What does remodeling really cost? And why homes prices will be supported.
It is no secret housing prices have been rising over the past few years as our country tackles the inflation issue we have all been experiencing. If you have done any home renovations recently you have seen the inflation pressures. The cost of construction has pretty much doubled since Covid due to the increased cost of materials as well as the increased cost of labor. We may see materials come down a little bit, but the labor cost is definitely here to stay. There is a shortage of skilled tradesman, particularly in the plumbing and electrical fields resulting in much higher pricing.
Now there is always ways to cut corners and do things cheaper. However, in my experience after many projects under my belt and managing a portfolio of properties, it’s not worth it, do it right from the start.
I thought it might be useful to outline and display a project I am currently working on to show what one could expect with regards to cost for an overall project. This property was purchased to hold in our portfolio and operate as a short and mid term rental.
In early january we purchased an investment property located at 208 Hartford Schaumburg. As you can see, it’s old, dated and in need of a full remodel. Here is the link to the 3D walkthrough tour prior to renovations. This home was purchased for 259,900 with 10k in seller credits negotiated. So let’s call it 250k. To provide some perspective, at the time of purchase is was a pretty good deal. I was able to achieve this by jumping on it quickly and offering very favorable terms for the seller via a fast cash sale and quick closing. Prior to closing we started planning the renovations. This was fairly easy for us as we remodeled the same floor plan a couple years ago. Additionally we are not planning on doing any structural or framing changes. Just a simple rip out and replace throughout the home. We submitted drawings with the scope of work to the village of Schaumburg. Submitting for permits is a rather tedious task as you need to submit the info and licenses of all subcontractors and a letter of intent from each. After a couple weeks we received a rejection letter from Schaumburg stating that we needed architectural or engineered drawings. Therefore, we had an architect create the drawings at a cost of $2000. Approximately 5 weeks later we received permits and ready to start work.
First step demo: our normal crew came through and removed all flooring, baseboards, casing, kitchen, bathrooms, etc. Cost was $2500
Step 2: windows, we had ordered the windows approximately 4 weeks earlier and they were ready to install. We chose black windows both inside and outside, which are a bit more expensive but provide the modern look we are going for. Total cost $9800. When the window installer removed the bay window in the front the supporting bricks broke off and we needed a masonry to repair it. Additional cost of $500.
Step 3: plumbing, prior to starting we needed to have plumbing supplies ready. All rough and finish plumbing for this home cost $3000 from studio 41 our typical supplier. Our normal plumber Danny came through and went over the scope of work: for the kitchen he replaced valves, changed the drain, ran a water line for the fridge, and replaced the lines for the laundry machines. In the bathrooms he replaced the valves, installed the shower kit, and installed the tub. These are all necessary items per code. He also replaced the older hot water heater at a total cost of $6000.
Step 4: electrical, given the extent of the remodel and the changes we chose to make, the village requires many additional electrical upgrades, adding substantial cost to the project. We added lighting throughout, outlets where required, rewired the home for arc fault breakers, and replaced the electrical panel. Total cost came to $10,000.
Step 5: rough inspections, both the plumber and electrician called the village to coordinate inspections prior to starting finishing work. They passed.
Step 6: Finishing work, we are using one of our typical subs to do all flooring, painting, kitchen, bathrooms, baseboards and casing, and install new exterior doors. They started out by patching all drywall through out the home and prepping for paint. Then they painted the home. During this time we coordinated materials to be delivered.
Flooring $2500 from top quality flooring – luxury vinyl planks
Kitchen $6000 from advanced cabinets – modern melamine cabinets
Exterior doors, baseboards, casing – $5000
Door hardware and light fixtures $2000 from build.com
For this home we re-used the interior flat panel doors, painted them, and added new hardware. Depending upon condition sometimes we replace and sometimes not.
Step 7: exterior this home is comprised of a partial brick facade with terribly ugly green siding. And believe it or not, the home never had gutters. The brick will be painted beige/greyish color and siding replaced with a light green vinyl to complement the quirky green kitchen we installed. Additionally we replaced the soffits and added gutters. Fortunately the roof was in good condition so it will remain. Cost for this work is $10,000. Additionally, we removed the existing landscaping, planted new bushes and installed a new paver patio in back where a dilapidated concrete patio once was. Total cost about $8000.
Step 8: Finishing touches, time for the fun items to bring it all together. We had countertops installed at a cost of $5000 and all finishing items such as light fixtures, hardware, and faucets.
The interior finish labor and rough materials came out $20,000
Once all work is done we can have final inspection with the village in order to move on to obtaining a rental license for this property. In the meantime I have been consulting with a design firm call showplace.com to fully furnish the home and prepare for short or mid rental.
Below is a full breakdown of all costs involved to renovate this home. Now this a smaller single family home consisting of 1100 square feet with 3 bedrooms and 1.1 bathrooms. Our cost to renovate on this project came out to approximately $100 per square foot. I do believe this figure can be pretty accurate for quick estimates. At the time of this writing we are still finishing up final touches so we’ll add completed pictures once done.
Overall the house came out great and we excited to get our first group in there.
To give some perspective on cost, as mentioned, we remodeled the same floorplan 2 years ago. At that time we spent about $65,000 for a very similar project. Given the cost, scope, & time involved remodeling an entire home is quite a task. Therefore, if you have a home that is in disrepair, or simply old it may be best to sell direct to a cash buyer such as us.
| Purchase Price | $250,000 | |
| Architecural & Permits | $ 2,000 | |
| Demo | $ 2,500 | |
| Plumbing | $ 6,000 | |
| Plumbing Supplies | $ 3,000 | |
| Electrical | $ 10,000 | |
| Windows | $ 9,800 | |
| Finishing Labor | $ 20,000 | |
| Kitchen Cabinets | $ 6,000 | |
| Countertops | $ 5,000 | |
| Appliances | $ 7,500 | |
| Exterior doors & Trim | $ 5,000 | |
| Hardware & Lighting | $ 2,000 | |
| Siding, Soffits, & Gutters | $ 10,000 | |
| Landscaping & patio | $ 8,000 | |
| Total Remodel | $ 96,800 | |
| Total Investment | $346,800 | |