OfflineWhen you rehab, something unexpected almost always happens. Because of this, you should expect the unexpected by setting aside more money than the estimated costs. In all of my rehab properties, the vast majority of the time there is always something significant that needed to be fixed which was not able to be seen until we dug deeper into the project. It is vital to allow yourself some protection in these kinds of situations. Budget this into the margin and adjust your maximum offer accordingly.
Locate a property that will only need minimal repair. Even if you saved money from buying the house at a discounted price, it is also imperative that you know the estimate restoration or you might end up spending to much.
At the same time, do not get too attached to a property that you refuse to repair it even if it is necessary, or remodel it in such a way that you spend too much. This is not your future home. Remember: you are improving the house to draw prospective buyers. You are doing this for business and profit and if you get too emotional about a house, you may end up spending too much for it.
you have to be smart about your fixer upper purchases and only buy those properties that you can realistically fix and profit from right away
Understand that your mission is not to make your property the best house on the block. Instead, it is to upgrade the property so that it is at least equal to the other houses on the block. That is, your renovated fixer upper should be able to "hold its own" once you're finished fixing it up.
If you don't have the funds to complete all necessary repairs, either don't buy that particular property, repair what you can, be willing to sell the property "as is" and profit less. Purchase fixer upper properties that have good resale value 3-4 bedroom houses with at least 2 baths tend to sell really well, regardless of the economy.
Tips on Rehab
Posted on: Sat, 11/19/2011 - 00:28
Tips on Rehab
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- by scarlson
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Sherry,
for sharing this post with us.
Another thing to keep in mind when we do repairs is to consider if we're buying and holding to rent; some cities have the health department do a walkthrough to make sure the properties are up to city code.
And if we're renting to section 8 they will also have a list of requirements, and do an inspection prior to letting the tenant move in.
Learning and progressing every day,
Valerie
Valerie
“And will you succeed? Yes indeed, yes indeed! Ninety-eight and three-quarters percent guaranteed!” ― Dr. Seuss
"I believe in angels, the kind that heaven sends; I am surrounded by angels, but I call them friends" - Unknown
My journal: http://www.deangraziosi.com/real-estate-forums/investing-journals/59110/...
We have agood realtor who will give us an idea of what he could sell it for as is. Then he will say how much more we could get by doing "this and that's". Then we can do a cost analysis to see if it is worth the time doing additional work. This works for rentals also. How much rent you can demand is based on Location as well as what you offer in "amenities".
Factor in more $ than any contractor tells you for rehabs. At least 10% more. Something always comes up! Good advice ladies!
Sheila
"If God is for us, who can ever be against us?" Romans 8:31 NLT
Here in Colorado if you don't go all out(for that specific neighborhood) when you do your rehab/remodel they don't sell!! If you look like everyone else you have nothing to offer. You have to buy right, estimate what it will cost to have the nicest one on the block at the lowest price. One that when a home owner comes in and looks at they go WOW!! One that agents really want to show their clients. Nice kitchen and bathrooms!!! Nice fixtures. Roof, furnace and water heater are tip top!! Look at the nice landscaping and there are no cracks in the driveway, porch or garage concrete. Create excitement!!
What we see here with halfway, minimal rehabs is they do not sell!
Done right and nice is what SELLS here. Maybe in Detroit or other places halfway is ok!
Now if you are going to rent that is an entirely different story. SFH Vacancy is at 1.5% and multi is 5%!! You can rent just about anything as long as it passes inspection!
PM me with questions or comments!
Michael Mangham
MD Home Acquisitions LLC
Knowledge is power, but execution trumps knowledge. Tony Robbins
http://www.mdhomeacquisitions.com Seller site
http://www.mdhomeacquisitionsbargainhouses.com Buyer site
http://www.mdhomeacquisitionshousehunter.com Bird Dog Site
http://www.mdlodeals.com Tenant/Buyer site
In the past 40 remodels we've done here in Beverly Hills, Fl. we do the same thing; new kitchens, appliances, bathrooms, light & plumbing fixtures; paint, carpet & tile. Then have a listing price less than what the "original" houses in the neighborhood are listed for...
The price gets them in, but that "WOW" factor gets them to buy!!!
Like Sherry said at the edge. It depends on your ultimate plan with the property. Rent it or flip it. If you are going to buy and hold, you don't want to spend a lot on nice things that are potentially going to be destroyed be renters. If you are flipping, that's a whole different game a depends on location. If you live in a great area and things are top of the line, you need to compete. Where we live, the least fanciest house in YOUR neighborhood would be top of the line here. The people in our town struggle to get financed due to the job market so keeping it simple gets it sold.
Clean it up and make it better than the comps. It doesn't take as much money here to sell. Because so few sell here, due to fewer buyers, we need to take into consideration the "what if it doesn't sell?" We have to do it at a low enough cost that we can still rent for profit.
If we were in your neighborhood where everyone is still keeping up with the Jones', then you have to go top of the line. People are still materialistic here, but also realistic. We know that people in our town can't afford marble toilets or whatever, so we give them a good house that will not need further maintenance at the right price. If it doesn't sell, I know I can rent it out with out worrying about a renter destroying my marble toilet.
That's just a rural perspective. It's different for everyone. Have a "your town" perspective. Don't try to be Beverly Hills in PoDunk, You'll lose money. At the same time, don't go PoDunk in Beverly Hills, you'll never sell.
Sheila
"If God is for us, who can ever be against us?" Romans 8:31 NLT
looking for homes to rehab and get it for cheap and sale Quick
Timothy Lum
just looking for the lowes ones
Timothy Lum
you need to be better then the compitition & at the same time offer @ a lower price & that will eliminate your compitition,as soon as everyone finds out what kind of property you deliver to the market they will be lining up at your door for the next one.
keep the faith Matt