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I just pray there's nothing wrong inside that motor that'll send me over the $500 mark
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For what it's worth, when I rebuilt my 1500 motor, had the machine shop:
1) complete rebuild of the head. New valve seats and guides, install valve guide seals (which weren't original on these motors), triple grind on the valves, install new valve springs/retainers. Valves were fine, so didn't need new ones. Seats and guides are important, and just looking at them by a novice won't necessarily catch a problem. leave this to the pro's. This was the most expensive part of the machine work... $250.00.
2) Boiled block/head. They checked all tolerances for me. Bored engine .020. had to grind crank .010 on all journals. They checked the block and head to ensure mating surfaces were flat and true. Cost was around $275.00.
Total machine shop costs were reasonable imho. $525.00.
But that was just the beginning. Bored engine meant bigger pistons, $200.00. Rings/bearings were another $100.00(?). New camshaft, hot street cam, (mine was wasted due to DPO putting in wrong fuel pump), $300.00. New double valve springs, $25.00. New tappets, $35.00. New vernier double row timing chain and gears, $300.00. New freezeplugs/gaskets/seals/etc, figure another $100.00. New oil pump $100.00, Without adding up all the receipts, it was easily around $1,700.00, maybe just a bit more, for a total rebuild of the motor.
This also doesn't include the small parts (new oil pressure spring, head studs, rod bolts, flywheel resurfacing, new clutch/pressure plate/bearing) etc.
A lot is dependent upon what you want done by the machine shop, performance increases, etc. But, there are always unexpected variables when you begin to rebuild a motor. To get away with a total rebuild for $500.00??? I'm not sure that can be done.