$170K for a full gut rehab in So Cal. Is it reasonable?

Question

I recently had a contractor come out to a property in Whittier, CA (1640 sq ft home on a 6400 sq ft lot) that needs a complete gut rehab and below is the soft quote he gave me and everything he'll cover for $170K. Notice how this quote does not cover room conversions (open concept), plumbing, electrical or roofing. It seems kinda high for socal, but maybe this is what should be expected with lumber prices soaring? So should i expect over $200k for a gut rehab if i include roof, electrical and plumbing, and room conversion (open concept). By the way, when I say open concept, i mean the kitchen, dining room and living room are one big room. I think "open concept" is the term?

Anyways, i've seen charts that show rehab costs to be much lower as seen in this quote from this thread.

Originally posted by @Morgan McRae:

	1500 or less SF	1500 - 2500 SF	2500 - 3500 SF	3500 - 5000 SF	5000 or more SF
Light (Carpet, Paint)	$10,000	$15,000	$25,000	$30,000	$40,000
Average (Carpet, Paint, Kitchen, Baths)	$25,000	$35,000	$45,000	$55,000	$70,000
Heavy (Gut Job, Everything Brand New)	$50,000	$75,000	$90,000	$100,000	$120,000

As you can see, this is for rehab costs in San Diego. Still part of SoCal. I'm in Los Angeles county and I imagine San Diego and LA county have similar rehab costs. So what am I missing???

THIS PRICE COVERS

Kitchen- white /gray shaker cabinets with soft closing hinges. ( all appliances stay in same place. Meaning no moving Electrical, gas lines, plumbing,)( customer to provide appliances)

Electrical- 4 resesed lights per room (More than its an extra cost per light)If theres an existing ceiling fan and upgrade is needed , you provided fan and will install.Install all new electrical outlets and switches

Flooring- laminate flooring through out. (We'll provide samples) New basemoldings and installation. (We provide samples)

Bathrooms -Soft remodel. New tile install throughout. New shaker vanity install new valves install. Install hot mop where needed ( customer provide tub, valves,faucets, toilets and tile of choosing)

Counter tops. Will provide counter top samples and installation

Exterior windows and doors. New double glass energy efficient white windows. (Window will be provided by us)

Interior doors- all new white shaker doors and new casing all around. New door knobs

Interior painting -Walls and ceilings All one color Bathrooms semi gloss one color

Exterior paint:one color.

New tankless water heater

All demo and trash to be haulaway by us

TOTAL 170K
No roofing

No Electrical panel upgrade

No permits at this point

Justin R. · Answer

I'd say $100/sf for a gut rehab, including new electrical and plumbing and roofing, some wall moving, maybe 50% new drywall throughout, new mechanicals, and all surfaces was a good estimate in 2018/19 for a 1950/60 era in San Diego IF you're GCing yourself and using licensed guys for the key trades. If you're hiring a retail GC to do the project for you (and relying on their license), add 20-25% on top of those field labor+material costs.At the moment, it's so hard to generalize because the data is changing so fast locally. I recently (July 2021) completed a 1200sf gut rehab for $95k with a legit licensed Contractor who self-performed all trades other than plumbing ... but seeing numbers from paper Contractors (all sub labor) with prices in the $165/sf for 60's ranch. So, it's all over the place.Point being (and yes, this is a huge generalization that my GC friends may take issue with) I think of three general types of GCs:1. Paper GCs. Their job is managing a business and they want to make a margin off of other people's labor.2. Field GCs. Their job is similar to a site superintendent - they oversee work by people they know and jump in when needed to finish things. They pay themselves in line with well-paid superintendents.3. Working GCs. Their job is to actually build things, doing all or most trades themselves. They would rather work for themselves so they can make their own decisions but otherwise think of their pay in terms of daily / weekly income, just like people in the trades do.There's pluses and minus working with each of these. Too long to go into those details. For purposes of this thread, #3 is going to give you the lowest build cost, but if that actually makes you the most money (when considering timing, in particular) is primarily up to the individual GC and your luck. In general, #1 types are easy to find. #2 is more difficult. #3 only comes through referrals and, in this market, only if they want to work with you.

Bruce Woodruff · Answer

You said 'full gut rehab'. I bet I'm not very far off.....My average remodel like that was over $500k, but I generally worked in high end areas.And the relationship between purchase price and remodel is not relevant. It was/is common for people to purchase for say, $1 mil and spend $2 mil on the remodel...

Will Barnard · Answer

Those posted rehab numbers are certainly not accurate in today's market here in So Cal. A heavy gut job rehab of 1500sf for $50k is just not possible, even if the GC worked for free!Your 1640sf rehab with your specs - $170k seems like it is somewhere in the ballpark but knowing you need new roof, permits, panel upgrade, etc, you can expect this to be in excess of $200k easy. I also don't see any mention of drywall work, stucco, HVAC system, etc. If you replace the panel and do new windows (nail fin and not retro fits), you will have a lot of drywall work and stucco patch to do.

Will Barnard · Answer

Yes, this year but 6 months ago and prices have gone up dramatically since February!Also, "Offer = 70% ofARV - REHAB COSTS." - Good luck finding anything here in So Cal to meet this equation. The 70% rule you are quoting is ONLY a quick back of the napkin equation and NOT really a rule. Price points and a number of other factors (location included) make it necessary for this equation to be adjusted and ultimately, exact numbers are to be run, not just a %.As to rehab, as another stated, using $150 pSF for full gut remodel should get you in the ball park. May be slightly less and may be slightly more.

Will Barnard · Answer

I see where you are going with this @Dan Heuschele but do keep in mind this is the rehabbing/flipping forum, not buy and hold, completely different analysis are used compared to buy and hold. To extract 100% of your investment from a flip, you need a profit margin and the 70% rule (more accurately "guideline") is not something any investor should rely on to make their purchase decisions for a flip.

Matthew Paul · Answer

Put in your mind that the price the contractor quotes you this week could be possible higher in 4 weeks . Do not expect contractors to start quickly , they are booked for months , which could cause your cost to go higher depending on price increases and availablity . You want to keep costs low , but in this market contractors can pick and choose who they work for . As a contractor I have NO reason to bid low , its the exact opposite right now .

Lynnette E. · Answer

With that soft bid, you can plan on sooo much more money. No kitchen counters, no kitchen sink, no facet, no windows, no garage door, the list of what is left out is long!

Todd Powell · Answer

@Mario Casarez add to your list new roof, gutters, garage door, exterior doors, AC, and new furnace with some siding replacements, and we did a 1500 sq foot house for $70k. Its in Albany, Or and was a 90 day flip that my son is now buying. I had a GC for $40 an hour and I paid T & M and I did most of the larger scale shopping, while he made Home Depot and Lowes visits for many other items needed. I also did some painting here and there, and did a weekend install in the LVP floors with a couple guys with free labor. In the end, your price sounds REALLY high and I know the average person on my flip would have spent an easy $100k or more. I have done many flips in the past and its always costing more now and hard to make a dollar in this market. Hope that helps!

Mario Casarez · Answer

@Bruce WoodruffAh yes. Good point. I should have mentioned that this is for a BRRRR property. I want to keep my costs low and get this property ready for rental or flip.

Mario Casarez · Answer

300k?? That would be 50-60% of the purchase price here in SoCal. This is the first I hear of a rehab costing that much in SoCal. Yikes.