[stevewilhelm]

> A 14% return on properly selected and executed rehabs is very easy to do.

This is unrealistic in the SF bay area. First time home buyers are paying top dollar for "fixer uppers" and in many cases just tearing down the existing home and replacing them with a new ones.

Good contractors have several month lead times and are being paid in excess of $300 per square foot for doing renovations.

Real estate agent commissions are three to six percent of sales price.

[davismwfl]

My suggestion to the OP is to look outside of CA in general, not because it isn't possible to make these returns but because in CA the rehab & rental market are a lot tougher in many ways, taxes, fees, a heap full of regulations (good and bad) etc. And it isn't that you can't make these returns in the SF Bay area, it is just that the cost to enter the market is significantly higher both in terms of dollars and knowledge, plus the proper type of inventory is constrained. The risk right now with the Bay area market is also far from ideal, and should stop any small investor from entering. Hence why you have to find markets, and neighborhoods within markets that are better to work in.

Real estate commissions are basically the same across the US, and 6% is common, 3% to buyers agent, 3% to sellers, with lower fees in some markets or if you negotiate them down (careful what you negotiate here though it can backfire fast). These are always a factor you add to your deals to see if they are good or not, e.g. taxes (both while holding and at sale), costs of materials & labor, interest costs, loan fees (if any) etc.

As for the contractor availability, 60-90 days of lead time is not uncommon right now for decent contractors most places. But here is the key, if you do things legally, i.e. with permits, it takes 30-60 days to get all the permits in line usually and most contractors will come aboard if you hire them, get all the paperwork started through the system and be ready to go the minute they can. At the same time not all rehabs require a GC or permits, so you can hire day labor or handy people to knock a ton of stuff out.