Full rehab jobs, when finished, can bring in a substantial profit if you bought at the right price and calculated your rehab costs correctly. The last thing you want though is unexpected rehab costs that eat away at your profit margins!
Sure, a few light bulbs here and some window screens there don’t break the bank but these surprise costs that aren’t in the budget can add up quickly if you aren’t careful.
Being aware of small costs before your rehab starts can help you budget your project correctly. You’ll be able to better understand common costs that need to be added as you become more familiar with rehabs in your area.
We’ve compiled a list of common items that are forgotten in the initial rehab bid.
- Interest charges while holding property (if financed)
- Driveway repairs
- Dead tree removal
- Fence posts
- GFCI outlets
- Garage door openers
- Light bulbs
- Broken sewer lines
- Plumbing leaks
- Septic tanks
- Window screens
- Door bells
- Exterior wall spickets
- Foundation repair
- Trash removal
- Landscaping maintenance
- Paint prep
- Broken rafters
- Address numbers on curb, mailbox, and/or house
- Sprinkler systems
- Smoke alarms
- Fire extinguishers
- Removing environmental hazards (lead paint, asbestos, mold, etc.)
- Dated electrical (including Federal Pacific Electrical panels)
- Light switch wall plates and outlet covers
The list goes on and on and while many of these you won’t have an issue with in your particular rehab, they’re important areas to consider and to add in to your rehab budget. Some are required for inspection while others can add value to the property once it’s updated.
A lot of the updates are just a few dollars to update but bigger surprises like a sewer leak or foundation issue can quickly add up to hundreds or thousands to repair. As we all know, this will dig into your potential profit, which no one wants to have happen.
When you receive a bid from a general contractor, look over what’s included and what might be missing for that particular project. Err on the side of caution when determining your rehab cost and leave room in your budget to help cover any expected costs.