Spokane Apartments: Contractor Bids are in (cont…)

Yesterday we finished talking about the Doors and trimming and we ended with these new (simplified) numbers:

Retail $271,959.00
20% Discount -$54,391.80
Expected Cost: $217,567.20
50% Overrun $135,979.50
Expected Rehab: $353,546.70
Bid A: $472,700.00
Delta: $119,153.30
Bid B: $393,400.00
Delta: $39,853.30

So I’m giving ground on these guys but I still think that the numbers are way off. Let’s look at it this way $473k divided by 36 units is $13k per unit!  That’s twice the amount that I expected.  Hell I’m, buying the property for less than that. I’m buying for $11,000/unit.

On a square-foot analysis basis: $473k divided by 11,700sqft is $40/sqft.  I’m buying for $35/sqft.  In expected the square-footage number per apartment to be high it’s just hard to justify it not being higher because the units are so small.  But on a full square footing basis, these numbers are rather high.  But let’s get on to the other line items.

Windows and Trim

The bid came in at: 4,000.00.  And I was expecting to replace all the windows at a $9k cost.  Now my estimations hadn’t included vinyl blinds, so we finally got some where that their bid was actually lower than mine!  Something is a little funky with that.  I know we had talked about only replacing the windows that need to be replaced so let’s just throw out a number there and say 50% of the windows need to be replaced.  That’s fine, I’ll adjust my numbers down by 50% on that to $4500.

Demo

Here’s what I consider a padding category on any rehab.  Basically you are just paying for labor, and you can fluff some numbers to add to the bottom line.  $15,500.  Let’s just say we are paying an hourly wage of $20 (inclusive with taxes and benefits) that’s 775 Man hours! Or 21 man hours per Apartment.  I’ll be generous and say it takes 8 man hours to demo a single apartment which is 288 Man Hours or $5,760.  To me this is the smoking gun on the bids coming in way too high.

Wall Framing

There are 6-8 apartments that have a weird configuration to them.  Half of those have an old hallway telephone nook which protrudes into the apartment and makes the kitchen inconvenient. The other half have hallway janitor nooks which again, protrude into the apartment and makes the kitchen oddly shaped.  So I want them removed, to open up the kitchens a little more ~20sqft/apartment. The goal to actually make it easy to install appliances and cabinets in the apartments. I’m okay with the Framing costs being bid at $5,500. I know I hate hanging drywall and a sanding.

Heating and Coolingbaseboard heater

Oi vey! I just need 36 baseboard heaters.   At $40/pop this should be a fairly cheap solution: $1,440. I’m not even sure how it came in at $20,700!  Maybe the thermostats to control those suckers are REALLY REALLY EXPENSIVE!

Electrical and Wiring

I’ll admit that having to put in nipple lamps, new outlets, GFCI outlets, new covers, new light switches, is a lot of work, and it takes a person who is comfortable working in darkly lit environments, and sometimes on a step-ladder. I will also admit that I hadn’t added lights to my rehab calculations, my bad.  Add another $2,600 for lighting.  Outlets, switches and covers run the gauntlet from $.40/per to $1.00/per. While there maybe some cost in having to re-wire some circuits (there might be some extra electrical work to be done) coming in with a bid at $30k sounds like it’s a lot higher than it should be.

Wrap-up

We got through a couple more line items today.  Which is good, but there’s still a lot more to get through.  So we’ll continue tomorrow.  I had to add $2,600 to my calculations for lighting, and decreased my expected window calculations by $4,500.  Seeing that I also forgot to add in a Demo Cost let’s also add back the $5,760 on that and I’ll be generous and add a 20% overhead fee to it, for a another $7k.  Grand total: +$5,100.  Also note that I had my formula set to be adding 50% over run off the initial cost without any “bulk” buy discounts in my earlier numbers:

Retail $270,036.24
Demo $7,000.00
20% Discount -$54,007.25
Expected Cost: $223,028.99
50% Overrun $111,514.50
Expected Rehab: $334,543.49
Bid A: $472,700.00
Delta: $138,156.51
Bid B: $393,400.00
Delta: $58,856.51

 

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