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I've been looking at houses for about 7 months and have finally found 2 I like. Both are bank-owned and both have unfinished remodeling. My 1st choice is a 50's modern that had the kitchen completely ripped out but other than that it mainly needs some drywall and trim work as far as I can tell. The other one has very high end interior finishes, new kitchen etc. but needs some work on the exterior (don't know how much yet). I want to have a contractor to look at them before I make an offer so that I can get some idea of how much these "projects" will cost. What would be a reasonable amount to spend for that? Are there any other things I should do? (I know I'll also need an inspection) Thanks!
I would talk to the contractor about a possible "retainer" situation. You will pay an hourly fee, to be applied to the job if he gets awarded the project. Also, if you are working with a RE agent, see if they have any contractors they work with. I have a couple that I really like, and they will meet with my clients to give estimates in these situations for free. They just want first crack at the job.
I've been looking at houses for about 7 months and have finally found 2 I like. Both are bank-owned and both have unfinished remodeling. My 1st choice is a 50's modern that had the kitchen completely ripped out but other than that it mainly needs some drywall and trim work as far as I can tell. The other one has very high end interior finishes, new kitchen etc. but needs some work on the exterior (don't know how much yet). I want to have a contractor to look at them before I make an offer so that I can get some idea of how much these "projects" will cost. What would be a reasonable amount to spend for that? Are there any other things I should do? (I know I'll also need an inspection) Thanks!
If CO is anything like IL there are some factors that could eat you alive in this sort of situation. #1 is the weather. Whenever I see a property that has not been inhabited in the winter I get very very very worried that there is damage to the structure from freezing. I am not talking about one pipe freezing and leaking, I am talking about structural elements getting soaked, freezing and literally being moved / damaged so badly that they no longer support the load designed. I have seen houses like this that are cheaper to tear down and start over.
The second big factor is MANY communities have regulations that certain kinds of renovations MUST be done to current specifications once started. If you cannot prove that the those specifications were followed it is up to you to disassemble things to allow official Code Inspectors to verify these changes. You can spend BIG MONEY swapping out old fashioned plumbing, electrical and even fire-related structural elements and not get a dime back on your investment. Even honest experienced contractors may be blindsided by the fact that if the original owner pulled permits and got sign off those inspections may NOT be sufficient for the work you may need to do -- more inspections slows the time line and increases the cost!
Typically these projects make more sense to partner an investor and the contracting firms -- the need for redo or hidden work may make the added risk of a big payoff worth it to both sides. I think these projects have "money pit" written all over 'em for regular home owners and even investors that do not have a contractor they have partnered with before on less risky efforts. If is one thing to get bills that are valid but wildly outside what you thought because additional work is needed and another to have a contractor that is willing to swallow some costs for a long term payoff...
I just got a couple of local contractor recommendations from my agent. Good idea. Also, that is an interesting point about structural damage. I never thought of that. I planned to have an engineer do the home inspection if I buy it. Frozen pipes are a definite problem too since they are both at 7500' + altitude and both have been empty for awhile. I'm hoping a contractor can at least give me a ballpark price to make them livable. That way I can at least move forward to the next step. This is sort of a separate question but one of them has a large in-ground pool. Would I need to hire a pool company to inspect it separately?
Frozen pipes may not be a big problem - I just flipped a house with frozen pipes - plumber quoted me $1000 - I did it myself in 2 hours and $5.00 in materials.
Frozen pipes may not be a big problem - I just flipped a house with frozen pipes - plumber quoted me $1000 - I did it myself in 2 hours and $5.00 in materials.
... the problem is often you just DO NOT KNOW how bad the problem is until you really investigate. Sure there are situations were a pipe freezes and only a small repair puts everything back to "good as new" but I have personally encountered situations where a water soaked section of sill, caused by a leaky pipe freezing, froze so hard and shifted so much that an entire brick wall had to be torn out and relaid. That is $20k+ worth or wasted material and labor.
I have also seen homes exposed to the elements were the entire foundation is damaged so badly that the cost of getting the whole place back to "square, plumb, and level" results in the the only cost effective solution being to tear down.
Unless you are an experienced professional contractor with the knowledge to evaluate what sort of renovation the property was "in the middle" of you could easily get stuck thinking "a little bit of dry wall and this is all done". Then when the drywall crew comes in and tells you there is not a straight wall or ceiling in the place you call a framing carpenter who tells you the whole structure is basically worthless due to freeze damage what do you do???
I've been looking at houses for about 7 months and have finally found 2 I like. Both are bank-owned and both have unfinished remodeling. My 1st choice is a 50's modern that had the kitchen completely ripped out but other than that it mainly needs some drywall and trim work as far as I can tell. The other one has very high end interior finishes, new kitchen etc. but needs some work on the exterior (don't know how much yet). I want to have a contractor to look at them before I make an offer so that I can get some idea of how much these "projects" will cost. What would be a reasonable amount to spend for that? Are there any other things I should do? (I know I'll also need an inspection) Thanks!
Talk to your mortgage person about a 203(k) mortgage. It's an FHA loan program designed for houses that are in need of construction or rehabbing. The total amount you can borrow is based on the projected value of the house when the work is complete, not the current condition. You can finance the costs of the work, in pieces as you do the work. There are some additional paperwork & inspection requirements, but it may be worth it.
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Be very very careful...
