Say a home like this to gut it and rebuild it to be livable for someone. What's the process, total cost, etc?
Just to get out in front of this. I'm definitely not seriously thinking of doing this and couldn't. But it's more just out of curiosity. It's my pie in the sky idea of, if I won the lottery for billions of dollars, I'd just start rehabbing vacant homes and giving them to people.
This is the correct answer. Anywhere from $100 to $200 per sq. foot.
Coincidentally that is around the cost to just build your own home.
Edit: on a side note- I really hate the look of Formstone. If you don’t know what it is, it’s the facade of the building and it’s covering up beautiful brick. It’s difficult to remove without damaging the brick beneath.
I know materials costs are still high post covid but starting to drop back down to normal, Id err on the high side right now.
Yeah, there's really not a huge financial upside to rehabbing a vacant vs. starting over from scratch. It's one of the reasons the vacant problem in the city is so intractable. It just doesn't make financial sense to rehab them.
It's why the city shouldn't let people sit on vacants and should absolutely have programs that keep people in houses. Making cosmetic changes is a heck of a lot cheaper than a complete tear down
There are 14,000 vacants in Baltimore. You’d expect the city to front the cost to repair them? It costs $15k to demolish them and $100k to make them habitable.
Say hello to doubled taxes…
Who you responding to? I didn't say that
Solidly $200 right now
I toured a 3 bed 1 bathroom flip house a year ago in Madison park area that was listed for $119,000. It was a fire rehab, so I assume they listed 30% to 50% or so above their total investment. I would wager $70,000 is minimum needed to do a proper gut and rebuild. But idk.
60k for a rehab that involves a kitchen, 2 bathrooms floors, electrical, new HVAC and ducting and all the usual plumbing etc but nothing structural. Rehabs where you have a brick shell and need to frame are 120k+ easily. Underpinning adds another 20k+ to the budget. The fire may have been contained to a particular area of the house or they may have received nonprofit funding. These are all trade prices and assuming you have the connections to not get ripped off by a retail GC.
I’d say it’s closer to $90-100k. There isn’t much of a profit margin on these row houses, which is why they’re still vacant.
Did that one sell for $119k? That’s the other problem.
I think it went $114 but I can’t remember.
Yeah, anything over a 10% return in real estate is good, but 30-50% returns aren’t realistic. $114k is maybe 15% profit.
Dang! Good to know.
Yeah man. If it was that easy to make a 50% return, everyone would be doing it. Many of these projects either fail, or barely break even. Most would be thrilled at a 15-20% return. I don’t flip, I BRR (Buy, Rent, and Refinance) and I make higher profits but also have higher carrying costs. On most of my properties I make about a 10-15% rental return, but the properties increase in value over time as well.
A lot of people that flip houses aim for 20%, it’s hard to keep it at that, but that’s usually the aim.
20% is the median best outcome for flips. The average is much much lower.
So there’s a ton a variables. If you can assume the structure is still good, the roof, framing etc. Also assuming you got have mold, asbestos etc.
Process wise your looking at demo, permits, install of all the stuff inside the walls, drywall, flooring and finishes (paint, trim, fixtures, tile etc). With inspections throughout each stage.
Figure you might spend: $10-15k each for electrical, plumbing and HVAC (central heating/air).
$5-10k each for drywall, flooring (including subfloor, leveling, flooring material and trim)
$3k-5k each for demo, appliances, kitchen cabinets and counters, paint, and adding a new layer on the roof
So you could easily be spending $75k-100k. Assuming you don’t have any big ticket surprises.
Add another $10k for windows and doors. $1.3-4k for new front steps. The costs can get up into $150-170k depending on material and design choices. You can easily spend $40k just on the kitchen alone.
Goodness, that sucks. No wonder people aren't buying them and fixing them up. My problem is the companies buying properties and not being forced to fix them up.
This would be helped immensely by the city charging a vacancy tax on property owners. DC charges a 5% tax rate for vacant buildings, and a whopping 10% tax on blighted buildings.
Baltimore charges the exact same rate to property owners regardless of the status or condition of the building. If Baltimore adopted a similar policy to DC, it would force these loser property owners (many of them out of state) sitting on vacant blighted buildings to sell to people who are willing to do something with them.
Yep.
Honestly, if you compare the price of what you're getting (not looking at the location for a second) to the prices for places in DC, Boston, Philly, NYC, or other 1st and 2nd-tier cities around the country? $200K all in is not really too bad at all. The same physical setup would easily be a million plus in NYC (maybe closer to 2), as a frame of reference, and that's BK or Queens or the Bronx.
Baltimore punches above its weight in many ways, in terms of what you get access to. You're in the NE sprawl, one of the most vibrant economic hubs on the planet. You're a cheap MARC ride to DC, and on the Amtrak NE corridor. You're on 95. Baltimore metro region is not small in the scheme of things, plenty of local opportunities.
Is a $200K investment in a small home in a pretty significant metro area a better option than in some other places, from an economic perspective? Absolutely, in some circumstances, IMHO. Just know what your schools are like if you have kids, and add private school to the bill if you don't want to tolerate what may be a really challenging learning environment in the public system.
> You're in the NE sprawl, one of the most vibrant economic hubs on the planet
The mid-atlantic region of the US (from DC -> NY) has a GDP of 5.2 trillion making it the third largest economy in the world. 200K to live in one of the richest parts of the entire world sounds like a great deal to me.
In theory, in areas where ARVs approach/exceed $150k it starts to be worthwhile to fix them up for resale. That’s while you’ll sometimes see developers redoing an entire block of vacant houses.
The average sale price of a house with modern amenities on my street is like 200-225k but there are still vacants. I think the problem is those are 2 story and the ones that sell are 3, so I guess adding a third floor is cost prohibitive?
The vacants could be remaining vacant for a bunch of reasons. They could be owned by a speculator type, who bought the house with no intention to fix it and is just timing the market. They could be in bad enough shape due to structural issues that even at a $200k selling price it’s not worth it to fix and flip.
The houses being 2 story just means they wouldn’t sell for as much. I expect adding a third floor would be very expense and not worth it from a ROI standpoint.
The 150k number I mentioned earlier, is location/size specific. It seemed to be the price point around me when a lot of 3bd, 2 story houses started getting fixed up.
That addressed was posted doesn't seem like one of those areas
It is not. A couple blocks closer to the park maybe are into that $150k range
People flipping houses are not installing 40k kitchens. That's either high end custom work or clueless retail clients overpaying.
True but it’s easy to spent near $25k if you are starting with a shell assuming you are doing the work legal and following code.
That is way, way too much.
Not really. I did my kitchen in my old house back in 2013 for ~15.5K material only plus countertop. Appliances were $6K including a washer and dryer; cabinets were $5500 from Home Depot, cabinets were ordered but all were standard sizes nothing custom and the uppers were white and the cases were dark blue; I had someone do the countertops for $1500 and they were only laminate; 2 new encasement windows ~$600; tile floor ~$1200 included the tile saw rental; paint ~$400; sheetrock and other minor plumbing, gas line and electrical changes ~$800. If OP is doing the work it can be done under $20K, but if they need a licensed contractor labor for kitchen reno down to the studs will be around $10K.
I am in the industry. You overpaid.
Overpaid for what, exactly? I am partly in the industry as well. Buying nicer than contractor grade cabinets and appliances isn’t over paying. I was living in the house at that time. You can’t get a decent encasement window for under $250. I bought a vacant house all the plumbing was stripped and not a single appliances in the kitchen was remaining. Edit: I may be off on my appliances cost by $1300. It was 10 years ago.
If you're in the industry and doing total kitchen remodels for under $25k then please share your company name and the photos of your work. Otherwise, it sounds like your sub-$25k kitchen remodels are not something you're willing to stand by.
No I don't think I will. I don't care about impressing people on the internet.
Because you're too busy trying to make people feel dumb on the internet?
Indeed. Not to mention doing the work yourself vs paying others, whether you can be patient and try to get deals on materials vs going with the fast options.
If you’re starting with just a shell with only a few of the brick walls standing and you get cheap construction it’ll be between 100k-120k. A house that doesn’t need a complete guy you might be able to make livable for 60-75k and these are all very rough numbers.
Looks like there’s maybe two other homes that might be inhabited on the block, the houses across the street literally have trees growing out of them. Safety is another variable, not just with living there, but with the rehab itself. You’d have to keep it from getting broken into and have a way to prevent your supplies from getting stolen. Some contractors won’t even do work in an area like this.
Beyond that, you have a $100k investment in a neighborhood no one wants to live in. The minute you leave the property empty it’ll get broken into, emptied and trashed, and you’re right back where you started.
Just saw a post about a physician who bought a home in Baltimore, rehabbed it, had it sitting vacant for a few weeks, went to get it ready to show for lease and found a family living in it. Now she has to file a full eviction for these squatters who are insistent they’re rightfully renting it. Police wouldn’t kick the squatters out.
You'd be lucky to make a non weather tight 1000 sq ft vacant habitable for 100k.
The process? Lots of paperwork, planning, estimates, permits. The cost? A fuckton.
My gut (no pun intended) says you're definitely getting close to $150K said and done, and it's a 6-9 month project. This is if you don't do any work yourself, and have a general contractor.
My frame of reference is having my row home (looks similar in size, something like 1100 square feet) about half-gutted and redone maybe 7ish years ago, and this included replacing most of the kitchen including appliances, floor, and cabinets, moving my main bathroom (so a total re-do), and then adding a half bath/powder room.
I didn't do my flooring and a couple rooms, which I kind of regret in retrospect. I didn't have to do a furnace and water heater (although I have replaced my water heater, and that's not cheap).
Prices have gone up a ton since then, with building materials and such pretty heavily impacted from what I understand.
coming in on the flip side of this—if you're buying a vacant, gutted place for ~$10k and have the budget for renovation, why not rehab it? a lot of row homes are on the market already in the $150-$200k range, you get to rehab a building and do some architectural preservation while also making a home that's customized to your taste, and your neighbors benefit by not having a vacant next door anymore. like, of course it's a big undertaking, of course there can be unexpected costs, but in the end the estimates are coming in around the price of a move-in-ready home. if you like a project and like the location, why not?
Well you gotta budget rent for the 6 months to a year or more the work is happening
But I assume the biggest issue is that banks don’t see it your way and you can’t get the same loan for a rehab you can for a move-in ready property. Which makes it a nonstarter for most homebuyers in this area
The problem for most of these is the location. You invest $100k and now own a property no one wants to live in. The ones in good locations sell for $50k, with much higher renovation costs. At that point, unless you’re an investor with a crew, it’s cheaper to buy an existing structure or a brand new build.
Depending on the condition of the house you might be better off just getting it bulldozed and start over from scratch.
Particularly with 12' wide or 30' deep rowhomes. Most lots in the city are 60-80' deep, but a lot of them are mostly grass behind a one and a half story 19th century townhouse. Those kinda houses only have like 600-800 sq ft, but the lot itself can fit ~2.2k sq ft with a 3 story build that is 50' deep and has a partially finished basement.
That's cool.
Whole block is dilapidated. Let the city demolish it or developers take the block.
Depending on the area, the house is probably not worth saving. So many of those row homes that go up to auction are money pits. And if personal safety is an issue, then no amount of money can fix it.
Unless you do the labor yourself/have a company with skilled laborers, you're gonna get close to $200k.
But really tho, if you won billions in the lottery would you really be rehabbing homes in Baltimore or would you just leave and take care of your family and call it done?
Also, if you really wanted to help people, you could just go the crony capitalist route and get donations in gov, but instead of greasing up palms for your own benefit, you donate for the purpose of benevolence. You would get a lot more bang for your buck via lobbying than just fixing up houses.
I dunno. I've had the same idle thoughts as the OP when I see the lottery prizes over a billion. I figure if I was that rich, there are way worse things I can do than take the Jimmy Carter route.
There are 14,000 vacants in Baltimore, if it’s $100k on average to renovate…
it's about $150k. just look at that house ($10k ish) and look at what a fixed-up one sells for in the same neighborhood. that will tell you what costs.
the process is a mess of paperwork.
Not quite... There are huge chunks of this city where the cost of rehabbing vacants is greater than the value of the house would be if the work got done, hence huge chunks of this city staying blighted
>would be if the work got done
the "if" is the key there. look at a neighborhood where people have gutted and rehabbed a house with private money. the sale price of such a house is roughly the cost to rehab it plus the initial purchase price (sometimes it makes a profit, sometimes it's a loss).
in neighborhoods where the sale price is below the rehab price, you see such houses either being done through a charity, or people losing money on the sale (high foreclosure rate of rehabbed houses).
$26.00 for a gas can $3.19 for regular x5 =15.95 $4.19 for a box of matches
So total comes out to be $46.14
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Parity Homes is doing some interesting work around this
in addition to my previous comment, I would like to say that if a house starts out livable (some basic heat, some basic running water, and a roof), then the cost of fixing it up can be a lot lower because a homeowner can live there and fix it up themselves gradually. you can get away with a lot of non-permitted renovations when you live there and do it gradually. if you hire a crew to come in and gut it, you will get shut down if you try to re-plumb, re-wire, etc. a house without a permit. but if you want to re-run the electrical to a room in your own house on the weekends, nobody is going to know or care.
so, if you're not making much money, you can get a cheap place that is minimally livable and gradually fix it up for probably half the cost of doing a full gut, though you probably won't get as much resale value out of it because it will still look old, even if you have replaced the plumbing and such.
In 2001, I bought an 1835 3 floor row house which had been a shop on the first floor since the 1920s. (and the 1920s was the last time it had been lived in) There was virtually no electric and only a single toilet/sink. It took me $70,000 and mostly my own labor to bring it up to a nice livable house. I hired a plumber and electrician to do the major plumbing & ele, I have filled in some additional since. I figure it would be about 150K to do the same today, with less self work. I still need a new roof, though I have a paint on elastomeric roof which I re-coat every other year. My house was neglected, but not wrecked. it was a time capsule. My first row house, in West Balt was in better condition, even though it had been a rental for about 10 yrs. It was 2 level. I think I put about 50K into it. But that was in the 80s.
It is all doable. Where the difficulty arises is having a team which can assess the needs and a team to do the work.Developers don't want to do that. they want to clear cut and build new stick houses. Small time flippers want to do the cosmetics and be out in a few weeks. I think another real problem is all the hassle in getting funding. The banking industry, was part of the reason for the decay, they do not like the model of restoration and its hidden costs, they do not like the whole idea of working in what they see as the bad lands. If government guarantee for loans could be secured, as was the case with the dollar houses then there would be a greater interest. Also too few Americans have any idea of how to do basic repairs. Even an undesirable paint color can nix a house sale these days.
Assuming the foundation doesn't need any work, but everything else does, I wold estimate around 100K for something like this. You're going to need to get a GC (or GC it yourself if you can). You'll need a building permit and all the trades will need permits and inspections. The basic order of operations is:
You'll also need to do some exterior work at some point - those steps look like they need work.
I do this professionally, and I can also tell you that no one who does this actually has the money to do it themselves. It's all borrowed money. The standard thing to do is get a hard money loan (short term, high interest rate) to buy the house and rehab it, then either sell it or refinance into a long term mortgage once the work is done.
Having worked in the industry, I'd ballpark 125k average; 80-90k on the low end. If you're truly curious, check out some of the City's incentive programs like Vacants to Value.
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Our home was in that state in mid 2020 when the guy bought it, rehabbed it and sold it to us. It's a brand new house from the brick walls in. I think he put about $130,000-170,000 into it with everything he did. He had a crew who did everything. We have a dugout, finished basement, main floor and second floor. 3BR, 3.5 bath. Fenced back patio (concrete) with everything new to code. Tore off formstone, tuck pointed, the brick, added a 2-story addition onto the back of the home. Basically he did the classic East Bmore Flip that's happening on every street around us.
I will say he had a tougher time then because he was doing this during the pandemic while the housing market was insane. So getting appliances and materials was really difficult for him. He actually did everything right structurally and mechanically with better-than-contractor-grade finishing spec'd throughout. My father is an engineer and has been a home inspector for 30+ years and said this place is a lot better than most of the flips he's seen.
So, ours was probably on the upper end of that range. I'd guess $155-170k for the total renovation.
We’re you in contact throughout or only found the house once it was finished?
We only found it once it was finished and listed for sale.
Man I’d love to rehab the vacant next to our house
Estimate $50+ a square foot.
Double to quadruple that is more realistic. $100-200 per sq ft depending on fit and finish.
Add in MD permits and bullshit and you’re close to $100k min.
needleinacamelseye t1_j9czqtf wrote
It's going to depend on what condition the vacant house is in (is there a roof? are the floors intact? are walls crumbling?) and on the cost of labor. I once heard that it costs about $150/sq. ft. to do a full renovation/refinish of a shell of a rowhouse, but I can't remember where I saw that number or what it includes.
Edit: I found this paper from last year which estimates that the cost/sq. ft. to bring a vacant up to code is between $100 and $200/sq. ft.