This is BEYOND helpful, James!! And, having you do a site walk through while explaining was so much more helpful. I’d love to see some videos talking about material costs, and how that works with contractors. Also, if you could do some videos, going a little slower and more in depth on many of the renovation projects you briefly touched on here (electrical, plumbing, HVAC, seismic, roof, siding, insulation, kitchen only, bathroom only, etc.), that would be great. Also, perhaps a video devoted to the whole budgeting and negotiating process, with either a general contractors or subcontractors. Also a video on what are generally the big cost differences (and specific items) on merely cosmetic renovations vs more in-depth renovations, going all the way up to a full gut and build out.
Hey BiggerPockets community- James here!! I hope you all enjoy our newest episode! Let us know in the comments if this content was useful for your REI journey 💪
At 14:20 - Flipping houses must be terribly difficult if it takes 12 months (through no fault of your own) just to get to this rough stage. Don't you have to still pay property taxes, interest on your loan, home insurance (is your home insurance priced similar to a regular homeowner?), and I assume water and electricity is turned on. When you finally sell, you then have all the typical selling costs. I assume you're either a realtor or broker but I also assume it's mathematically correct and fair to still include the 5% realtor commission fee as that's a lost opportunity cost (I'm not a CPA so I'm just guessing, I'd like to hear from a CPA on this). You likely also pay a property transfer tax. Where I live, Oakland California, this is 1.5% under $2M paid by the seller. Then after selling, you pay federal + state tax on the gain. I'm surprised flipping is still worth it after all the up-front money plus substantial selling costs and risk you put in.
Totally agree - but we factor for long hold times in our proforma in certain cities. Going into this deal we factored 15 months because we new the city was backed up from the pandemic. As long as you prep for the costs correctly there is still a great margin. Luckily we are heading into drywall and it takes us about 8 weeks to finish after drywall is complete. Won’t be too over on holding expense but the cash on cash return goes down. Big fixers need big margins to make it pencil right.
BP, thank you for the great content. Anyone able to recommend a website, app or service that does a line-by-line breakdown on a rehab? Would love to then import local material/labor costs into it and create more formal system. Thanks!
James, you are so knowledgable! What do you recommend to newbie the best method to gain constrcution knowledge? taking classes? learning from real flip? thanks
These numbers seem totally bogus. You guys must be doing all the work at the actual cost. Contractor rates are way higher than the numbers he’s quoting. At least in my area.....
I want to know about Architectural and Engineering costs because I’m doing my fist project Engineering was 7k and architecture (drawings and schematics) 13k. Are these numbers correct?
@@ProjectRE The house had foundation issues, so decided to build an ADU. The house is a little less than a 1000 sqft. and has a dirt basement big enough to build an ADU. I am not sure if location plays into it but the is in Los Angeles, CA.
@@dannykent6190 Thanks. I figured it must be something like that even though he specifically said per square foot on the “presidential roof.” I was not aware of the industry term.
I paused and went back a couple times like "wait... wha...??" Lol 600k for a 1000 sq ft roof?! That would be insane! Forgot "square" meant 100 in that case.
