I am going to start a new thread for the remodel project. I think this will be interesting because it will be a remodel on a shoestring budget. I don’t own the house so I cannot post the exact address.
Property:
This house belongs to a young couple who purchased it in early 2013 in a regular sale. The house was purchased as a ‘fixer’ and let me tell you that it is STILL a horriid fixer. Nothing has been fixed since they bought it. It was originally a 2/1 and prior owners pieced together a family room addition and then a master bedroom addition. The family room addition is in terrible condition and was built with poor workmanship. I have never been inside the master bedroom addition but the exterior looks OK. I don’t even think the appliances even work in the kitchen.
The house was set up as two living units. A roommate lived in the front part of the house and they were sharing the kitchen. Her parents approached me in summer and asked me if I could go over and give advice and an estimate to remodel the house and add another kitchen into the family room addition. I worked with them to give them a rough estimate but told them my crew couldn’t start work until November.
Later, they came back and said that they have decided to start a family and would I help them remodel the house. Yes, but now it looks like December or January to start the project. They have been patiently waiting and they don’t want anyone else to do the work for them. This was my brilliant idea how I was going to keep my crew busy while waiting to sell my current project and have some spare time to search for a new project.
I have been able to negotiate a small Project Management Fee into the budget. I am estimating about $65,000 for the remodel and 8 weeks schedule.
We already have a big issue. In order to do the huge demolition that we need to do, we need a dumpster on site. We cannot get a dumpster into the driveway because the main power lines cross right over the front of the driveway and dumpster company will not deliver into the driveway. So, off to the City to get a permit to put dumpster on street and the City denied the permit because the street is only 32’ wide and minimum requirement is 36’ wide. This means we are either going to have to use my truck to go to the dump twice a day for a week or hire one of those ‘hauling’ guys that charge way too much money to bring their jalopy truck over and load it.
The next dilemna is that, in my opinion, the house is in such a terrible location and neighborhood that I feel they are wasting their money remodeling it. They are going to be over improving the house for the neighborhood and will not recoup their investment. From a real estate standpoint, it is not a smart idea.
I had to sit down last week and ask them… Do you really want to over improve this house? Is this where you want to start a family? Is this where you want your children to go to school? Have you really thought this out? I recommend that you do a different type of remodel… fix it up to sell. Then take your equity (they have about $200k in equity from property values rising) and buy something in a better school district and better neighborhood. We are talking about a neighborhood with neighbors with bars on their windows.
I think they are going to be stubborn about staying in the house. The house does not have good bones. I expect to find all kinds of nasty issues when we open up the walls. We will see
This does not sound like it’s going to be a good experience. If you do go ahead with the work, make sure your guys lock everything up nice and tight every night.
What happens if you open up the walls and discover major problems that have to be addressed? It doesn’t sound like the budget is flexible. Have the owners thought about that possibility?
I have warned the owners over and over again that the house additions are shoddy and we might find a lot of expensive repairs.
Even worse on this one… they are going to be living in the house while we are trying to remodel. This will be a first for me and the crew. We are boarding off the master bedroom addition. They have a bathroom and have installed a little kitchenette for themselves and they have direct access from garage. No need to enter the remodel zone. But, I can predict a lot of hovering over shoulders and driving my carpenter crazy. However, that should alleviate the security issue at night.
Believe me, the parents are horrified how their daughter lives and I am pretty sure they realize the couple should move to a better location. But, I will talk to them today about it
“Even worse on this one… they are going to be living in the house while we are trying to remodel”
this to me would be a non-starter.
If I were in your shoes I’d INSIST that they cant be there-it will slow EVERYTHING down and net net, increase THEIR costs. You are holding all the cards- if they want you to do the remodel it has to be on your terms. period. the security issue at night can be managed by one of those security eyeball I see at lots of remodel sights.
I know you like this couple but I think there are other projects that are a better use of you and your teams valuable time.
just my 2 cents…
First of all, I appreciate the fact that you are looking out for the couple, I only wish someone had been doing that when we did our house renovation (we paid an architect for that very reason, for all aspects of the renovation/expansion). To be honest, with your description all I see is grief for both you and them, chances are if you have shoddy construction that is obvious like that there is a lot more worse that you can’t see (which it sounds like the OP knows). I would sit down with the couple and the parents and lay it all out, that by the time they are finished they likely will have a much bigger bill than what you quoted them and it likely will take a lot longer, too. I suspect with all your good intentions, OP, that likely you will end up the bad guy if you do this job and you might end up eating some of the cost overruns, construction is one of those things that often is a no win situation. The fact that it is not a great neighborhood (if it is gentrifying, might be a different story) only makes it much, much worse, even with appreciating real estate values neighborhoods like you describe can easily go the other way,it doesn’t take much, then they really would be in trouble. I hope that the couple isn’t doing this out of some sense of wanting to ‘change the neighborhood’, ‘demonstrating their committment to the community’ and other stuff I have seen, people who did that had good intentions but didn’t understand the reality IME, if they are point out if they are planning on having a family the consequences of living in a marginal area will be much more, that they may find the local schools don’t work, then they would be faced with finding alternatives.
I tend to agree that having a talk with the parents and laying out what you see with this house is important. You could have serious structural issues, things like mold, if the plumbing was done poorly that can cost a bundle, if the foundations are bad, if the wiring was done badly, it can (as the OP I am sure knows) cause the cost of renovation to exceed what literally tearing down the old house and building from scratch would cost. I don’t know the couple’s financial situation, but especially if mom and dad are helping the couple they may have enough influence to get the couple to sell it as is, hopefully get equity out of it, and buy something in a better neighborhood that might need work but won’t be a potential disaster like this.
Do they actually want to be able to rent out part of the house? If not, sounds like to might be more feasible to tear down the shoddy additions, or at least one of them, and remodel the rest.
This sounds like a disaster in the making, and I agree that you are going to end up the bad guy.
Ditto, ditto, ditto. Haven’t heard you say one positive thing yet about this venture, @coralbrook. Best to consider padding the budget by 25% to be prepared for all the anticipated issues. And why can’t the couple live with the parents during the remodel.
This project does sound more and more complicated and expensive. Also sounds like you and your crew would be doing a ton of running around so even more time involvement. If the project is not close to home, that’s a lot of added stress and bother for you.
I’d point out to the parents (who presumably have some savvy about real estate investing) that this is just not a good plan for this house, in these circumstances.
I am not sure why you have to do this project, regardless of the amount of fees you get. You should put in all your effort s to locate another flipping deal and based on your past experience, you will be able to get it in one or two months. Even though you are acting as a non-contractor in this renovation, when things go wrong, you will still be responsible, because you received a fee. With a “small fee” it is not worth the risk. In Flip #5, your “fee” is in the 100s 1000, where in this renovation, you are getting basically nothing for your valuable time, which could be used to house hunting. The notion of getting your “employees” busy is not the reason to starve yourself because they are NOT your employees. Why don’t you only give free advice but let go with the project and have them to sign contracts with your “employee”. I did just that with my cousin’s renovation.
I will never do any renovation project for anyone unless it is my house.
These investors have trusted your knowledge of the market and of houses. Hopefully they will listen to you and your advice. They should be paying for and appreciating your knowledge and recommendations, not just your labor.