Contractor “Services” Are One Cost, but the Actual Cost of “Supplies” is Another Very Real Factor that Can Get Out of Hand, Quickly, when Rehabbing Foreclosures
Under estimating the cost of supplies can kill a foreclosure rehab budget. Remember, contractor services are one cost, but the actual cost of supplies is another very real factor that can get out of hand, quickly, when rehabbing a foreclosure you’ve just picked up. Here are some basic “supply” costs to consider when rehabbing your foreclosure real estate investment. Everything is relative to your area, but below are some basics I encountered in my neck of the woods in Atlanta. Some of the items you may not need at all, but many you will, if not on your first foreclosure property, then on the next.
Porcelain-like bathroom sinks are very cheap: $79 for a pedestal and sink set can be had at The Home Depot.
Toilets: Complete toilet sets — tank, bowl, seat, and hardware — can be had for as little as $79. Usually, the taller a toilet, the more expensive it is. Also, when you get into brand names, you, naturally, encounter more costs.
Kitchen base cabinets can be had for as little as $100 a piece, depending on width of the cabinets, number of doors, drawers, etc. If you plan to paint the cabinets, prowl the junk yard. I found a nice 30-inch, 2-door, cabinet base with a drawer the other week for ten dollars!
Porcelain enameled 1-piece steel bathtub (plain old “new” tub, nothing fancy), $99.
Light fixtures can be had for as little as $18.00 as set. I was really surprised to see this when I first started out.
Wooden thresholds (you know those little lips that separate, say a carpeted room from a tiled room) can cost $7 and up, depending on the width. (They have adjustable thresholds, too.) You can also choose marble or aluminum mediums.)
New windows (double-hung, vinyl, with screens) can range from $89 and beyond, depending on size. You can walk right into your big home improvement stores and pickup standard size windows, but you’ll have to custom order non-traditional sizes for, say, older homes. (The older, wooden-framed windows with the actual glass panes can be found at salvage and junk yards for $5.00 and up per window. These can be non-standard sizes, but a good contractor can make them fit by building around them.)
Wooden, cheapie screen doors can cost as little as $19.99. (Once you get into the stained screen doors, they can start at $70-ish.)
Interior doors (without the door knobs, of course) can cost $29-ish. (Again, junk yards? $10.)
Vinyl shutters that border windows from the outside range from $25 – $38 and up depending on length.
Bathtub wall surrounds can cost as little as $69 (lot cheaper than ceramic if you’re rehabbing a property to be a rental!).
A French door set with the door jam (standard 60-inch set) can run $329 — but prowl the junk yards for this… you can find a full set (usually with the jam) for as little as $60. This is the kind of thing you tell the junkyard worker to keep an eye out for and call you if he or she gets one in. Tip them well and they will call you when the “good stuff” comes in. This will save you a bundle!
Porch columns — I love columns! — those round, large, aluminum porch columns that have to be put together (including base), run about $129 each.
Fancy light fixtures — Dining room light fixtures with three to five lights can be found for as little as $39 — (note: nice fixtures sell homes).
Little plain-Jane light switch covers: As little as .25 cents!
Bi-fold doors for linen closets, $29.
Louvered bi-fold doors (painted): $52 (less if they are not painted!).
Exterior doors start at $69. (Again, scour junkyards for these for considerably less.)
Stainless steel, double-sided sinks for kitchen: $100 and up. (Though I’ve seen as low as $59 for the smaller sinks.)
Small, electric water heater $160 – $180 (In one property, I bought a small one that would accommodate the no more than, count ‘em, “two” people that should have been living in the rental property.) Just remember, you don’t have to buy everything “new.” They know me well at the local junk and salvage yards in my area and I saved a bundle on things like doors and windows. Some stuff will need to be new, but buy salvage as much as you can.
When rehabbing, of course, keep all your receipts for tax and file purposes. For the big stuff, take back what you don’t need and get a store credit or get your cash back when you’re done. But keep the little stuff. You’re bound to have tons of miscellaneous leftovers like nails, screws, bags of sand, concrete mix, tubes of spackling, a pallet or two of roofing shingles, tile pieces, felt, sheetrock, mud, tape, etc. Just find a nifty corner in your garage or basement for this stuff. If you’re in this business for the long haul, you’ll use it again.
The best way to get ready for the rehabbing business is to grab a cup of coffee on Saturday mornings (even before you pickup a property) and head out to the salvage yard, builders’ surplus store, junkyard and your mega home improvement store. Sniff around these places so you know what things cost. This will go a long way in helping you prepare budgets that are dead on that will have you smiling when you look at your bottomline.