If you turn on the TV almost any night you can find at least one show dedicated to rehabs and house flipping. Fueled by this growth rehabs have become the most popular real estate investing niche by a large margin. Almost every new investor wants to be a rehabber. For as many new investors that succeed a good number struggle. This is not because they lack the desire or the work ethic but because they aren’t exactly sure which steps to take. Having a plan and the right team around you is a good place to start. Regardless if you are looking for your first deal or a seasoned investor there are a things you can do that will give you an advantage over your competition. Here are three important tips for your next rehab project.
- Wait for good deals Success with rehab investing is all about the numbers. You can find a great property but unless the numbers make sense you need to pass. One of the biggest mistakes that amateur investors make is jumping at every new property that comes their way. Even if you haven’t had a good deal in weeks you have to fight the temptation to force the issue. It is always better to wait for strong deals than settle for bad ones. One bad deal can put you in a hole that is difficult to get out of. In the world of rehabs quality is always better than quantity. Stay patient and wait for good deals to come your way.
- Do the right work It is not enough to slap some paint on the wall and call your property rehabbed. You need to make improvements that are in line with your market. Before you even make an offer you should have an idea of what styles & trends are hot for your area. A fancy swimming pool may sound appealing to you but may not work best for your local market. You need to do work that maximizes your return on investment. There are certain properties that you can cut corners and others where only high end labor and materials will do. Talk to your contactor, a few local builders and your real estate agent before you start any work.
- List at the right price In most cases you will hold your property in higher regard than everyone else. Because of this you are likely to list your property above the fair market value. This is one of the worst things you can do. Buyers do not care what condition you bought the property in or all the struggles you may have gone through. All they care about is how your property stacks up with everything else on the market. By listing too high you put yourself behind the eight ball. Instead of creating instant demand and appeal you run the risk of losing a good number of potential buyers. Every day your rehab sits on the market directly costs you money in the way of carrying costs. As a side effect buyers will think you are desperate and start throwing lowball offers your way. By listing at the right price right from the start you can sell your rehab quickly and usually for the best price.
There is always something you can learn with every rehab. In most cases it is the little things that determine your rehabbing success.