All Forum Posts by: Mike G.

You are investing your time, money, and expertise into rehabbing the home. That is valuable beyond just the numbers on a balance sheet. Otherwise, no managers anywhere would ever get paid for anything. What does a manager do - he just makes sure other people do work, right? Well, he comes up with a plan, he oversees the project, he manages people, he coordinates schedules, he makes deals and purchases from vendors, etc. That is valuable.

Also, because rehabbers have time to shop around and because they can buy in bulk or offer repeat business, they can often find materials and contractors for less than the average homeowner. Plus, they tend over time to know more than the average homeowner and are not as likely to get fleeced by contractors. So, it may cost a homeowner $50k to do a renovation, whereas the rehabber can do it in $30k. Therefore, in a sense, the rehabber just added $50k of value by spending only $30k.

I see homeowners buying fixer houses here in SoCal for slightly less than a renovated home thinking they are getting a deal because they will fix the home up themselves, not realizing that they are probably going to spend more on the home than if they bought a fully renovated flip.

Looks good. I wouldn't worry too much about some of those items not being 100% specific. You need to walk through with your contractor and point out everything that needs to be done anyway. And then you need to be at the job site regularly to make sure they are doing what you want done. Make sure you work with a contractor who you communicate well with and that you trust knows what he's doing and what your expectations are.

Always have some business cards on hand, preferably those that say "We Buy Houses" or something similar. That way, if someone approaches you, you tell them that you are a real estate investor and you are looking for vacant houses to buy and renovate. Then you hand them your business card and ask if they know of any blights on the neighborhood that they would like to see fixed up.

Yes, it's definitely better to have a permitted addition, but it opens a can of worms. Was the electrical done properly? Probably have to open up the walls to find out. Plumbing? Same thing. Then when the walls are open, they find that the walls were not built according to code. Is the foundation proper? The roof? By the time you're done, you could have saved time and possibly money just tearing the thing down and building a new addition. In fact, you may end up having to do just that. For me, it's better to just plan on getting rid of it.

Also, Mike G has a +1.

For us, it depends on the property. It's either 1, 3, or 4, but never number 2. If the addition is in good shape, was done well, and matches the house, we'll leave it. If the addition looks shabby, either remove it or move on. The more the addition has impacted the house (or the more additions that were done), the more likely we are to just move on. If a garage was converted to living space, this will almost always be unconverted.

Also, if you can rent it out, make sure you check to see if it would fall under rent control. Single family homes are exempt from rent control, but duplexes are not, and a guest house may be considered a second unit and therefore subject to rent control. Also, if you rent out a single family home room by room, then it also falls under rent control, so this situation could be similar as well.

Count me in for two (me + 1).

We almost always get ours from Bed Bath and Beyond.

We don't usually ask for the daily, hourly, or s.f. rate for a contractor. We have them give us a bid for the job and have them break up the bid into sections so we get an idea of their price for each section. I realize that doesn't help you for what you're trying to do. And your approach seems reasonable, we just haven't had a contractor for a large job even talk about rates.

As for the price per square foot, we've only gotten that type of estimate for things like paint, granite, sod, and concrete. A price per s.f. for a kitchen remodel doesn't make any sense. It depends on what you're doing to the kitchen. And it would be hard to give you an idea if $2.50/sf is a reasonable rate without knowing the extent of the work, the quality of the materials, etc.