Hitting the right rehab costs is critical to smartly renovating a vintage home. Here are some tips on how much to budget and how to choose a good contractor.
In general terms, the decision to buy and renovate a “fixer-upper” is driven by a desire to either make money on it – as would a flipper – or to move into a desirable neighborhood at a lower cost. A third type of homebuyer is the person who enjoys fixing and decorating, with a sense of design that can turn “ugly” into “wow.” Each can achieve their goals if they use a smart approach.
NELA – Northwest Los Angeles – offers many opportunities for all of these types. There are plenty of homes for sale in Highland Park, Eagle Rock and Mt. Washington that could use some work. Glassell Park and Garvanza real estate has proven lucrative for flippers in recent years. Hermon homes have often been occupied by the same owner for decades, meaning the 1970s kitchen has got to go.
But the buyer has to know what he or she is doing. According to a September 2016 article in the real estate section of Money magazine, the fixer-upper should list at least 8% below the price of move-in-condition/updated homes of otherwise comparable value (same-size homes, same neighborhood, etc.). So if homes for sale in Mt. Washington average at $736,500 (Zillow Home Value Index 2017) but you find one that is less than $677,580 (8% off the average), it might be a smart move if your renovation costs can be kept at or below $58,920.
Clearly, the condition of the home means an awful lot in the equation. But so too does hiring the right contractor, who will play a big role in hitting the right costs. Here are some things to keep in mind when doing that:
It starts with your expectations – You have to be realistic about what things cost and what you can afford. In the Mt. Washington example above, is that amount sufficient for materials, appliances, and labor in the tricked-out kitchen and baths you hope to build? It helps to have a contractor who can determine those costs before you make an offer.
Fast + cheap = poor quality – The markets for labor and materials are competitive, therefore the prices for everything are whittled down as far as is reasonable. A good example is laminate versus traditional hardwood floors; the former are less resilient and can only be sanded and refinished once or twice. But they are cheaper and faster to install.
They’re busy now – Contractors are generally booked 2-4 months in advance. Factor that into your own timing when buying and planning to move in.
Be wary of the low-ball quote – The inexperienced contractor will not budget adequately for a job. If you get several quotes – which is recommended – look for the mid-range prices, or pay top dollar if your renovation is likely to be tricky due to quirks or vintage aspects of a property.
One final note is that most contractors are themselves engaged in the work. That means they are often unable to immediately return phone calls as might be expected from someone working in an office. A two or three delay should not be read as indifference.
The Tracy King Team works with buyers and sellers of homes in NELA. They have a good sense of values, so contact them for advice on which fixer-uppers are worth the price and which ones aren’t.
With over 30 years experience in helping clients buy and sell homes in Northeast Los Angeles, Tracy King has a depth of real estate knowledge that makes her the go-to for both the first-time home buyer and the seasoned real estate investor. When she's not holding open houses or negotiating offers, Tracy enjoys wine tasting, cooking, or planning her next trip to Paris. If you are looking to buy or sell a home in Northeast Los Angeles, contact the Tracy King Team at 626.827.9795 or firstname.lastname@example.org.