down to variables and being able to trust your Agent and your contractor. It can be tough to invest non locally especially when you haven't built relationships.

 A couple of things you could try to help minimize your risk.

1.Doing a virtual walk through with the realtor asking questions and taking notes on problem areas.

2.Have a virtual meeting where the realtor introduces you to the contractor or even multiple contractors to discuss the problem areas and solutions. Remember it's your project not theirs. Pick people you like it will make working with them more enjoyable. 

3.Form a scope of work (the road map) for the contractor including: milestones, deadlines, and payment schedule. Be sure to have a general plan to remedy things that come up in case unknown expenses come up or the time line starts to fall behind.
 
You mention having to rely on the agent and contractor communicating effectively...Do you own this property or are you actively looking?

Either way, I've learned, from both the investor side and the contractor side of my businesses, communication is what makes or breaks projects.