Maalox run
Posted on August 9, 2007 - Filed Under Business |
Rounding the final corner on the houses, not much work left to do. Three big things remain: cabinets, appliances, counter tops.
In starting to do my in-depth analysis of the budget versus actual expenses, I was disappointed in that my bottle of Maalox ran dry. If these figures are correct I won’t have the money to replace it.
Remember the original budget: $32,000
Well, wave "buh bye" to that.
Mentally I prepared myself for some budget creep: around $5,000. But this? Well, the only other entity which exceeds their budget by this amount is the US Congress. The only difference between my situation and theirs: no Chinese to buy up my deficit.
It is the labor which was my largest expense. This is California. Labor is not cheap. Good labor costs even more.
Some areas I was able to trim costs. The cabinets were purchased under
budget. The Lowes Coupons were of great assistance. A few hundred here, a few hundred there. But Mikki does not accept coupons.
When all is said and done, my figures show the project actually costing 50% more than I had budgeted. A more thorough analysis of the project and the numbers is on the way.
50%? Ugh! Where’s that Maalox?!?
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6 Responses to “Maalox run”
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50% cost over run!!!!
Now you got me worried, I’m in the process of acquiring a property for my first flip, and hiring the right contractor and the cost of renovation and one of my main concerns.
If you don’t mind sharing, what is the main culprit for blowing the budget? Was there factors or cost that you did not include in your initial budget? Or was it simply scope crept?
William;
Is the Real Estate situation in Canada still supporting flips? I had read that this practice had significantly trailed off in the US due to the so-called “market meltdown”.
William, I’m doing my in-depth analysis this weekend. But the numbers are preliminary wheras the job is not finished.
Remember: labor costs in California are different than most other places.
And good luck on your flip. I’ll be reading!
Oh, no!!! That’s awful! It doesn’t help at all, I’m sure–but, I’ve been there. For my first rehab, I overestimated what the expenses would be. On the second, I underestimated. By the third, I pretty much had a good feel for what the majority of expenditures would run. Of course, things I don’t normally deal with end up surprising me still. I’m avoiding houses with structural concerns since I have NO IDEA how to guesstimate those. Our House 16 is about to close–and, it has termites, which has me nervous as all hell. I haven’t dealt with termite damage before, so again, I can’t say with any confidence how much that’ll run.
On June 8 you estimated 45 days and $32,000. Looks like it will be close to 90 days and over $50,000. Bad news if you are trying to flip, and would-be flippers should take heed.
If you bought right and the house cashflows on actual rents after all operating expenses including the true vacancy and collection loss, it will turn out to have been a good investment in 5 years. Have you looked at current comps (including listings) to see what you could get today?
AI, Actually I have looked at comps. I’ve also looked at what rents are for three bedroom houses. It appears that my asking price is not outrageous for my area. I am quite excited about that.
It wasn’t my intention to flip these houses for the moment. I wanted to hold them until the next market upswing.